Hines enters European self-storage sector with UK portfolio acquisition

assets/files/images/15_05_24/bigstock-view-of-self-storage-warehouse-437685719(1).jpg

Hines, the global real estate investor, developer and manager, has made its debut in the European self-storage sector via the acquisition of a three-asset portfolio in the south east of England.

The portfolio, acquired on behalf of Hines European Real Estate Partners 3 (HEREP III) from a local private family proprietor, comprises 1,449 self-storage and office units across three trading assets in Ashford, Chatham and Ebbsfleet. Hines has engaged with one of the leading self-storage operators in the UK, Storage King, on specialist management and branding for the portfolio.

This first acquisition is expected to be a springboard for HEREP III to grow its presence in the sector via further acquisition, development and re-positioning opportunities. The fund is looking to aggregate a portfolio upwards of £200 million in value over the coming years, initially focused on the UK but broadening in due course across additional European markets. 

The three acquired assets offer modern market-leading specifications, and benefit from a range of amenities for customers and occupiers including EV charging spaces, cycle storage, co-working facilities and outdoor breakout space. Hines plans to further increase the quality of the portfolio’s specification through investment in sustainability credentials, most immediately focused on operational energy use and exploring opportunities for the installation of solar infrastructure.

The portfolio is located in supply-constrained areas across the South East of England. Ashford, Chatham and Ebbsfleet all have a low supply of self-storage units compared to the UK average (0.52 sq ft per capita versus 0.9 sq ft per capita) and each asset benefits from a population of over 130,000 people within a 15-minute drive time. 

Demand in each market is set to increase in the coming years as the HS1 fast railway route, which passes through each town, spurs large-scale local housing development. The three towns have a combined 20,750 homes currently in development or planning, which are expected to increase local populations significantly.

The self-storage sector in Europe is generally viewed as strongly supported by long-term structural and demographic tailwinds. The UK self-storage market specially remains acutely supply-constrained, with just 0.9 sq ft of space per person across the country. This provision significantly lags the US, Canada and Australia, which have 10 sq ft, 5 sq ft and 2 sq ft of self-storage space per person respectively. Declining home ownership in the UK and smaller living spaces in both new build and rental accommodation are notable drivers of demand, with rising online retail penetration rates and rebounds in consumer spending post-pandemic acting as other significant long-term tailwinds for the sector. Many markets in continental Europe share similar fundamental trend drivers.

Greg Cooper, managing director and head of UK Industrial & Logistics at Hines, commented: “The nascent UK self-storage sector is propelled by long-term demographic and consumer trends likely to drive increased demand in the years to come, particularly in densely populated commuter towns in the South-East of England.

“Combining Hines’ six decades of experience as an active asset manager and developer and Storage King’s position as a leading operator in this sector, we believe we have the perfect partnership with which to build a new growing offering in the market.”

Paul White, senior managing director at Hines and fund manager for the HEREP series said: “As always, we are first and foremost focused on the fundamentals story. In self-storage, especially in the UK, we see rising, unmet demand meeting highly constrained supply. From an investment perspective, the sector remains highly fragmented. This is the right moment to channel time and effort into aggregating a meaningful, high-performing platform, as an agent of the inevitable consolidation in the space. We’re excited to see where this theme can take us, in the UK and beyond.”

JLL acted as advisor to Hines on the acquisition.

Add a Comment

No messages on this article yet

Editorial: +44 (0)1892 536363
Publisher: +44 (0)208 440 0372
Subscribe FREE to the weekly E-newsletter