When I arrived in Spain in 2000 to develop EasyBox, there were no self-storage operators in the country. One of our first challenges was simply explaining what self-storage was.
The concept was already well established in the United States and increasingly familiar in the UK, but in Spain we were starting with a blank sheet of paper. Customers didn’t know the product, property owners didn’t know it and local authorities didn’t have an obvious category in which to place it.
There was therefore a fairly fundamental question behind the whole project: would self-storage actually work in Spain? There were good reasons to think it might. Madrid and Barcelona were dense cities with a large proportion of apartment living, businesses needed flexible space and people moved, renovated and accumulated possessions just as they did elsewhere. Spain was also entering a period of strong economic growth, with rising employment, consumption, housing activity and population.
On paper, the conditions looked promising. The harder question was whether those theoretical drivers of demand would translate into people paying every month for a product they had never heard of.
Part of the job in those early years was therefore educational. We weren’t competing for existing self-storage customers because, for practical purposes, there weren’t any. We had to help create the market, and that affected everything from marketing and terminology to the conversations we had with landlords and local authorities.
Twenty-five years later, the situation is almost the reverse. A new operator entering Madrid or Barcelona doesn’t need to prove that a market for self-storage exists. The questions are whether there is room for another facility, where it should be located, what it will cost to develop and how it will compete with everything already there.
That is a very different starting point.
For the numbers behind this story — growth rates, market fragmentation, what a typical Spanish portfolio actually looks like — see The Evolution of Self-Storage in Spain.
Before the institutions came the entrepreneurs
The Spanish self-storage market was created by entrepreneurs. In the early years, there was no established asset class, no substantial body of Spanish operating data and certainly no institutional capital waiting to finance expansion. Operators had to take a view on demand, invest their money and find out whether they were right.
Over time, more entrepreneurs entered the sector. Some built substantial businesses, while others opened one or two centres, often converting existing buildings with relatively modest amounts of capital. They tried different locations, building types, unit mixes, prices and operating models. Some worked better than others, but collectively they demonstrated that Spanish customers would rent storage space and that viable businesses could be built around that demand.
I think that contribution is sometimes overlooked when we look at the market today. Fragmentation tends to be described as a problem to be solved or an opportunity for consolidation. From an investor’s perspective, that is understandable: hundreds of relatively small operators create an obvious opportunity to assemble larger portfolios.
The fragmented market that investors now want to consolidate is partly the result of the entrepreneurs who proved there was a market to consolidate in the first place.
Institutional capital represents an important new phase for Spanish self-storage, but it didn’t create the market. It arrived after much of the difficult early work had already been done.
The product became easier. The real estate became harder.
One of the more interesting changes over twenty-five years is that some of the risks have almost reversed.
In the early days, the big uncertainty was demand. The product wasn’t proven, awareness was low and there was very little operating history on which to base our assumptions. On the other hand, there was virtually no competition from other self-storage operators for suitable properties.
Today, demand is much easier to demonstrate. We have years of operating history, competitor data and a much better understanding of the catchments in which self-storage works. Finding the right real estate, however, can be considerably more difficult. Property owners understand the sector, brokers understand it, investors understand it and competing self-storage operators are often looking at exactly the same opportunities.
Planning has also become one of the more complicated issues facing the Spanish industry. Self-storage still doesn’t always fit comfortably within classifications designed for other property uses. In some municipalities, this can restrict operators to buildings or areas where storage use is clearly permitted, which in turn pushes competitors towards many of the same industrial locations.
There is a certain irony in that. Twenty-five years ago, we sometimes had to explain to local authorities what self-storage was because they had never encountered it. Today, everybody knows what a trastero is, but the planning system can still struggle to decide exactly what self-storage is.
I think the terminology itself may be part of that problem, but that deserves a separate note. From an investment perspective, the important change is that one of the great uncertainties of the early market — whether the customer would come — has diminished. Another has taken its place: whether you can find and secure the right property at a cost that still allows the economics to work.
The business behind the building has changed
The buildings may still be recognisable, but the way we operate them has changed enormously. When I started in the industry, pricing was relatively static, marketing was predominantly local and offline, and websites were informational rather than transactional. Many processes that are now automated required somebody at the facility to handle them.
Today, a customer can discover a facility through Google, compare reviews, obtain a price, reserve a unit, sign a contract, pay and potentially access the building without speaking to anyone. Behind that journey sits an increasingly sophisticated operating infrastructure: paid search, local SEO, automated collections, access control, revenue management and much better operating data. AI is now beginning to change customer discovery again.
Revenue management is probably one of the clearest examples of that evolution. We used to think primarily about occupancy and headline rental rates. Good operators today increasingly think about the relationship between occupancy, achieved rent, length of stay, promotions, existing-customer increases and the value of the next available unit.
I don’t think, however, that greater technological sophistication is automatically better. The industry can sometimes become enthusiastic about technology because it is new rather than because it solves a sufficiently important problem at a sensible cost. Keyless access is a good current example. I have little doubt that it represents part of the future of self-storage, but I am less convinced that every system available today yet justifies its cost.
For me, the test is fairly simple. Technology is useful when it improves the customer experience, reduces operating costs or helps generate more revenue. Beyond that, I’m not sure sophistication has much value in itself.
Spain is no longer just Madrid and Barcelona
For a long time, it was difficult to discuss Spanish self-storage without the conversation quickly becoming a discussion about Madrid and Barcelona. That made sense: they were the country’s largest urban markets, much of the early supply was concentrated there and they were the obvious starting point for international operators.
That is changing. Self-storage has spread well beyond the two largest cities, and the next stage of growth is likely to be geographically broader than the first.
I would be careful, though, about treating Spain as a single market moving through one neat stage of maturity. Madrid and Barcelona now have significant competition, established operators and relatively high consumer awareness. Other cities are at very different stages, and even within the same city one catchment can behave quite differently from another.
That matters because it is tempting to take what worked in Madrid or Barcelona and reproduce it elsewhere. A smaller city may have less competition, but it also has a smaller catchment. Property may be cheaper, but achievable rents may be lower. Customer awareness may be less developed and the appropriate facility size may be different.
The opportunity outside the largest markets is real, but so is the need to understand each market on its own terms. The next phase of Spanish self-storage may therefore be much less uniform than the first.
Some things haven’t changed very much
Perhaps the most striking thing after twenty-five years is how many of the fundamentals remain exactly the same.
You still need the right property in the right catchment, and the acquisition price or rent, construction cost and fit-out still need to leave enough room for the business to produce an acceptable return. When you finally open the doors, the building is still mostly empty and you still have to fill it, customer by customer.
Some unit sizes fill faster than expected and others more slowly. Some marketing works and some doesn’t. Competitors change their prices. A catchment you thought you understood occasionally surprises you. The technology surrounding the business has become vastly more sophisticated, but it hasn’t removed that basic operating reality.
Nor has institutional capital changed the fundamentals. A larger balance sheet allows a company to build more facilities and absorb the early losses of a growing platform, but it cannot turn a poor location into a good one or make customers rent units they don’t need. A sophisticated financial model can describe an investment very precisely without making the underlying assumptions correct.
Those lessons are not particularly new. We just have better spreadsheets now.
The questions changed
The Spanish self-storage market I encountered in 2000 was uncertain in ways that would seem strange today. We were asking whether customers would understand the product, whether they would trust it and whether enough of them would pay to use it.
Twenty-five years later, those are no longer the questions keeping the industry occupied. Today we are asking where the next generation of facilities can be built, how much competition individual markets can absorb, what happens to returns as property and construction costs rise, how planning rules will evolve, how far technology should change the operating model and what institutional capital will do to an industry largely created by entrepreneurs.
Those are more sophisticated questions because this is now a much more sophisticated market. But I wouldn’t describe Spain simply as a mature self-storage market. Parts of it certainly are; others are still developing. New operating models are emerging, institutional ownership is increasing and the regulatory framework is still trying to work out exactly where self-storage belongs.
When I arrived in Spain, we were trying to establish whether self-storage had a future here. Twenty-five years later, that question has been answered rather convincingly.
What interests me now is what the next twenty-five years will ask of us.