There has been an increase in commercial occupiers taking industrial space in self-storage warehouses who would traditionally have taken self-contained industrial or warehouse units. With the recent introduction of VAT on this type of space, making the service more expensive for domestic users, 42% of all self-storage space is now used by commercial occupiers as opposed to 39% the year before.
Commercial Self-Storage – Flexibility is Expensive!
Reason? Well clearly this type of space offers huge flexibility and due to the often small areas allocated within the “lock-ups”, the cost seems to be inexpensive. Storage centres that offer a reception service also adds to the attraction but occupiers really should do their maths especially if they are taking in excess of 50 sq m (540 sq ft).
It is understandable that occupiers remain cautious after years of recession and are sometimes unwilling to sign formal leases. The self-store route can also therefore be attractive for new businesses. The Valuation Office Agency (VOA) has ruled that the burden of business rates on these premises lays with the self-storage company itself not the individual occupier so occupiers may think they are saving again but in reality this is far from the truth.
The “flexibility” can be expensive, often equating to around £20 per sq ft per annum or even more in some locations. Whilst this includes rates it can still work out to be more than double or even treble the cost of space taken on a more permanent basis. With small business rates relief available to small space occupiers, occupational cost on a traditional basis could equate to more like £5-£6 per sq ft per annum.
This suggests that unless you have a business where your industrial space requirement is fluctuating constantly it is worth researching what deals are available through the more traditional leasing route.
Cameron Park – 10th January 2014