“Awesome”, “Magnificent” or “A warehouse is worth more than what you store it in” are some of the most repeated phrases by those working in the industry. Inside Madrid starts to get cheaper rent more ground than a warehouse. The key: central places where homes are small and occupants need extra space to store their belongings, furniture or kids’ bikes.
There is no official data on the rents paid for this type of asset, but the average of all advertisements posted on the Idealista portal in the capital is 25 euros per square meter per month. This assumes Pay more than 100 euros per month for a property of 4 square meters.
According to the Brainsre real estate data platform, if a house is rented for an average of 15 euros per square meter, storing old furniture or rubbish costs 66% more than sleeping. Consulting firm Colliers offers national rents of between 30 and 35 euros/m2 in the city center and between 18 and 22 euros/m2 in the slums.
The map that Idealista offers for both buy and sell is uniform in the capital. No districts were donated even though the rent offer was higher than the sell offer: 426 versus 149. Buying one costs an average of 2,804 euros per square metre.That’s 23% less than the average housing price in the capital, according to the College of Enrollment.
As with rentals, paradigmatic situations arise, such as the Villaverde region, where the lowest average apartment prices in the capital (€1.943/m²) and storage rooms are 50% more expensive than housing. In Usera, the second district with the cheapest housing, there are storage rooms for sale for 1,000 euros per square meter, which is more expensive than an apartment.
Spain has 600 spaces for storage rooms, more than half are located in Madrid and Barcelona. The national stock accounts for about 12% of the total available in Europe. There are over 1000 in London alone. “The Spanish and European market, in general, is a highly concentrated market in locations but very diversified for operators and owners,” explains Luis Sendra, deputy director of Capital Markets at Colliers consulting firm. 75% of the national market is in the hands of owners who only have warehouse space.
Storage rooms are built in silence
A company founded in 2017 has developed several hundred storage rooms. This is Grupanxon, a shareholder of Grupo BH and allied with the Gabriel International fund. This company announced that it is promoting more than 600 storage rooms in its 2020 corporate presentation. According to their website, realized projects add up to 941 properties from these features. To do this, it received the support of investors from Urbanitae real estate crowdfunding, which provided a loan of 3.2 million euros with a maturity of 10-12 months and interest rates of 10% to 15%.
To a lesser extent, Re-Aviva, the company specializing in urban recycling, has also experienced the rage of storage rooms. Currently they have developed only two projects: in Embajadores-Matadero and in Puerta de Hierro. The first, which has already been delivered, consists of 4 flats and 47 storage rooms. “Half was sold very quickly to the occupants of the building itself, and the rest to the residents”explains the company’s partner, Ildefonso Muelas.
“The appetite for international investment funds in Spain is enormous. Besides Madrid and Barcelona, they focus on cities like Seville, Malaga or Valencia,” says Luis Sendra.
The return of a mutual fund with a patrimonial vision that has a storage room package and entrusts management to a company, surrender 5% or 6% output. Again, funds that own an operator and buy, adapt and lease a space can earn a ‘return’ of 9% or 10%.. One of the most relevant operations is Oh my box!, for which Safestore paid €17.25 million and generated an estimated 9% return for the buyer. operator was purchased.
How profitable is it?
The profitability of making and selling storage rooms varies according to the area of the city where it is made. The greatest demand is in areas where houses are smaller. and therefore with less storage space. The smallest average-sized district in the capital is Carabanchel, with 69 square meters per residence. The average price of trade asset transactions published by Registrars is 1,534 Euros per square metre. To this price we should add 200-400 euros per square meter, which, according to industry sources, is the cost of preparing a building to convert a building into a storage complex.
Considering the average market price of Idealista ads of 2,643 euros per square meter, the developer’s return is 36%. “There is Business hitting real balls”EL PERIÓDICO DE ESPAÑA, an intermediary of the Prensa Ibérica group to which this newspaper belongs, draws attention to various sources consulted, explaining that there are companies that earn between 50% and 100% for projects developed in just six months.
Rental and management, two different businesses
There are different parties within the storage sector. On the one hand, there are supporters like Grupanxon or Re-Aviva. These companies buy a building, design and market storage rooms, and close sales to end customers or an investor. Your return can range from 35% to 100%depending on the cost of the project.
Owners can be clients for personal use or investors small and large. When it comes to big investors, they are the second figure to make up the market. End use is important because it will imply compliance with one or another regulation., in terms of material or fire prevention. Also, if the end use is for the public, that is, if it is rented individually, permission from the City Council will be required to carry out the activity in question. There are also differences between cities: Barcelona does not allow basements, while Madrid does, despite restrictions.
Most storage room operators have a mutual fund behind them.. The largest is Bluespace, which belongs to the Fremont fund, with 45 buildings for storage rooms. Homebox from the French Rousselet family with 34 of them; with Guardatot, 22; Box Infiniti with 21; and Pongo Trasteros with 12. Every manager has different strategies. For example, Guardatot, one of the reference companies in Catalonia and Andorra, is committed to approximately 300 square meters of local storage rooms, with a strong investment in technology that ensures no staffing required in the centres. For its part, giant BlueSpace is looking for large spaces, most of which are in the environment, where it can generate economies of scale that allow it to make its model more profitable.