Hines targets £200m self-storage portfolio with debut buy

Hines has made its debut in the European self-storage market as it seeks to build a £200m portfolio. It has bought a three-asset portfolio in Kent on behalf of Hines European Real Estate Partners 3 from a local private family. The portfolio comprises 1,449 self-storage and office units across three trading assets in Ashford, Chatham and Ebbsfleet. Storage King will manage the assets for Hines. Hines said this first acquisition was expected to be a springboard for HEREP III to grow its presence in the sector via further acquisition, development and repositioning opportunities. The fund is looking to aggregate a portfolio upwards of £200m in value over the coming years, initially focused on the UK but broadening in due course across additional European markets. 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 and logistics at Hines, said: “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, added: “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 are excited to see where this theme can take us, in the UK and beyond.” JLL advised Hines on the deal.