Big Yellow occupancy improves further as it hunts for new London sites

Self storage provider Big Yellow Group said its 73 stores improved occupancy by 183,000 square feet in its first quarter, it said on Thursday, resulting in a closing occupancy of 82%.

The FTSE 250 company said that equated to a 5% year-on-year improvement in occupied square footage to 3.73 million square feet.

“In May, with our final report, we set out our focus on occupancy gain and so it is pleasing to report strong occupancy growth of 4 ppts to 82% across the portfolio,” said chief executive officer James Gibson.

“Our long held target of 85% is now within reach and, as we have previously indicated, that target is now under review.

“Net average achieved rent over the quarter has been flat, but we are confident that, at these higher occupancy levels, our pricing model will deliver growth in net achieved rents in due course.”

Its revenue in the three months to 30 June was ahead 5% over the same period in 2016 at £27.8m, with like-for-like revenue also ahead 5% at £27.3m.

The average achieved net rent per square foot during the quarter was down slightly, however, at £26.00 against £26.03 in the first quarter of last year.

Enquiries for storage quotes were broadly in line with the same quarter last year, the board said, but with improved conversion rates, move-ins increased by 4% compared to the same quarter last year.

It said there was less churn in the business, resulting in move-outs being down by 4% compared to the same quarter last year, with the combination of those factors driving the improved occupancy performance over the quarter.

Revenue from the Armadillo portfolio for the quarter to 30 June increased 20% to £3m year-on-year, while like-for-like revenue, excluding West Molesey and Canterbury - which were acquired from Lock and Leave in April 2016 - and the Quickstore portfolio - acquired in April 2017 - increased by 7% compared to the same quarter last year.

“Big Yellow stores now average more than 50,000 sq ft occupied per store,” James Gibson explained.

“This represents over 50% more than the industry average of 32,800 sq ft.

“We have no doubt that this is as a result of our market leading brand position.”

The company’s new 56,000 sq ft store at Guildford Central, on a prime location on Woodbridge Meadows, was under construction and remained due to open in March 2018.

Big Yellow said it was also constructing a 25,000 sq ft extension to its highly occupied Wandsworth store in South West London, which will increase the store's maximum lettable area to 72,000 sq ft upon completion in April 2018.

The firm said it also submitted a planning application in June for a proposed 60,000 sq ft MLA landmark store on its site in a prominent location on Water Street, central Manchester, and it was continuing planning discussions on other development sites, ahead of providing a further update in November with its interim results.

“Supply remains constrained, particularly in London and other large conurbations where our stores operate,” Gibson added.

“We are aware of only one store opening in London in the next 12 months, but also one closure, resulting in no net increase in supply.

“We continue to look to acquire additional land or sites, and our financial strength should allow us to exploit any opportunities that arise.”