Is open storage the new asset class in the industrial sector?

Who uses open storage?

Traditionally, low-grade open storage yards comprising mainly of hardcore and broken asphalt surfaces have catered adequately for users such as scrap metal recycling, waste disposal, low-end HGV parking, private car parking, containerised self-storage and general storage of items not susceptible to weather damage. Some open storage sites also include modest buildings to provide staff facilities (but not principally used for storage). 

However, demand has evolved and diversified rapidly in the last few years, with significant growth from new types of user.

Modern urban distribution warehouses are designed to maximise the size of the building relative to the site and in many cases site coverage is now reaching 65% or more. This leaves minimal external space for HGV movement and parking; the large fleet of vans often required to carry out last mile home deliveries; or other service uses such as staff parking and general storage. Parcel operators, for example, would normally want to operate with a site cover of 25%-35%. As a result, there has been a huge increase in requirements for urban open storage facilities to cater for these ‘overspill’ parking and storage needs.

In addition, some logistics operators are now using supplemental fleets close to their distribution facilities to maximise shift patterns and accelerate the flow of goods. Increasingly, open storage is used for specialist van fleets, including electrical vehicles, and we are seeing significant growth in requirements for EV charging.

Other users have also emerged. For example, takeaway delivery companies such as Deliveroo and Just Eat saw rapid expansion during the pandemic, with operators increasingly using prefabricated containers (sometimes known as ‘dark kitchens’) located on open storage sites, which require a base slab and basic utilities on site.

However, it is important to remember that the traditional base of occupiers such as building contractors, and uses such as pallet storage, scaffolding, general storage and scrap metal recycling still form a significant proportion of overall demand, and continue to sit within the sector’s diverse tenant mix (although many of these users do not require the highest quality sites). 

What is the level of demand?

Carter Jonas has been monitoring the rapid acceleration in enquiry levels for open storage sites over the last four years. 2022 saw well over 400 enquiries compared with 250 in 2021 and under 200 in 2019. 

To view the current occupational demand levels for open storage, read our latest Open Storage Update report.

What types of site are in demand?

Those sectors where demand is growing rapidly tend to require high specification sites with excellent surfacing, drainage and security, as well as being easily accessible for large vehicles, and with unrestricted B8 planning use.

Given the increasing importance of the quality of a site, Carter Jonas has developed a 4-tier classification system to score sites based on a standard set of criteria. This is based on the quality of the surfacing, site security, the services and facilities available, accessibility, operating hours and planning use. 

Our research also assesses the average size of site required, with the highest level of demand by number of enquiries being for small ‘ultra-urban’ sites of less than 1.5 acres. However, demand is broadly spread across a range of size bands up to large urban sites of 3-7 acres, as well as non-urban sites above 7 acres. 

We have analysed in further detail the types of open storage sites which are currently in demand in our latest Open Storage Update.