Strong Demand for Self Storage
There are around 1200 operating self-storage facilities in all of Australia, with 431 in the major metropolitan cities. The highest demand cities are in Sydney, Melbourne and Perth, but you’ll find wide variations in demand and supply in each suburban area.
Self-Storage facility operators have survived the financial crisis by having a diverse and extensive customer base. The industry is also aided by the overall trend of young workers shifting to the inner city, where space is limited.
A Steady Source of Income
Storage facility owners derive their income from the net operating revenue of the facility. The main performance measures that impact on overall revenue are: occupancy levels and average storage fee revenue.
Therefore, a cost-effective building with maximum rentable area is vitally important to the owner-operator.
Storage fee rates vary considerably. In Sydney metro, customers pay between $200 and $370 ex GST per sq m, per annum. In the last year, fees have risen in Sydney and Melbourne outer zones by 8 and 9%, with inner zones showing less movement and Brisbane outer zone showing a 2% rise. Monthly revenue across the East Coast has gone up overall this year to an average of $291 monthly net revenue (source: Blackwell Consulting 2010).
Meanwhile, occupancy rates also vary. A mature major facility rents out between 85 and 90% of total rentable area.
Flexible and Low Risk
Because license agreements means mostly customers pay by the month, operators are free to change the storage license fee at any time. This enables a faster reaction to marketplace changes than other forms of building lease income. Under such agreements, customers are also liable for securing and insuring their own personal items.
Increasing Customer Demand for Storage
While the growth of actual facilities has slowed from its explosion in the 1990s, there is no doubt the demand for storage from both business and residential customers is steadily growing.
The Self Storage Association of Australia found in their 2010 demand study:
- 5.7% of the general population indicated that they are currently using self-storage. This is an increase from 4.3% in 2008 and 3% in 2006
- 50% of potential self-storage customers search for a facility using the Internet.
- 40% of self-storage customers had stored at the same facility before. (An increase from 20.4% in 2008).
- 87% of self-storage customers indicated that they were satisfied or very satisfied with their self storage facility.
- The SSAA demand study is available from www.SelfStorage.com.au for $125 non-members/$75 members.
Demand for Retrofitting of Old Buildings
It seems that many industrial building owners are looking for a more constant source of revenue from their building. More than 50% of new storage space is derived from expanding existing facilities, including “build over” projects in older style, single level self-storage buildings (Figures: Blackwell Consulting, 2009).
At Storbuild, retrofitting single level buildings into cost-effective multi-level facilities is one of our specialties.