Advice and Opinion Research

Self storage leading the world as an asset class

The R90+ million flagship self storage Stor-Age facility in Claremont which borders a fine grain residential area

Self storage is taking the lead world wide as an asset class and is recognised as more profitable than the international music and Hollywood film industries combined. Three of the top five of the 141 companies listed in the Bloomberg Real Estate Development Trust (REIT) index for the three year period ending March 3, are self storage companies. South Africa may still lag behind the main players – United States, Australia and the UK – but the massive investment in the industry means a quick catch up.

Stor-Age, with a property fund valued in excess of R1.75 billion, has become the leading and largest self storage group in South Africa. Since opening the first facility in Edgemead in 2006, the company has pioneered the development of high profile self storage facilities throughout South Africa and currently has a portfolio of 36 properties, with 28 trading stores and a further four set to join the portfolio this year.

“We identified a gap in the market for a professionally run and managed self storage product, close to residential hubs, based on successful international models and introduced this proposition to South Africa,” says Gavin Lucas, CEO of Stor-Age.

“Our USP is convenience, with state-of-the-art technology, top security, efficient service and value adds through ancillary product offerings. Self storage offers you the flexibility of storing anything from sporting equipment to spare furniture and extra stock for periods as short as a month and generally speaking in spaces ranging from 1m2 and up to 30m2”

The core market is around 70% domestic with the balance of the demand coming from the SME commercial segment. “The urban trend of smaller living spaces has resulted in a burgeoning self storage industry. It has become a home ‘extension’ and not only a place to store your belongings when you moving home or renovating,” says Lucas.

The R90-plus million flagship property in Claremont and latest to open, borders on a fine grain residential area which meant the architecture and design had to blend with this mix of property usage while being highly visible, aesthetically pleasing and have maximum storage space. According to architect Izak Burger, from MLB Architects, the site posed several unique challenges with its irregular tapered shape which was partially excavated for a previous development.

“The bulk of the eight floor, seven-storey building is set back from the street at the upper levels. Here, a strong statement was made using a mix of commercial and industrial materials woven together with sophisticated detailing. The elevations were treated as a macro design element which disguises the individual levels resulting in a building which appears to have fewer floors.”

What further differentiates the facility from traditional self storage is that the ‘commercial’ design is complemented by sculpted ramps, steps and landscaped planters which gently elevate, protect and direct visitors to the single volume covered entrance. To reduce noise and traffic impact on the sensitive Brooke Street edge, the entire loading and unloading function was pulled into and under the building in a secure double volume space.

Energy efficiency has also been carefully planned and managed from ventilated double skin walling systems, solar panelled geysers, insulated roofing and energy efficient LED lighting operated by movement sensors. Water conservation is also high on the priority list and, where possible, permeable paving has been included which allows for the treatment of water on site before it is discharged.

All Stor-Age’s properties are focussed on the location. They have deliberately targeted mixed development areas, close to highly populated residential areas, on major routes with high visibility. Added to this is the bold, red, visible branding.

The 28 operational properties offer a combined lettable space of 200 000m2. Apart from the Claremont flagship, recent new sites include a purpose-built, green field development in Westering, Port Elizabeth – the second property to trade in the Eastern Cape and a purpose built development in the Heidelberg region of Somerset West which forms part of a contemporary mixed-use retail mall development.

Claremont brings the total to 36 properties, all in the right locations on key arterials. Although mainly based in the South Africa’s four metropolitan cities: Johannesburg, Pretoria, Cape Town and Durban, Stor-Age also has a presence in Port Elizabeth and Bloemfontein.

“From humble beginnings, Stor-Age has turned the South African self storage market on its head by changing the way people think about it, from the perception of it as the ugly duckling of the commercial real estate market with rows of dirty garages. The novel introduction of multi-storey, high quality facilities being developed in high profile and sought after locations has changed this. “The executive management team saw an opportunity,” says Lucas, “It has embraced a four prong approach to the sector opportunity, combining outstanding locations, excellent quality facilities, unrelenting customer service and ‘big’ branding.”

There is no slowing down either with the Group on the acquisition trail having set a target of a R2 billion portfolio of 40 properties offering 280 000m2 of storage space by 2015 and doubling the size by 2020.

“After studying the more established self storage markets internationally we have a good insight into where self storage in the local market is heading over the next decade,” says Lucas. “There is no doubt that self storage is a success – we believe that within this time frame we will see every middle to upper income residential suburb in South Africa being serviced by two to three self storage facilities.”