No more space for your stuff? Try self-storage

IN urban centres where home sizes are shrinking and real estate values are high, one may need to consider ways to get more space, especially storage space.

Self-service storage (self-storage) is a relatively new concept in Malaysia. The service offers storage spaces ranging from as small as a locker to a substantial room size. They cater to those who are looking to rent small spaces on a short-term basis ranging from a few weeks to a year. Clients are usually companies and individuals who need some extra space to store their goods.

This niche business began in the US decades ago, driven by rising demand from individuals and businesses.

According to commercial real estate consultancy CBRE’s 1H2015 Asia Self-Storage Report, demand stems from the rise in what is called the 4Ds – Death, Divorce, Downsizing and Dislocation.

The industry in the US and Europe have seen tremendous growth, and it is slowly moving into a more established and steady stage. Asia as a whole, however, has only just begun with the exception of a few. Among the Asian cities that have seen significant growth in this industry over the past few years include Hong Kong, Tokyo and Singapore, driven by their small living and commercial spaces.

The report also showed that generally, Asia is 20 years behind the US.

“Starting in the 2000s, self-storage in Tokyo, Hong Kong and Singapore have had a 10 to 15 years introductory phase. Currently, the business in Asia is transitioning into the growth phase and its rapid expansion is expected in Tokyo, Hong Kong and Singapore,” the report showed.

The rest of Asia, including Malaysia, is presently at the pre-introduction phase.

“According to a research by IPSOS Business Consulting Hong Kong in 2015, the level of competition in Asia is still low with the growth potential at about 6% to 10%. Malaysia is at least 10 years behind Singapore, Hong Kong and Japan in terms of penetration rate. There are about six players right now,” Singapore-based Lock + Store CEO Helen Ng tells TheEdgeProperty.com.

Malaysia has only seen self-storage businesses popping up recently -- there are only a handful of players in Malaysia.

Nevertheless, Kuala Lumpur has been ranked as one of the cities with the most growth potential by CBRE Global Research, supported by urbanisation, marriages, students and office expansions.

According to the CBRE report, self-storage is not only a new business in the commercial market, it is also an opportunity to unlock the value of a property by transforming empty offices or factories into money-making entities.

Flexi Storage co-founder Desmond How says the industry is growing steadily. Currently, the occupancy rate at his facility is 70%.

“We have been receiving good response from our customers who are from accounting and legal firms, online businesses, entrepreneurs, home owners and students,” How shares.

Flexi Storage offers more than 60 different storage sizes ranging from 16 sq ft to 200 sq ft. The minimum space-renting period is two weeks and the maximum is a year with renewal options. The minimum charge per month is RM66 (locker storage size).

Meanwhile, Lock + Store offers storage space with sizes from 14 sq ft to 150 sq ft. The rents range from RM7 psf to RM12 psf per month.

Lock + Store’s Ng believes rapid urbanisation, shrinking apartment sizes, and the rising affluence resulting in people accumulating more things have spurred Malaysians’ demand for storage space and supported the growth of the industry.

“The rise of e-commerce and online shopping in Malaysia has also raised demand for storage space. Compared with five years ago, we are seeing more e-commerce or online stores rather than the traditional brick-and-mortar stores,” Ng shares.

Moving forward, she says the worsening economic climate may see more households and businesses tightening their purse strings, which in turn could reduce demand for self-storage.

“However, this will be balanced out by short-term demand, such as from families in between houses who need a place to store their furniture, expats relocating and the rising number of e-commerce stores,” Ng reckons.

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