http://www.businesstimes.com.sg/arch...runch-20140204

Published February 04, 2014

Self-storage firms gain from space crunch

With at least 15 new self-storages opened since 2011, number of such facilities has nearly doubled to 35

By raphael lim [email protected]


SMALLER houses, high shop rentals and a general scarcity of space may be a bugbear for many people and businesses in Singapore. But for one sector, these are the very reasons operators are thriving.

Self-storage firms are experiencing boom time in the last two years, with at least 15 new ones being opened since 2011, according to research by Colliers International. The number of facilities here has nearly doubled with at least 35 now.

Altogether, these offer over 1.7 million square feet of space, up from 1.3 million in 2011, that can be leased to individuals and small businesses.

Self-storage is a concept popularised in urban areas such as Hong Kong and Manhattan. It was introduced here around 10 years ago by self-storage company StorHub in 2003.

These providers allow users to rent space ranging from 10-square-foot lockers to rooms over 1,000 square feet for a minimum of two weeks to meet their changing needs. Since then, other companies have taken root as well, offering a range of services from wine-storage to item collection.

One of them is Store Friendly from Hong Kong. Since its launch here in December 2011, the company has grown to 11 branches with around 2,100 rooms for rent across the island. This includes two new branches that are opening in the first two months of this year: one in Tai Seng and another in Chai Chee. The company focuses on having more localised branches with a smaller number of rooms and leasable area.

Jes Johansen, managing director of Store Friendly, said that awareness of the self-storage concept is only around 50 per cent in Singapore, lower than Hong Kong's 90 per cent based on internal research. "As people get more familiar with the concept, demand will rise," he said.

Similarly, Extra Space self-storage, which has six facilities here, reported an 11 per cent year-on-year increase of its customer base in December 2013. It opened its newest facility in Kallang Way last December, adding over 68,000 square feet of leasable area.

The company has outlets in South Korea and Malaysia as well, and has grown more than 37 times in terms of space since it first started here in May 2007, said CEO Michael Hagbeck.

He cited affluence and the increasing hobbies that Singaporeans engage in as reasons for the increased demand.

"Homes are getting smaller while incomes are getting larger, Singaporeans don't always have the space to accommodate all their acquisitions," Mr Hagbeck said. "It's also a good option for small businesses that need to spend their resources on driving results, not on real estate."

Rising demand from consumers also means greater competition among self-storage providers, said Heng Tze Kiang, StorHub's general manager. He said that upgrading by companies was essential to maintain a competitive advantage.

Hence, services offered by these companies go beyond a simple storeroom for boxes. Many also include 24-hour video surveillance, with options for wine cellars and climate controlled rooms for temperature-sensitive items.

To set itself apart, StorHub, a wholly owned subsidiary of CapitaLand, also provides complimentary insurance for items stored with them, Mr Heng said.

In addition to regular growth, self-storage companies also report seasonal spikes in demand of around 20 per cent during the December to January period each year, when households begin cleaning for Christmas and Chinese New Year. "People want a presentable home and do not want boxes lying about," Mr Johansen said.

While the majority of users are personal customers, Colliers told The Business Times that growth in number of online retail and startup firms meant that an increasing number of businesses were using such services.

Lock+Store, a Singapore Post (SingPost) subsidiary with four branches here, said it sees a 70 per cent spike in demand for boxes month on month from small and medium enterprises (SMEs) during the year-end period to package their filing needs. Around 20 per cent of that translates into rental of storage space.

Helen Ng, CEO of Lock+Store, said: "SMEs expect more than just basic self-storage. They are increasingly looking at specialised document storage services with shelving, and integrated services such as transport and packaging."

Lock+Store opened its latest branch in Serangoon North four months ago.

SingPost acquired the company in 2012 to expand its own self-storage business, Self Storage Solutions (S3). Both are now managed under the Lock+Store brand.

Such moves are not unusual in the industry.

StorHub acquired competitor Big Orange last July, adding the latter's four branches to its portfolio. The company is now the largest self-storage provider in Singapore with more than 10,000 storage units across 11 facilities.

Mr Heng said: "The expanded operations offer us greater economies of scale and allow us to offer our services not only at more convenient locations in Singapore but also at affordable prices."

Self-storage providers BT spoke to said they remain optimistic about the industry's potential.

Store-11, which opened its only outlet around a year ago, said that it planned on expanding should the company find a suitable location.

Maybeline Woo, business development manager of the 35,000-square-foot facility, said: "As houses get smaller and shopping centre rents go up, people will look for places like these to store their non-essential items."

Store Friendly's Mr Johansen said the company planned to increase its presence at a rate of a new outlet every two months. There are plans for at least 10 more branches, possibly with more in heavily populated areas such as Ang Mo Kio.

"There's no reason for us to stop," Mr Johansen said.