It’s no secret that the past 18 months have created many winners and losers.
Depending on who you speak to, investment sectors once seen as safe bets took quite a hit during the pandemic, leading many to reconsider their portfolio makeup.
Investors of all sizes reassessing markets with new eyes has led to increased interest in alternative asset classes.
According to Store Local’s head of growth Peter Camphin, one sector making its way to the top of lists is self storage, as he explains.
Often stereotypically perceived as dark, dusty and damp, self storage has been reincarnated into a sector that’s been able to innovate, diversify and, most importantly, profit during a period where many have not.
Labelled by some as pandemic-proof, this low-risk status has resulted in many seeing self storage as the next big investment opportunity, attracting attention of newer entrants and larger scale investors than ever before.
However, stepping into an “unknown” market can often prompt a lot of questions.
So, for newcomers eyeing the industry with curiosity, the question may be: is self storage a safe investment choice and how can one ensure early success?
The Australian market has seen waves of trends during the pandemic period—office leasing has ebbed and flowed due to the normalisation of working-from-home; a lack of international travel has seen the tourism and hotel industry rely more heavily on a push towards local travel; and the hospitality industry, arguably experiencing the worst effects from Covid, has resulted in many closing their doors for good.
Few have escaped unscathed and, for those who have, it’s meant coming to terms with the fact it could take a while for things to return to “normal”.
In contrast, there’s the self storage sector. With a substantial increase in enquiry, move-in rates and occupancy remaining consistent, self storage has experienced something rare in these times: stability.
Generating upwards of $1.5 billion annually, those in the self storage sector are reporting growth across equity and return rates, with some facilities seeing over 15 per cent development investment returns, 12 per cent value-add investment returns, and 10 per cent passive investment returns.
Outside of the financial benefits, self storage also boasts low capital expenditure, low staffing, minimal car-parking requirements, and high multi-level development density on prime commercial and light industrial land.
So, while other sectors have spent their time in the trenches, and may continue to do so for some time, it’s full steam ahead for self storage.
Human movement patterns during the 21st century have seen people migrating from regional areas towards metropolitan cities and surrounding areas, the so-called Goldilocks zones.
With more people moving out of regional Australia towards the coast, the customer pool for storage grows with it.
Self storage is naturally involved in human movement—people need space to store their belongings while in transit, but the growing population around Australia's major cities also brings with it more alternative types of storage customers: small business owners, trades and hobbyists.
For investors at a crossroads for their next big investment move, with the money, the infrastructure or the land, self storage is now looking like a worthwhile investment.
We are more frequently being asked questions from potential investors like what makes an ideal location for self storage, is an existing warehouse suitable, how big does it need to be and what are the funding options.
To make it easier and to answer these questions and more, the online Australian Self Storage Investor Symposium will be held on October 21 and 22.
For anyone on the sideline of self storage, this symposium is designed to give them the playbook on how to win.
With a collection of speakers who have been there and done it themselves, investors, managers, and even one of Australia's most renowned demographers, Bernard Salt, executive director of The Demographics Group; you can learn all you need to know about setting yourself up for success in this booming industry.
To register for the symposium, secure your ticket here, or email firstname.lastname@example.org.
The Urban Developer is proud to partner with Store Local to deliver this article to you. In doing so, we can continue to publish our daily news, information, insights and opinion to you, our valued readers.