Australasia is the third-largest self-storage market globally, both on a per-capita basis and by number of facilities, behind only the United States and Canada. The industry emerged in Australia and New Zealand in the late 1970s. Today, there are more than 1,500 storage facilities across the region.
The three major owners—National Storage REIT (NSR), Kennards Self Storage and Abacus Property Group—have a combined market share of approximately 25 percent. NSR, the region’s largest self-storage operator and its only sector-specific real estate investment trust (REIT), has 116 facilities and more than 40,000 customers. Kennards, a privately owned and family-run company, owns and operates more than 85 centers, while Abacus is a diversified REIT with approximately 65 externally managed storage properties.
In general, the industry is highly fragmented, with most owners being independent; though there are several regional operators that own small portfolios in major cities, and several franchise and management groups that offer third-party management services. Customer awareness, professional management and institutional investment in the Australasian self-storage industry have progressed steadily over the past 40 years, particularly with the listing of NSR on the Australian Securities Exchange in December 2013.
Demand Drivers
The demand for self-storage in Australasia, like in Canada and the United States, is influenced by demographic and socio-economic factors. Residential customers require short-term storage due to change-of-life events, such as moving, a change in marital status, home renovations, births and deaths. Their long-term needs are typically related to limited space at home, particularly due the growing trend of apartment living and the downsizing that’s supported by urbanization and an aging population.
The increasing popularity of inner-city living has created a densification within the region’s major cities. As block sizes continue to shrink and more people look to split existing parcels of land to build townhouses and small-lot developments, many items traditionally stored under or around the home need to be sacrificed or stored in an offsite location.
"Empty-nesters" moving from a traditional suburban home into an inner-city apartment or retirement home often don't wish to part with treasured family memorabilia, hobby or collectible items, or leisure equipment. Established self-storage centers provide a convenient, secure and affordable alternative to storing goods at home.
Commercial customers typically require storage for inventory, records and point-of-sale materials, with a growing number of online retailers using self-storage as a flexible and scalable warehouse alternative. The major storage operators offer dedicated account management, business services including receipt and dispatch, and centralized billing for large corporate and commercial clients.
Industry Expansion
New supply in Australasia is primarily being driven by population growth, with most development happening in capital cities on Australia’s east coast. Urbis, an Australian firm that advises property developers, owners and investors, forecasts 8 percent to 12 percent growth in self-storage over the next three years, which is broadly in line with population advancement.
A third of the storage assets under construction are by new market entrants, which signifies the growing popularity of self-storage as an asset class. The majority are in areas with limited competition, though established operators are willing to pay a premium for sites with strong demographic and socio-economic profiles.
Market Awareness
Product and brand awareness as well as differentiation are among the greatest challenges faced by Australasian operators today. The most significant inhibitor to growth is awareness of the benefits of self-storage. The industry has yet to succeed in mass marketing, so awareness is still low—well below the levels seen in Canada, the United Kingdom and the United States—with many Australians and New Zealanders having never heard of or used the product before.
The major operators are working to educate the market using a range of channels including television, radio, digital advertising and content marketing. Social media is beginning to gain momentum as an awareness-building platform.
NSR has been at the forefront of these efforts, pursuing a sports- and community-sponsorship strategy with the goal of creating top-of-mind awareness for the both self-storage industry in general and its specific brand/product. This plan, which encompasses major games of football, cricket, netball and basketball, generates awareness on a local level, where the teams are actively engaged in their communities, and on a national level, where major games are broadcast on TV and online. This year, the NSR brand will have been seen by more than 70 million people across Australia and New Zealand.
Self-storage has traditionally been an offline industry in Australasia, with many operators slow to embrace the online environment. The challenge is to market the industry’s features and benefits, assist consumers with spatial awareness, and provide confidence to rent online. The pace of change in digital environments presents several opportunities, of which the standout is the ability for operators to cost-effectively build awareness and improve the customer experience.
As demand drivers continue to strengthen, the sector is becoming more established and product awareness will continue to grow. These are all signs of an industry full of potential.
Makala Ffrench Castelli is the general marketing and corporate manager for National Storage REIT (NSR). She has more than 12 years of experience in corporate communications, investor relations and marketing communications. She oversees NSR’ retail marketing, business innovation and corporate affairs. NSR is the first independent, internally managed and fully integrated owner and operator of self-storage centers to be listed on the Australian Securities Exchange. For more information, visit www.nationalstorageinvest.com.au.
