Popularity in Storage
As the self-storage concept gains popularity among consumers, more facilities are springing up across the island to take advantage of this demand.
With space constraints as well as the rising cost of home and office space a top concern of many consumers in Singapore, more and more are turning to self-storage to combat the challenge of managing the spaces they occupy.
Consumers look into the self-storage businesses as space solutions to declutter, organise and manage their treasured belongings into a cost-effective and secure storage alternative.
In this issue, we look into the self-storage industry to better understand the business concept, and its relevance to consumers.
Self-storage spaces are generally fully-enclosed, and sizes can vary according to particular needs. In Singapore, Colliers International estimates that the sizes to range from lockers of about nine sq ft up to large storage units of up to 530 sq ft — capable of housing massive business archives or the complete contents of a house.
Most storage spaces offer users the flexibility to occupy much larger spaces in the form of amalgamation units and double-deck storage units. Lease terms usually range from one month to a year, depending on the use and the facility. CapitaLand’s subsidiary, StorHub, offers storage periods starting from just two weeks.
The idea of self-storage is to allow users to lease a storage space and fully manage their stored items in a specialized facility. The concept is essentially a do-it-yourself style of storage management, wherein users can choose and control what, when, where, how and for how long they store their belongings, unlike with traditional warehouses.
Operators usually provide 24-hour access for all users / customers at their facilities through personalised means of entry, such as biometric fingerprint recognition, digital PIN and key cards, while ensuring security in the facility with basic security services such as CCTV cameras, and even security guards.
Drivers and demand
“Three key trends drive the growth of the self-storage industry in Singapore: rising affluence and consumerism, shrinking apartment sizes, and increased entrepreneurship,” said Lock+Store CEO Helen Ng. According to Colliers, “the search for additional or alternative storage space outside one’s home or office underscores the fundamental demand for self-storage space”.
However, apart from users who need space for personal and household items, or for business products and documents, niche user groups are also on the rise, and are boosting the demand for self-storage facilities.
One of them is the e-commerce sector (online stores and blog shops, for instance). In a report about self-storage spaces last year, Cushman & Wakefield said: “The rising e-commerce retail trade has also increased the need for flexible storage.” It also noted that e-commerce is an extremely popular trend in Singapore.
Moreover, as the local self-storage industry develops, it also evolves over time, resulting in the expansion of services operators offer to meet the changing needs of customers.
More than just storage
The self-storage industry has grown from offering just lockers and storage rooms. Nowadays, a greater variety of services is provided to cater to a wider range of users.
For example, some operators offer air-conditioned storage areas. These spaces are kept at a constant temperature of between 23°C and 25°C — ideal for them storage of antiques, paintings, equipment and musical instruments.
Some operators, like Lock+Store and Extra Space, offer wine storage cellars to cater to the specific requirements of wine dealers and collectors. Though they cater to a more niche market segment, these storage cellars are becoming increasingly popular.
In an interview with CommercialGuru, Ng said over 95 percent of the wine storage units at Lock+Store’s flagship facility in Chai Chee have already been taken up, and it plans to offer another wine storage space at their Tampines facility.
“There is a rising trend of both private and business storers keeping artisanal wines at our Chai Chee facility for their personal consumption, or distribution and retail purposes,” said Ng.
“Despite the keen competition and the entry of specialised wine storage providers in Singapore, the demand for climate-controlled storage outstrips supply. This has led us to dedicate a customised space for wine storage at our Tampines facility.”
Other operators provide features that complement their storage facilities, such as in-house serviced offices and courier services.
“Usually for SMEs, if they store with us long enough, they’d appreciate having a serviced office within the facility,” Ng said, noting that their Chai Chee and Tanjong Pagar branches offer these services. LHN Group, better known as a real estate management services group, recently entered the self-storage business with Work + Store. This storage business offers work and storage spaces that cater mostly to the e-commerce business.
“The Work + Store space offers a conducive environment with standard fittings (lighting, electrical points, air conditioning) for the businesses to satisfy their order fulfilment duties and store their goods all in the same unit.”
Meanwhile, Lock+Store offers on-site sale postal services such as SmartPacs and stamps. “SmartPac is a postage-paid postal service for delivery anywhere in Singapore, the next working day, for a fixed price,” said Lock+Store, adding that SmartPacs — which are boxes measuring 300mm (l) x 190mm (w) x 70mm (h) — convenient for e-commerce retailers
As the awareness and understanding of self-storage increases among consumers and corporations in Singapore, current operators are expanding, and new players are entering the market to take advantage of the demand that is expected to grow even further in the future.
While there are no official statistics on the self-storage business in Singapore, a recent report by PropertyGuru stated that there are 20 self-storage operators in the local market. StorHub is the largest in terms of size, with 11 facilities covering a gross floor area (GFA) of 1.4 million sq ft island-wide.
Asked if the rising competition poses a threat to their business, major players said the rise of new companies and the growth of other operators are forms of affirmation rather than intimidation.
“We welcome competition if it means better offers and more choices for customers. (The) competition also keeps us on our toes and motivates us to come up with more creative storage solutions to retain customers and attract new ones,” said StorHub General Manager Heng Tze Kiang, adding that the industry’s growth helps raise awareness of the benefits of self-storage business.
Work + Store concurred, saying that “healthy competition can help drive both new entrants and established players to go deeper into users’ needs, and innovate to provide them with a better experience (in self-storage)”.
Room for growth
Despite stiffer competition, analysts remain optimistic about the growth prospects of the self-storage industry in the city-state.
“It is like a hot potato — everybody wants a slice of it so there will be increased demand from both personal and corporate (users),” said Ng.
Although the local self-storage space model is still in its budding stage of development, with just over a decade’s presence in Singapore, the industry has evolved into a flexible, cost-effective and secure storage alternative for users, where the offerings are beyond those of conventional warehouse spaces. This means there is much room for growth for the sector.
According to Colliers International, greater disposable income will allow more individuals to afford personal expenditures like clothes, shoes, household items and collectables. “But with home sizes expected to remain small, individuals would need to turn to external storage space providers to meet their storage needs.”
“There will be opportunities for new investors or players to enter the market, and for existing players to grow their footprints. This will add more facilities in new locations, lead to more innovative product and service offerings, and ensure that the rents of the self-storage units are kept competitive — all for the benefit of the end user,” it added.
Article written by Nikki De Guzman, on Nov 27, 2015. View the original article on CommercialGuru here.