BT : Renting self-storage space a brisk business

Business Times - 15 Mar 2010

Renting self-storage space a brisk business

Customers get to store anything from furniture to company records on a monthly basis

By FELDA CHAY

(SINGAPORE) You know that something has got to give when you move into that shoebox-sized apartment that cannot hold all your beloved ornaments, books, paintings and shoes - or if it could, would require you to climb over hills of clutter just to get into bed.

But fret not, there's a solution. Just turn to companies that offer spaces for rent, where individuals and businesses can store items that they want or need to keep, but do not have the space at home or in the office to do so.

And judging from the brisk business that self-storage companies are doing, residents and firms here seem to be lapping up the concept - which first swept into Singapore in 2003.

At Storhub Self Storage, a pioneer of the local self-storage industry, revenue has shot up from $900,000 when it started in 2003, to $13.4 million in 2009 - a staggering 14-fold jump in seven years. Its net profit has also been steadily increasing. From a loss of $1.4 million when it started, it has bounced into the black, making a net profit of $2.4 million for 2009.

Another self storage company, Extra Space Self Storage, has seen its revenue and net profit quadruple since it opened in 2007, says its chief executive Michael Hagbeck.

Further proof that self-storage firms are doing solid business here: Since 2003, at least five firms boasting about 20 facilities offering storage spaces have sprung up, where one can store anything from furniture to personal collections of wine and company records.

Storhub, for one, has opened four other outlets in areas such as Toa Payoh, Kallang and Tampines since opening its first shop in Changi in 2003. Its director, Jack Chua, says that one more outlet in Tampines would be opened in the third quarter, offering about 1,500 units of space for rent.

Monthly rates range from $64 for its smallest space of eight sq ft to $3,382 for its biggest, 1,308 sq ft.

The booming business stems from the attractive package offered by these firms. They offer varying storage areas to suit the needs of clients (accompanied, of course, by varying costs), leasing contracts that can be as short as a month, security infrastructure such as having security guards that watch over all the storage units in one outlet, and access to units 24/7. Those that offer wine storage provide temperature and humidity-controlled space.

The advantage offered by such businesses is summed up nicely by Angus Miller, chief executive of Big Orange Self Storage Singapore, which entered the market three years ago. 'The beauty of self storage is that it is a month- to-month kind of thing. We offer the flexibility to grow with them or shrink with them.'

This, he says, offers players in the industry an edge over warehouse operators, which offer a fixed space area and longer leasing contracts that give clients less flexibility to swap between different unit sizes to suit their changing needs.

Such a concept is especially useful to enterprises that use the space to store their inventory of goods, says Mr Miller. Companies can choose to move between sizes as they sell their products and therefore need less storage space, or increase stocks and require a bigger store.

These storage spaces have also gained popularity among individuals. At Extra Space, 80 per cent of its clientele are individuals, while the remaining 20 per cent are businesses.

Says Mr Hagbeck: 'The individuals are primarily people who have valuable things (monetary as well as sentimental value) that they want to keep, but just don't have space for in their homes, or who want to declutter down to a more zen-like lifestyle.

'There are also people moving house or renovating who need temporary storage or Singaporeans moving overseas for a while and who have sold or rented their house.'

Extra Space's storage units have been used by individuals to keep anything from guitar, manga (comics) and wine collections, to items such as paper prayer money - which Mr Hagbeck says is commonly stored at its facilities. It has even built a storage unit specially for a customer who wanted to store a Harley Davidson.

Monthly rates range from $50 to $1,500, for space of 16 sq ft (the size of a closet but half the height) to 500 sq ft (the size of a studio apartment).

Similarly, Storhub's Mr Chua has seen many individuals who turn its spaces into homes for their personal collections. 'I've seen a store full of Hello Kitties,' says Mr Chua. Another client had rented 40 square foot of space to keep her shoes - turning the store into a makeshift walk-in closet for footwear. Sports cars, too, have found their way into such storage units, adds Mr Chua.

The wide variety of uses for self-storage spaces have led the industry here to continue powering ahead despite the economic downturn. Storhub, for one, saw its net profit for FY2009 top that of 2008, while Extra Space has seen revenue double in 2009 from 2008.

The booming business, says Mr Hagbeck, stems from a combination of reasons such as rising consumerism, scarcity of space resulting in the purchase of smaller homes and convenience.

'As people acquire more, they collect more stuff which, because they have spent good money on, are reluctant to part with.

'Boris Johnson, the mayor of London, likens self-storage users to the pyramid builders - wanting to preserve their belongings for the ages!'

With the tills ringing, it is no wonder then that many of these firms are subsidiaries of large firms that want a cut of the meaty business.

Storhub, for one, is under Hersing Corporation, which deals in real estate and property management. Another self-storage company, Lock+Store Self Storage, is a subsidiary of real estate firm Mapletree Investments. SingPost has also moved into the business with Self Storage Solutions, which was launched in February last year.

Time then, to move into the business of self storage - not only because of how lucrative the industry appears to be, but also because it allows you to save that much treasured collection that no family member adores - but you.

Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.