Self-storage facilities, or “Do-It-Yourself” (DIY) storage spaces are emerging as alternative solutions for businesses looking to scale space usage according to their needs, and correspondingly, optimise operational costs. In the face of an increasingly challenging economic climate, the solutions-based concept has grown into an avenue for business owners to exercise fiscal prudence with efficacy.
In a survey of 207 personal and business users by Knight Frank and Lock+Store, nearly half of business storage users cite cost as a key driver for turning to self-storage facilities. This is followed by 37% of users occupying self-storage spaces due to the nature of their business – start-ups, home offices and e-tailers, where the evolving dynamics of businesses has afforded them operational agility without necessary conformity to a fixed office space (see Exhibit 7).
The self-storage model has also introduced the accessibility of on-demand space scaling in accordance to a business’ needs, accommodating upturns in usage during peak festive periods and reductions in space requirements with ease. Without the strain of static, long-term tenancy agreements, the flexible setup further encourages cost optimisation and operational elasticity.
Users are now also better protected by operators registered under the Self Storage Association Asia (SSAA), a seven-member coalition of owners, managers, and suppliers focused on growing and supporting the industry though education, advocacy and awareness. While strict adherence is implied only for members, SSAA hopes to set the bar for good industry practices and standards that include offering storage insurance for users, compulsory insurance requirements for facility operators, fire safety implements and security and access system safeguards.
With Singapore’s e-commerce market to total retail share projected to grow by 4.6% from 2015 to 2025 in an e-conomy SEA study conducted by Google and Temasek, there is room for growth for the self-storage space industry. Over the past five years, the number of self-storage operators has increased by more than threefold, from an estimated eight operators to about 27 self-storage operators with more than 80 facilities in Singapore, currently.
Helen Ng, Chairman, SSAA and Chief Executive Officer, Lock+Store says, “The digital push in Singapore and dismal brick-and-mortar retail scene has led to an increase in demand for self-storage among e-commerce business owners and SMEs with a strong online business presence. New self-storage operators with diverse offerings have emerged in recent years to meet this demand. We encourage new operators to seek accreditation with the SSAA. This will help uplift industry standards and instil greater confidence amongst self-storage users.
This is further evidenced by findings from a survey by Ipsos Business Consulting – the average occupancy of island-wide self-storage facilities in Singapore stood at 74% in 2015, higher than the 71% average occupancy across six Asian countries4. This is regardless of Singapore’s high gross floor area of self-storage space at 0.425 sq ft per capita, which is slightly behind Hong Kong, at 0.651 sq ft per capita.
In estimates by the 2013 Singapore Population White Paper, Singapore’s population is also projected by to swell from the current population size of 5.6 million to up to 6.9 million by 2030, reducing the GFA of self-storage space per capita projection to a potential low of 0.339 sq ft of self-storage space per capita. The projected drop in available space for consumer and business use paves the way for self-storage facilities to establish their presence in future growth areas, such as the regional hubs of Woodlands, Paya Lebar and the upcoming second CBD, Jurong Lake District (see Exhibit 11).
Opportunities also abound for industrialists looking to reposition or restructure their warehousing assets to the self-storage concept, enabling higher spatial and tenure flexibility, and infinitely expanding their potential occupier clientele.
Tan Boon Leong, Executive Director and Head of Industrial, Knight Frank Singapore comments, "The cost of converting a typical industrial space to a self-storage facility is relatively inexpensive, standing at less than $100 psf with lesser building alterations compared to other type of uses. Owners also have the flexibility of converting only a certain portion of their building for self-storage uses.
“Such ease of entry into the self-storage business has given rise to an increase in enquiries from vendors seeking to convert their industrial space, whether fully or partially.”
With more new entrants expected to join the bandwagon as the self-storage industry grows, the increased competition is set to benefit consumers – better rates, packages, incentives and the availability of added-services. For instance, Lock + Store also provides onsite postal services, pop stations and box shops to enhance the convenience of its storage users, especially for those in the online business.
Alice Tan, Director and Head of Consultancy & Research, Knight Frank, says, “The rising trend of shrinking living spaces amid elevated property prices in land scarce Singapore is a chief demand driver for self-storage space. The market share of business users is also set to grow going forward with the rise of entrepreneurship and start-up culture, where operational flexibility and cost efficiency are paramount factors and self-storage appeals as an alternative storage solution to better manage costs for small businesses.”