History of Self Storage
Modern day Self Storage is believed to have started in Texas USA in the early 60’s, with rapid growth to the present date, there is now over 58,000 sites across the United States, 3,000 sites across Europe and around 3,450 throughout Australia and New Zealand.
The Australian Self Storage industry was born in the mid 70’s with the firsts sites in Western Sydney. It was not until the late 80’s that the industry saw substantial growth and today has become one of the country’s fastest growing sectors.
Why invest in Self Storage?
Although the costs of constructing your self storage facility may be high initially, with the average cost per square metre around $40 for a single story and $75 for a multi-story facility, the regular income stream from your tenants is what makes self storage such an attractive business opportunity.
Self Storage offers investors the opportunity to diversify their investments with relative safety and confidence. The Self Storage sector has proven to be one of the, if not the most, robust real estate segments over the past decade, confirming its attraction and resistance to economic downturn.
Self Storage brings some unique benefits that deliver a robust financial proposal and illustrate why Self Storage is a good diversification solution:
• Diverse renter base.
• Low dependency on single big renters.
• Rental rate adjustment frequency.
• Strong stabilisation characteristics.
• Low overhead costs, maintenance exposure and on going capex needs once a Self Storage facility is built.
• Relative resistance to recession.
• Low impact due to non paying tenants.
• Use properties that are not in high in demand.
Return on investment
In developing markets, Self Storage companies are typically producing double digit annual returns. With its robust stabilisation characteristic, good returns nearly always continue over the life of the investment. This is often why many Self Storage owners/investors stay with their investment over the long term despite attractive third-party offers.
Getting started in Self Storage
Before you jump into a new project, and invest in Self Storage, it is vital to research your market. Use demographics/market research companies (especially if they know the industry) to discover who customers are in the area. What’s the mean income? What daily traffic passes the property you want to develop? Is the area growing, and how fast?
Self Storage Business Plan
With the in-depth information you’ve gathered on Self Storage with market research, you can start writing your business plan. This is essential if you need a bank, an investor or another party to help finance your project. They need to see the potential of your business proposal in facts and figures; a business plan does that.
Choose the Right location
When you plan to build or purchase your Self Storage building, it becomes a substantial asset of your Self Storage business that appreciates over time; therefore – just like the real estate industry – location is vital. Even if you rent a property and convert it into Self Storage, location is equally important because most users of Self Storage are interested in easy access.
Getting started in Self Storage
Before you jump into a new project, and invest in Self Storage, it is vital to research your market. Use demographics/market research companies (especially if they know the industry) to discover who customers are in the area. What’s the mean income, the daily traffic passing the property you want to develop? Is the area growing, and how fast?