Beat the space crunch with self-storage

Published 28 February 2011
My Paper
By Esther Au Yong

POPULAR in the last few years in Singapore, self-storage facilities have changed the way business owners here store their inventories.

Beat the space crunch with self-storageAnd as the trend catches on, business for self-storage providers is booming.

Basically, a self-storage facility is a property that is sub-divided into self-storage spaces, which are then rented out to tenants, usually on a monthly basis.

Typical features of a good self-storage facility include 24-hour access to the storage units, a high level of security – with the use of CCTV cameras and keycard access – as well as a flexible commitment schedule and contract period.

HOME-GROWN PLAYERS

In Singapore, StorHub is one of the pioneers in the industry.

The company, launched in 2003, is a joint venture between CapitaLand and Hersing Corporation. It now has five storage facilities, with storage units of between 8 sq ft (0.74 sq m) and 1,300 sq ft.

StorHub entered the market after the partners saw potential growth in the self-storage business in Singapore, which was at a nascent stage then.

Said Mr Vincent Lee, StorHub’s vice-president of new business: “With the rising cost of business space, self-storage helps business owners optimise cost by providing them with the option of renting a space that meets their size and tenure requirements, instead of being tied down by long and cumbersome leases.

“In addition, StorHub provides ease of transfer between the different sizes of storage space, depending on business needs.

“Self-storage also provides a temporary storage solution during an office or home renovation or relocation.”

StorHub has seen its customer base grow over tenfold since starting operations in 2003. Revenue jumped fourteenfold to $13.4 million in the same period.

Gradually, more players entered the market and some even started to provide customised storage solutions to corporate customers.

An example would be Extra Space, a company that was launched in 2007. It offers air-conditioned storage areas, which are kept at a constant temperature of between 23 deg C and 25 deg C.

“We also offer wine-storage facilities at our Boon Keng Road and Eunos Link facilities. Our Marymount Road location will also have this offering soon,” said Extra Space’s chief executive, Mr Michael Hagbeck.

“The wine-storage areas are kept at a temperature of 13 deg C and a constant humidity level of between 65 per cent and 75 per cent.”

He added: “Besides this, we also have a wine-tasting room, which has been designed as a cosy private lounge with comfortable chairs and tables, for customers who want to share their wines with family and friends.”

Extra Space currently has five self-storage facilities here – the other two are in IMM Building and West Coast – with plans to open three more by 2013.

On average, about 3,000 new clients sign up with Extra Space each year, with business customers making up about 20 per cent of the clientele.

CAPITALISING ON STRENGTHS

Then, there are providers who are capitalising on their strengths, like S3 by Singapore Post.

Besides being Singapore’s public postal licensee, the company is also a provider of consumer services ranging from mail and logistics to retail solutions here and in about 10 countries in the Asia-Pacific region.

Said Mr Woo Keng Leong, SingPost’s executive vice-president for mail: “Leveraging on our core strength in logistics, we introduced S3 , a one-stop integrated suite of services catering to the storage needs of individuals and small and medium-sized businesses in February 2009.

“We reconfigured our Ayer Rajah delivery base to include self-storage units, to better serve customers’ lifestyle needs and convenience.

“We provide a wide variety of short-term and long-term storage solutions, ranging from 9.7 sq ft lockers to 379 sq ft rooms, at competitive rates.”

One of the younger players in the market is Jumbo Locker – set up in July last year – whose strength includes its strategic location near Marymount MRT Station.

Said the company’s chief operating officer, Ms Geraldine Ng: “We see a potential growth opportunity in the self-storage business, given that the newly built developments in Singapore are smaller and owners have to turn to alternative storage space.

“There is also a limited number of self-storage facilities in a central location with good access, like what we have here.

The Marymount MRT Station is a mere two-minute walk away.

“We are also right smack at the junction of very densely populated residential areas like Braddell, Bishan, Thomson and Ang Mo Kio.”

NOT SATURATED

The industry players largely feel that the market for self-storage in Singapore still has plenty of room to grow.

Admittedly, there is still low awareness among corporate customers that self-storage is viable for businesses. But this is seen as an opportunity, rather than a disadvantage, by these providers.

According to Mr Jes Johansen, managing director of Steel Storage Asia, a self-storage components designer, manufacturer and project consultant, the total net lettable area for self-storage in Singapore is about 985,000 sq ft.

Compared to Hong Kong, where the net lettable area is about 1.51 million sq ft, there is still much room for growth in Singapore.

“The two places have great similarities in geographical and population size, wealth development and strategic location,” he said.

However, self-storage entrepreneurs must be mindful of modelling their offerings suitably, to meet the different needs of businesses and private consumers in Singapore, Mr Johansen added.

Going forward, self-storage companies in Singapore are optimistic about the industry, banking on rising property prices to help drive up their business.

Said Jumbo Locker’s Ms Ng: “Due to the escalating property prices in Singapore, many business owners are turning to smaller office spaces to reduce their overheads.

“They will then need to archive their documents and inventories in self-storage facilities.”

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About Jack Sheo

A licensed and proactive real estate professional, Jack goes beyond just sourcing and marketing real estate properties. Efficient and approachable, he makes the whole experience easy and stress-free.
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