Self-storage firms stand out in the growing industry with added services and amenities

In Singapore, StorHub has introduced online booking for storage spaces of various sizes.

With a yield of about 6.6%, the self-storage industry has set itself as an attractive investment opportunity, enticing more players to the market. To carve a niche in this expanding sector, experts emphasise the importance of providing value-added services and amenities within their facilities.

These value-added services can include packing supplies for purchase, complimentary usage of trolleys, and the option to utilise third-party moving services, said Peter Guevarra, Director of Research Consultancy for Asia Pacific at global real estate firm JLL.

On types of amenities that self-storage players can offer, Guevarra suggested meeting rooms, dedicated workspaces, pantry areas, and communal breakout spaces to packing stations and even bookable photography and live-streaming studios.

Industry player StorHub has introduced an online portal as a way to differentiate itself from other self storage businesses in Singapore.

“A lot of people have gotten more used to buying things online. So what helps us stand out above our competition in Singapore is that we’ve introduced, just recently, our online portal where you can book storage online,” Luigi La Tona, Group Director of Operations of StorHub, told Singapore Business Review.

Flexibility

Apart from offering an online booking option, StorHub also captures customers by offering 24/7 storage access and flexibility from storage terms to the sizes of their spaces.

La Tona said some of their customers want to rent storage spaces in central locations like Toa Payoh and Kallang, but cannot necessarily afford the price for the particular size they want as these places tend to have a higher price point.

But since StorHub’s storage units are up to 3.5 metres high, La Tona said they can offer smaller units in central locations which still fit the needs of their customers.

“You can take advantage of the high vertical spaces; you can stack your boxes. You can get into our most central properties for great value if you just organise the storage a bit more,” La Tona said.

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La Tona shared that StorHub also has spaces designed for specific customers like, for example, wine collectors. It has a wine facility under the brand, Winebanc.

At present, it operates three Winebanc facilities located in Delta House, Toa Payoh, and Kallang. There are over 500 wine cellars and lockers across all three Winebanc facilities in Singapore. Over 95% of the Winebanc units are filled.

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Apart from wine storage, there’s StorHub Lifestyle which offers a premium and secure self-storage space equipped with a digital locking system designed with passionate small business owners, collectors and avid hobbyists in mind.

“It has greater lighting and a better feel. It’s got a communal lounge in there and we also have a smart entry system as well. StorHub Lifestyle offers a podcast room where people can do live streaming. That’s what Lifestyle was designed for, for those people who focus on building their collections and growing their small businesses,” La Tona said.

Guevarra underscored that offering different unit types, including non-air-conditioned units and air-conditioned units for specialised needs like wine storage, is important to have as a player in the self-storage industry in Singapore.

Units must likewise be available in various sizes and offered at different monthly rates to accommodate different storage needs and budgets, he said.

In StorHub, a 60-square-foot space will cost around $320 (US $236) per month. The smallest space StorHub rents out is four square feet.

Knowing your customer

When entering the self-storage industry, Guevarra said entrants or investors also need to evaluate potential locations.

“The majority of the self-storage facilities in Singapore are concentrated in the Central Planning Region. These self-storage facilities are strategically placed near residential areas and businesses, with easy customer access and are close to public transportation options,” he said.

A testament to this is StorHub’s customer base. According to La Tona, nearly 70% of their customers live within five kilometres of their 18 facilities in Singapore. Most of StorHub’s customers are in their 30s, he added.

La Tona said they also have business customers like restaurants, retailers who sell festive items, players in the logistics industry, as well as businesses which deal with documents.

In terms of size, La Tona said spaces around 50 sq ft to 70 sq ft are popular amongst their customers.

Competition risk

With new entrants in the market, Guevarra warned investors that occupancy rates and rental prices of self-storage units may be affected.

“It is essential to assess the local market competition and differentiate the offering through location, amenities, pricing, and customer service. Additionally, long-term lease agreements, effective marketing strategies, and maintaining excellent customer relationships can help in attracting and retaining tenants,” Guevarra said.

Having a diverse customer base and offering flexible rental options can also help players maintain occupancy levels during market fluctuations, said the JLL expert.

Whilst there is a possibility for demand for self-storage spaces to fluctuate, Guevarra believes it would be stable “in the near-term” due to factors such as continuation of hybrid work arrangements, home-based learning, the adoption of new hobbies, and the growth of online retailing.

“Alongside these factors, traditional drivers like small home sizes, increasing affluence, and the recognition of self-storage as a flexible and cost-effective storage solution will contribute to the sustained demand for self-storage,” Guevara said.

From 2020 to 2022, self-storage services saw strong demand, pushing occupancy rates and rents higher.

Data from JLL showed that occupancy rate increased from 67% in 2020 to 81% in 2022. Average rents also rose by about 10% during the same period.