For any industry to remain strong, a core of dedicated individuals must be committed to its success. In June 1991, a group of pioneers launched the Self Storage Association of Australasia (SSAA) to lobby for important issues such as employment conditions, taxes and warehousing legislation, which had the potential to stifle self-storage growth. Nearly 15 years later, the association is a strong guiding force for a well-established industry in Australia and New Zealand.

In Australasia, self-storage has grown significantly since the early 90s. There are more than 500 SSAA members, representing almost 800 facilities, with another 60 provisional members and more than 50 service members. Membership grew by more than 100 last year alone. New facilities continue to open and existing facilities expand, increasing the presence of self-storage in the region.

Whos Who

Although the association is responsible for members across nearly 8 million square kilometers, the staff is remarkably small. Rennie Schafer has been executive officer since March 2004. He is supported by Claire Beattie, administrative officer, and Simone Hill, legal/special projects officer. The association board consists of members from each of the six regions, a service member and the past president. A permanent headquarters was established in Melbourne, Australia, in 2004.

Standards and Procedures

A number of initiatives have helped the association set the standard for local self-storage operators. One of the most notable is the Standard Self Storage Agreement and supporting Manual of Operation and Procedures. The agreement is used by nearly all storage businesses in the region and is an important legal document, given that the industry remains self-regulated.

While self-regulation means fewer legislative costs, it also means a lack of legal protection by statute, so the industry must be vigilant. The SSAA works at various government levels to minimize negative impact from changes in government policy. Rather than have legislators impose their rules, the association works closely with operators to ensure the development of appropriate codes of practice and standards. This gives operators great flexibility in their businesses and allows necessary changes to occur quickly, without the burden of parliamentary debate.

For example, the association recently developed a workplace-safety guideline that explains in detail how to keep a facility safe for employees and customers. It has quickly become the industry standard and is already recognized as a benchmark by regulatory authorities in the area. All SSAA members receive a copy of this booklet as well as a CD-ROM with the various documentation and measurement tools to help them adopt the system.

Delivering the Goods

Association members have access to numerous resources to help them manage their businesses, such as the standard storers agreement, workplace-safety manual, annual almanac and industry-service guide. The SSAA also has a number of group-buying programs for services such as electronic-funds transfer at point-of-sale and Yellow Pages advertising, which are particularly useful for smaller members that lack the purchasing power of larger operators.

SSAA staff is always on hand to answer general questions on all things self-storage, from industry trends to how to sell goods. A bimonthly magazine and monthly e-newsletter inform members of current news. Regular regional meetings allow members to discuss issues and listen to guest speakers.

The gala event for the Australasian industry is the associations annual convention and tradeshow, traditionally held at the end of September. This year, the event will be hosted in Auckland, New Zealand, Sept. 28-30. Continually receiving great attendance, this show provides a valuable source of information, networking and entertainment. The three days culminate in an awards dinner that recognizes industry achievers.

This year, the SSAA will launch the most comprehensive industry-based training offered to storage operators in Australasia. The first two components, legal and operational, will deal with many of the day-to-day issues facing facility managers and staff. It not only provides operators with the latest information, but allows networking with peers via practical exercises. Training in daily affairs helps association members prepare for the future.

Healthy Indicators

The Australasian industry as a whole is coming off a settled period in regard to economic return. Revenue rates were flat in 2003-2004, particularly in the Australian cites of Brisbane, Melbourne and Sydney. While there is still growth in the amount of storage space being let, growth in capacity has exceeded demand in many areas.

In some cases, this is a result of investors jumping on what they thought was a booming industry without conducting due diligence. Facilities were built on any available real estate without considering demographics, site exposure or the number of local competitors. Not surprisingly, this created oversupply in certain places. As the market grows, the surplus facilities are filling and the supply/demand mix is reaching equilibrium. But this kind of environment makes for strong competition, and discounting often occurs as a result.

The upside of oversupply is businesses are forced to focus on their marketing strategies, which increases the industrys profile and exposes its opportunities to more potential customers. Given that the Australasian industry is still young, there is a large untapped market without understanding of the self-storage product or what it provides.

Capacity in the Australian market has increased significantly. In the last two years, the amount of available storage in the countrys capital has increased roughly 20 percent, with a 30 percent-plus jump in Melbourne alone. While much of this growth resulted from new builds, numerous existing sites expanded, particularly in the suburban areas. This lowered the overall occupancy rate about 7 percent from the mid-90 percent range.

The New Zealand market is more buoyant than Australias, and supply has been better aligned with demand. This has resulted inretention of occupancy rates around 95 percent and a continuing increase in pricing. While there has been discounting in some areas, it is not as prevalent as in Australia.

Changes and Challenges

In response to changes in consumer need, the industry is targeting specialized markets. Wine storage is becoming increasingly popular, particularly in regions such as South Australia and the more affluent metropolitan areas. Many operators are converting existing units or building additional space with climate control to access this opportunity.

Commercial customers are also being actively pursued. Many operators are creating relationships with wholesalers and distributors, keeping stock on hand for their sales forces. Additional services such as use of an office or meeting rooms are becoming more common in storage facilities.

One of the most significant changes in the industry has been the increasing number of facilities traded. Up until a few years ago, hardly any self-storage businesses in Australasia had been sold. In the last couple of years, a number have come on the market. The most notable is the Millers chain, which sold to Homebush, New South Wales-based Kennards Self Storage, giving the company a total of 59 facilities in Australia and making it the largest single operator in the region.

Management groups are also becoming a significant part of the industry. Storage King is the early innovator in this area, with several other companies coming on board to offer the service in the last year.

While the industry has somewhat settled, its still new, and considerable growth is on the horizon. Occupancy rates of 85 percent to 90 percent and yields around 11 percent ensure a healthy profit and a good return on investment. More industry consolidation is likely, particularly as some of the smaller established businesses look at cashing up before the economy changes and interest rates rise.

The challenge for the industry is to manage self-storage supply and ensure the product retains its value. The SSAAs challenges are to keep the industry self-regulated during continued growth and increased recognition, and to maintain standards to ensure self-storage reaches its full development potential.

Rennie Schafer is the Self Storage Association of Australasias first full-time executive officer and has held the position since March 2004. Mr. Schafer, who holds an MBA, has a range of business qualifications and experiences and has been working with industry associations for more than six years. For more information, visit www.selfstorage.com.au.