Thailand’s MY STORAGE: A Look at the Development Challenges for Phuket’s First Self-Storage Facility
|Copyright 2014 by Virgo Publishing.|
|Posted on: 12/05/2010|
By Amy Fuhlman
In October, StoreGuard Co. Ltd. opened a MY STORAGE facility in the Jungceylon Shopping Center of Patong, Phuket, Thailand. Nestled in a mixed-use development, it’s the country’s first state-of-the-art self-storage. I recently spoke with company owners Sukanda Chiaranussati and Robert Akerblom about the challenges of renovating an existing building, their biggest hurdles to developing in Phuket, and whether they plan to do it all over again.
Tell me about the birth of MY STORAGE.
As operators of a real estate company in Phuket, we noticed a lack of commercial services available such as self-storage for property developers, suppliers, buyers and sellers, and temporary residents after years of construction focused mainly on hospitality and residential developments. StoreGuard Co. Ltd Thailand was founded with the intent to develop, own, manage and offer turnkey self-storage solutions. With facilities under our own brand, MY STORAGE, we aim at becoming a national leader in self-storage services and products.
Thailand is a green-field market with no proper data for high-quality, premium-priced self-storage, so our research was based on existing regional facilities in Singapore, Hong Kong and general trends in the West.
MY STORAGE is a conversion rather than a new build. What factors made you decide to convert an existing building over new construction?
For a first flagship facility, we needed a location in a major metropolitan area, preferably close to retail and high traffic. Being already established in Phuket and with an existing available warehouse at Jungceylon Shopping Center in Patong—the largest mall in Southern Thailand with 300 commercial tenants—we thought we had found a suitable location.
Built with an internal ceiling height of 9 meters and a shape following land boundaries, the space was far from square or rectangular, which presented challenges when trying to achieve maximum square footage. A newly built facility would have been our preference, but with high land prices, local building restrictions, zoning and few available plots of suitable size, we decided on a long lease option.
Patong is Phuket’s major hub, with strong growth expected for years to come in spite of the current world economy. We discovered storage facilities in mixed-used development typically have a higher success rate, so we decided it was a good fit.
What were the costs involved?
Construction costs are, strangely enough, higher here than in the West due to ineffective construction methods, lack of proper building material and long lead times. A new build would be best if selecting a prefab-type warehouse from an international brand produced in Thailand, such as Blue Scope Steel, which we may try for our next facility.
Other costs, of course, include partitioning systems, management software, ancillary products, etc. All of these needed to be imported, making the entry barrier even larger.
Tell us about the layout of the facility.
The facility has three floors of 800 square meters, each with a ceiling height of 2.6 meters. The two lower floors have been fitted together, with three larger units on the third floor. Plans are to design the final layout for the third floor after reaching 60 percent to 70 percent occupancy on the lower floors to determine a suitable unit mix.
With Phuket being a transient holiday destination, the average unit size is 5.10 square meters. We have a few smaller units up to 2.25 square meters; a wide range to 4.5 square meters; units between 6 and 9 square meters; internal larger units up to 15 square meters; and 20- to 25-square-meter external drive-up units with 24-hour access.
Layouts are projected between the floors, giving corridors identical location. Units along the outer wall have an irregular shape, but are apart from the rectangular.
What were your biggest struggles with this project?
Mainly seeing the project through in Thailand with no data to fall back on or local suppliers, so all had to be sourced abroad including the partition-installation team. In general, this meant long lead times, delays in shipping and customs, and costs higher than if we were to develop in the West.
Another thing was the availability of suitable buildings. In the West, there’s an abundance of affordable, suitable properties ranging from malls and factories to warehouses that can be easily converted. In Thailand, there are very few properties like this, so new builds or major restorations are needed to develop a quality self-storage facility.
Construction in Thailand is also very labor-intensive and manual, so delays are common in receiving materials and making sure work progresses. Being a tropical location rain can also hold up construction, sometimes for a week, and effectively stop all transports from Bangkok, which is the main source of construction material.
With this being our first self-storage facility, one thing we didn’t fully comprehend until the partitioning started to go up was that cutting around beams was a time-consuming and ineffective task. If we had been advised to avoid a system that reached the beams and gone with a wire-mesh ceiling, some frustration from the installation team could have been avoided, and we would’ve cut labor costs by 25 percent.
Advice on climate control might have come in handy, too. We find that some customers ask for climate-controlled units because of the tropical location. For our next development, we will take that into account.
Other obstacles include producing legal documents, such as bilingual rental agreements and a bilingual website, finding an insurance company and establishing online bank payments.
Ultimately you chose a mixture of roll-up doors and swing doors in all white. Are you pleased with the mix?
There were a few reasons behind choosing an all-white system. First, we prefer flat and not corrugated swing doors, and they are only available in white from our supplier. For a uniform look, we picked white doors. Also, not being sure how we would be received by the market and for future exit strategy, we chose white in case another operator bought us. Then they could easily adapt with minor costs and not be forced to change all the doors.
White is also easier to touch up than some darker colors and not as visually sensitive to minor dents. Pricewise it also made sense to go with white. Feedback from tenants shows the facility looks sophisticated, premium, spacious, appealing, clean and bright.
What has been the response for the first self-storage facility in Phuket?
It’s a relatively new type of service in Thailand that was previously executed on a minor scale in Bangkok; it hasn’t been executed at our level of quality or with intent to establish additional facilities. It may take longer to reach stabilization than in a more mature market. Thai nationals have not completely grasped the concept of self-storage yet because they were previously exposed to either storing their stuff in an open warehouse or renting a shop house or an apartment for their goods. This means our sales and marketing have to be in a more informative and educational tone than in other countries.
Is there another self-storage project in your future?
We are investigating other sites in Phuket and Bangkok. In Bangkok, it will take careful consideration for the location, how we want our brand to be perceived and our target groups.
With the intent to act as a turnkey provider, we plan to attend industry tradeshows where we would represent the brands used in development. Given time, that may result in facilities developed for parties interested in entering the Thai self-storage market.
Amy Fuhlman is director of marketing for Janus International, where she manages the marketing communications programs for Janus as well as Janus International Rolling Steel Division and Gliderol Self Storage Solutions in the United Kingdom. Headquartered in Temple, Ga., Janus is a manufacturer of commercial and industrial doors and building components for self-storage and an array of other industries. For more information, visit www.janusintl.com .