Self-Storage in Japan: Opportunities Exist in a Country Thirsty for Space

Tatsuya Saji Comments
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Differences From U.S. Self-Storage

Available land is limited in Japan. Most properties are leased. Some companies set up franchise systems to share a percent of profit with property owners.

Almost all Japanese trunk-room facilities are unmanned. There are no onsite managers or offices attached to the facility. Because sites are small, with fewer than 100 units, it’s not economically feasible to have offices with managers.

There are no computer-controlled access gates or high fences protecting outdoor facilities. Access to indoor trunk room requires a key to the main entrance as well as individual door locks. Renters can access units 24/7.

When tenants want to rent a unit, they visit the facility’s website or call to a reserve. They can visit a central office or regional offices for faster service. Each company can send a contract and other information by mail. Many companies require security deposits or automatic bank debit. It’s almost impossible to rent units the same day.

Most operators never deal with auctioning contents for unpaid or delinquent units. It’s costly and time-consuming to deal with delinquencies legally.
 
Tenant Profile

Arealink reports a good mix of residential and commercial customers, with an average ratio of 70 percent residential and 30 percent commercial. Some commercial customers, such as small contractors, prefer container-type units for easier access and better prices.

However, these units are often in undesirable areas and lack climate control. The typical items people store in trunk rooms include seasonal clothing, sporting goods, leisure items, books, collections, hobby items and furniture.

Today, self-storage in Japan is not considered an investment-grade asset. This will provide tremendous opportunity for early developers who invest to build a brand, platform and tremendous product that Japanese and institutional investors will soon view as a viable alternative to other commercial real estate assets in the country. 
It might take more time to gain recognition for self-storage in Japan, but it will surely gain at a steady pace.
 
Tatsuya Saji, president of Trade Winds International, has been consulting with real estate companies in the development of self-storage businesses in Japan since 2004.
For more information, call 81 798 54 9988; e-mail rsaji@trwinds.com.

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