By Dallas Dogger
Self-storage activity has been quiet in Australia, with occupancies in some cities stagnant, others in slight decline, and some micro-markets experiencing an increase in rentals. Local talk of the “two-speed economy” has some investors spooked, while there’s another view that a number of markets were overbuilt in the 2005-2006 boom times.
While the mining industry is selling commodities for record prices, mainly to China, retail businesses report slow if stagnant growth, and new residential housing starts—the precursor of the drive for self-storage—are at their lowest numbers in years. Local self-storage builders report little in the way of new construction, with some operators taking a consolidation approach to development, adding only new spaces needed in existing sites, and many reducing staff in the process.
A New Joint Venture
In September, Brisbane-based National Storage announced a new joint venture with global real estate investment management firm, Chicago-based Heitman. The joint venture acquired 20 freehold storage properties and businesses valued at more than AU$180 million. The transaction represents the single largest investment in the Australian storage industry.
The initial 20 acquisitions represent around 1 million square feet of storage space and 11,000 storage units. Nine properties were acquired from the APN Fund Management portfolio and another 11 were acquired from the Investec Property Opportunity Fund portfolio. The properties are located throughout Australia in Brisbane, the Gold Coast, Hobart, Melbourne, Perth, Sunshine Coast and Sydney. National Storage will handle the facility operations under its current branding and operational structure.
Indicating that he sees good potential for future acquisitions, Andrew Catsoulis, managing director of National Storage, says the company will target existing facilities in capital cities in which the company operates. “As the market leader in these areas, we will be looking to add critical mass to our current operating platform as well as add value to these existing operations. We currently operate 60 centers around Australia and believe a target of 100 centers under National Storage ownership within the next two to three years is an achievable number.”
The joint venture with Heitman brings “a partner with vision, confidence and global expertise in the storage industry that will help contribute value to our growing joint portfolio,” Catsoulis adds.
National Storage was established in December 2000 following the merger of Stowaway Self-Storage, National Mini Storage and Premier Self-Storage. Today the company owns and operates 60 facilities throughout Australia and employs more than 150 staff across its network. National has completed a revitalization of its technology systems, implementing a centralized customer contact center, VOIP phones across all facilities and a transition to Web-based software, allowing full-scale Web integration.