By Steve Spohn
On a recent visit to a self-storage conference and tradeshow in Las Vegas, it was clear most participants knew little about Japan’s self-storage industry. That wasn’t necessarily a surprise. A total of zero U.S. storage operators are doing business in Japan. However, I was surprised at the degree of curiosity and interest whenever I was able to engage in conversation about the Japanese industry.
I also found it interesting that many U.S. operators are wrestling with some of the same issues facing Japanese operators:
- The general lack of awareness among consumers about the different grades of product
- The general lack of reliable industry statistics
- Rental-rate management and optimization
- The effectiveness of various advertising vehicles, including the increasing use of online media
- Leveraging technology to increase efficiency and, ultimately, profitability
Perhaps the markets are more similar than any of us realize. The following is an overview of self-storage in Japan and a comparison of the U.S. and Japanese markets.
Market Size, Penetration and Growth
In comparison to other self-storage markets in the world, Japan’s is significant as measured by revenue but relatively young and undeveloped as measured by saturation (see the accompanying table).
For the last decade, storage supply has been growing, and it continues to grow by roughly 10 percent per year, based on the 2010 Japanese self-storage supply survey conducted by operator Quraz as well as information published by other large self-storage players. Growth has generally been fueled by an improvement in the quality of storage facilities and an increased awareness of that better quality. Between the third quarter of 2008 and the third quarter of 2010, unit supply grew 19 percent. The top five competitors, identified accompany chart, represent 60 percent of the market.
In terms of industry lifecycle, it might be useful to compare the stage of the Japanese storage market in 2011 to that of the U.S. storage market in 1970. Specifically, saturation was less than 0.5 percent in the United States, maybe only slightly more than Japan at present day (0.2 percent). It remains to be seen if saturation in Japan will approach U.S. levels, although growth rates are similar to those of the United States 40 years ago.
The fundamental nature of the storage product and its use is, not surprisingly, quite similar between Japan and the United States, that being space, rentable on a month-to-month basis, to store personal property outside of the home or office. However, there are several product and business-model differences that are important in understanding the Japanese market.
Unit Sizes and Rates
The average storage-unit sizes in Japan and the United States are roughly 30 square feet and 150 square feet, respectively. In Japan, a very popular unit size is one to two tatami (a type of mat used as a flooring material in traditional Japanese-style rooms, measuring approximately 18 square feet) as compared to a 10-by-15 unit (150 square feet) in the United States.
There are three primary reasons for the difference in size. First, Americans are much heavier consumers than Japanese. They simply buy and have more and bigger “stuff.” Second, the average living area per household in Japan is just 1,020 square feet, based on information from the 2003 Housing and Land Survey by the Japan Ministry of Internal Affairs and Communications. In Tokyo, homes are much smaller, often only 300 to 500 square feet. Given the limited living space, consumers will often use a 20-square-foot self-storage space as an extra closet or extension of their homes.