The Japanese Self-Storage Industry: An Overview, Including a Comparison to the U.S. Market

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Finally, storage-rental rates are simply much higher in Japan, due in part to the fact that real estate in general is more expensive, compounded by the fact that storage facilities tend to be located in more densely populated urban areas in Japan. Monthly rental rates in Japan average approximately $6 per square foot, which is four to six times average U.S. rates. It’s simply more difficult for consumers to afford a 100-square-foot storage unit in Japan. Simply put, Japanese consumers choose smaller storage units for the same reasons they choose smaller living areas.

Business Models

The top three Japanese self-storage operators, comprising nearly 50 percent of the market, each pursue different business models. Quraz generally pursues a conversion model whereby it purchases under utilized or misplaced office properties and converts them to self-storage facilities. This is the most similar to models in other parts of the world, including the United States, whereby the operator also owns the assets.

Arealink’s model is generally to lease single or multiple floors in under utilized office buildings, install storage units, and sublet the space to end users. This leasing model is the predominant storage business model in Japan, due in part to the relatively high price and low availability of real estate in urban areas.

Reise generally pursues a third model whereby landowners contract with the company to install a two-floor self-storage facility, with Reise managing the facility on behalf of the owner. This model might be similar to the third-party management services offered by some of the larger U.S. operators. Approximately 25 percent of storage capacity in Japan is owned by the operator, 50 percent is leased by the operator, and 25 percent is managed by the operator.

Indoor vs. Container Storage

Excluded from the above Japanese self-storage market statistics is outdoor, container storage, which operates using something similar to a marine or shipping container. Several operators, including Arealink and Kase, offer container storage to businesses and consumers who do not require the safety and security of an indoor facility.

Containers are placed on vacant, generally suburban land. The storage operator either rents the vacant land from the landowner and sublets the containers, or he manages the containers on behalf of the landowner who owns them.

As of the third quarter of 2010, there were approximately 2,700 container facilities and 92,000 storage containers in Japan, owned or managed by approximately 110 operators (some of which also operate indoor storage facilities). The gross potential revenue of these containers amounts to approximately $190 million, or 70 percent of the indoor storage market.

Over the past several years, the growth in container-storage capacity has appeared to slow significantly, likely due likely to two reasons: a wider awareness of the benefits of indoor self-storage, and the fact that containers have come under increasing scrutiny as often being noncompliant with various building codes. Additionally, there is generally a poor consumer perception about the safety and quality of container sites. Many indoor self-storage operators (myself included) believe container sites harm the perception of self-storage in Japan.

The self-storage industry in Japan is growing and is, in many ways, similar to the U.S. market. Perhaps Japanese operators will someday enjoy the same level of success enjoyed by their U.S. counterparts. They share many of the same challenges, and face an equally bright future.

Steve Spohn is the president of Quraz, Japan’s largest owner and operator of self-storage facilities. Spohn has been living and working in Tokyo for nearly four years. He can be contacted at sspohn@quraz.com .


Sources
(In alphabetical order)

  • 2003 Housing and Land Survey, Japan Ministry of Internal Affairs and Communications
  • CSSA.ca [Canada Self Storage Association]
  • FEDESSA.org [Federation of European Self Storage Associations]
  • Japan Self Storage Association
  • Quraz 2010 Japanese Self-Storage Supply Survey
  • SelfStorage.org [Self Storage Association, U.S. National]
  • SelfStorage.com.au [Self Storage Association of Australasia]
  • SSAUK.com [Self Storage Association of the United Kingdom]
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