Recently, the industry has seen an increase in conversions of industrial space. However, these are being poorly executed, with little attention paid to the location of the property and the overall safety, look and feel.
Consolidation and a New Player
In the early stages of market consolidation, I've seen multiple-site operators pursuing acquisition opportunities and developing superior third-generation facilities in desirable urban locations. A recent addition to the South Africa self-storage market is Stor-Age Self Storage, which builds big-box, third-generation facilities in high-profile locations.
The Stor-Age stores have traded well and attracted significant attention. Their operators strive to raise the profile and awareness of the self-storage product. Since its success in Cape Town, the company is rolling out new facilities in areas including Durban, Johannesburg and Pretoria.
Rental Rates and Future Development
Over the last few years, established operators who trade in quality locations have continued to raise rental rates to desired levels and maintain targeted occupancy levels. It has been tougher for operators in secondary nodes. Occupancy levels have generally been maintained, but at the expense of any meaningful rental-rate growth.
Looking forward, I predict a marked slowdown in the overall growth of new self-storage properties in the next few years. The number of quality facilities coming online will be consistent with prior years. It will be the emergence of two to three dominant players in the South Africa self-storage market that will have the keys to long-term success. Their success will be driven by the quality of their properties and the strength of the operators and the brands managing those portfolios.
Gavin Lucas is the founder and CEO of SASSI Self Storage Group in Cape Town, South Africa. The company has a portfolio of 20 facilities under the Stor-Age Self Storage brand name. For more information, visit www.saselfstorageinvestments.com .