By Nancy Torres
Over the last 15 years, the self-storage business has found a stronghold in Latin America. With a US $4.8 trillion economy, 600 million citizens and a growing middle class, the area has become one of the most dynamic growth regions of the world, thriving with commercial opportunities for local and foreign businesses looking to increase revenue.
Latin America has demonstrated the robustness of its economic resurgence, as nine countries are now top-tier emerging markets, surpassing Asia. Growth leaders are budding in the Andean Region, and it’s expected that Chile, Colombia and Peru will contend for the highest growth rate in Latin America in 2012.
Drivers of Self-Storage Growth
The Republic of Panama is the country with the highest self-storage growth. What’s driving it? The country’s strong economy, Venezuela expatriates moving to Panama City, logistics companies taking advantage of the Panama Canal, and a tremendous growth of small and mid-sized businesses.
In Chile, while some of the Panama driving factors do apply, the major driver is cultural changes: more divorces and a dynamic global workforce. In addition, self-storage is not a foreign concept anymore, and people are demanding better services.
In Colombia, the high cost of office space is enticing businesses to use self-storage to store inventory, goods and records, therefore maximizing office space.
A common denominator for growth in these countries is new construction, which is significantly more expensive. Residences are smaller than in previous decades. People can no longer afford an extra room just for storage.
Development and Construction
Self-storage development is primarily seen in major cities or on the outskirts. Due to the elevated cost of land, self-storage investors must build up. Multi-story buildings constitute 75 percent of all new construction.
Panama proudly claims the tallest storage building in Latin America. MegaStorage has 11 floors, 10 of which are climate-controlled. The first floor is used for offices and commercial space, and the building also has a basement for parking and non-climate-controlled units.
In Brazil, Chile and Uruguay, there’s a tendency for developers to buy old warehouses with the required height of 6 meters or more to build a mezzanine. This system complies with local earthquake regulations and allows buildings to be constructed quickly with significantly lower construction costs and increased overall building efficiency. This is seen primarily in areas where there’s no land left for new development.