By Nancy Torres
This has been a busy year for the Latin American self-storage industry, which experienced significant growth, largely due to innovation. Facility development is no longer just about storage space and amenities; it's about being part of cutting-edge, mixed-use projects and being environmentally conscientious.
Unexpected Demand, Development Obstacles
Urbanism is well-known term in Latin America, relating to the fact that a considerable percentage of the population lives in metropolitan areas. Higher education, work opportunities and access to better health care are major drivers of this trend. For the past decade, this has been true in cities like Buenos Aires, Mexico City, Rio de Janeiro, Santiago and São Paulo. But in recent years, other cities have been experiencing the same phenomenon, such as Bogota, Guatemala City, Lima, Panama City and San Jose.
At the same time, residents who migrated to Europe or the United States looking for jobs are returning to their home countries due to the economic recession. It’s interesting to see government-sponsored programs like the one in Peru that helps expatriates move back to their homeland. This programs include tax credits, moving subsidies and other benefits.
This creates fertile ground for self-storage development but also challenges in finding a location that meets all the requirements at a reasonable cost. The price for land in these metro areas can run from $1,500 to $3,000 per square meter, which poses hurdles for investors. This growth wasn’t planned, therefore, the infrastructure is not at par to the development. Traffic is chaotic and utilities, including communications, are not reliable.
Micro-City Lifestyle Centers
Costa Rica is a good example of a new trend catching on rapidly in Latin America: micro-cities. These areas offer all the amenities of the big city but within a smaller community. Escazú, a neighborhood about 9 kilometers west of San José, is a great example of this type of real estate development.
The Avenida Escazú project is the best of its class. This “lifestyle center” aims to combine options for housing, work, entertainment, shopping and wellness all in one place. It offers retail, offices, lodging, residences, theaters, restaurants, medical services and, yes, even self-storage.
The executive team of Loq Storage Mini Bodegas, which operates in Avenida Escazú, decided to be part of this cutting-edge project from the beginning, negotiating a lease on the lower floor of the community parking garage. It was challenging, but the company was able to build a third-generation facility within its budget and in tune with the community's environmental efforts.