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Aussie Self-Storage Market Expands Despite Obstacles to New Development

By Amy Campbell Comments

The Australian self-storage industry is well-established and still growing. Though a lack of funding provides obstacles to new development, some of the largest players continue to expand, and there are even new entrants to the market. One niche finding a foothold is the mobile-storage business, which is realizing accelerated growth.

Finance and Development

One of the biggest obstacles to continued growth in the Australian self-storage market is financing. “We don't have the range of lenders available to our operators that U.S. operators do, hence financing options are more limited,” says Dallas Dogger, CEO of Centreforce Technology Group, an Australian company specializing in self-storage software, websites and security. In addition, some banks still consider the industry “too risky” despite its established presence. As such, interest rates are higher for self-storage development projects than for other commercial real estate ventures.

However, the market has seen some signs of expansion. There are a number of new sites under construction in major cities, and a few new developers are entering the market. “Land remains the No. 1 cost, and combined with banks wanting essentially a 50/50 lend, new sites remain a challenge,” Dogger says.

Kennards Self Storage operates 74 facilities in Australia and New Zealand.An influx in development may come from APN Property Group, an Australia-based real estate fund manager that specializes in the Asia-Pacific market. The firm could be readying for new self-storage investment activity, according to an August report by “The Australian.” APN reportedly told investors it is in early talks with a specific company about the sector, and industry sources speculated it could be a "rival global player."

APN operates a $206 million AUD National Storage Property Trust that invests in 37 storage facilities leased to National Storage Property (NSP). In 2011, NSP created a joint venture with Chicago-based real estate investment management firm Heitman to purchase 20 properties for $175 million from APN Funds Management and the Investec Property Opportunity Fund.

Kennards Self Storage, one of Australia’s largest operators, continues to add to its portfolio, which consists of 74 locations in Australia and New Zealand. Earlier this summer, the company was granted a special-use zoning change that will enable it to build a new facility in the Kemblawarra Business Park.

Kennards also opened a facility in Klemzig last spring and recently converted an iconic Coca-Cola factory in North Sydney to self-storage. The conversion project, which opened in September, includes a large retail area, Wi-Fi access and customer-lounge spaces. It also accommodates vehicle storage.

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