The Rise of Self-Storage in the Republic of Macedonia

A Macedonian real estate firm took a gamble when it decided to transform a warehouse it owned in Skopje to self-storage. The author discusses the facility design, the local market, business growth and future plans.

By Dean Mandichevski

The original buildingUntil 1991, the Republic of Macedonia was part of Yugoslavia, which had a centrally planned economy. Back in those days, all companies were state-owned and there was no place for entrepreneurship. With the break-up of Yugoslavia and the transition to a market economy, a need for self-storage emerged.

Until 2010, all the storage space available for rent in Skopje, the capital, was bigger than 50 square meters. However, there was a growing demand for space smaller than 10 square meters from individual users and micro-businesses. Since our company was already in the warehouse-renting business, we decided to repurpose an existing warehouse and divide it into smaller units.

The Design

Before designing the space, we conducted online research and visited facilities in the United Kingdom and United Arab Emirates (UAE). We noticed the U.K. units were much like their U.S. counterparts—equipped with roll-up doors and available in different sizes. The facilities also offered extra services, such as a retail section with packing supplies. Some featured art and wine storage.

Facilities in the UAE, however, were much simpler. They typically offered just one size, and the units didn’t have roll-up doors but rather steel mesh for separation. Ultimately, we opted for the second design, as it was more cost-effective and got the job done.

Security is a huge selling point for us. As such, we offer a high level. The building and hallways are equipped with video cameras. Customers are required to bring their own lock.

The Market

About 70 percent of Macedonia’s population lives in individual houses, while the rest live in collective buildings. Many of these dwellings offer a small amount of basement storage. With this in mind, we knew it wasn’t going to be easy to introduce the self-storage concept to the general public. However, we also recognized there were many people who were either moving to another country, in between apartments or building a house, and they needed a place to store their belongings for a short period. We believed we had a target market.

Our customer base consists mainly of two types: individuals who store their extra items, be it for lack of space or because they’re in between moves, and micro-businesses that store documents, extra furniture and stock. We’ve also spotted a tendency among our business tenants to rent a second unit or to move to a bigger warehouse altogether. Fortunately, since our primary business is renting warehouse space, we’re still able to offer them what they need.

We started marketing our units, and the public responded well. Of course, some customers were wary at first. After an extensive explanation of our new offering, they were convinced the units and general service were of high quality, so there was no room for any doubt or distrust.

Growth

A year after we introduced the self-storage concept to our market, our occupancy reached 100 percent. We doubled the capacity of our property and are looking at the addition of even more units to fulfill the growing demand. We’ve been pleasantly surprised by the market’s response to this new idea. Occupancy continues to increase, so we can happily conclude that introducing self-storage to Macedonia was a wise move.

Storage units at Svoj Sklad in Skopje, MacedoniaAdding self-storage and diversifying our business has allowed us to gain a new customer base as well as increase our income and gain more awareness. We’re also looking at ways to bring in new revenue, such as selling packing supplies or offering truck rental. Unfortunately, Macedonians’ purchasing power is rather low, so anything we might introduce has little chance of becoming a profit stream.

We also thought about offering moving services to our tenants. However, since most Macedonians are of the do-it-yourself kind, we decided not to pursue it. The only amenities we currently offer in our self-storage business are the free use of trolleys and forklifts. Parking in our yard is also free to customers.

Value Add

We do follow self-storage trends, but because the Macedonian market is still in its infancy, we don’t think it’s the right time to introduce some of them. This includes things like art, mobile and wine storage; document digitalization and storage; and parcel acceptance or delivery. Should the market gain traction—and if customers demand value-added services—we’ll be more than happy to provide them.

Overall, we can safely say that entering the self-storage business was a fun ride. Even though we had previous experience with renting real estate office space or warehouses, this industry is a different beast altogether. Unlike dealing with corporate customers, storage tenants have different concerns we need to address to gain their trust. This will turn these relationships into a lasting partnership that’s beneficial to all parties.

Dean Mandichevski is the marketing manager for Svoj Sklad in Macedonia, which opened in 2011. The property is owned by GAL Dooel. Founded in 1993, the company owns and leases office, residential and warehouse space as well as brokers leases for third parties. For more information, visit www.svojsklad.mk.

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