International self-storage development is surging as major population centers continue to embrace the product and institutional funding looks for scalable development partners. Across the globe, hot spots are emerging, and professionally managed platforms are looking to expand. In addition, increasingly good industry data is becoming available, and better and more accurate information can be generated on these relatively young markets.
Following is an overview of global self-storage trends. I’ll also discuss changes in industry awareness some of the major transactions leading market expansion.
Following Industry Trends
I’ve worked in the international self-storage market since 2004. In that time, I’ve witnessed many cycles and trends. Though there’s more data available, when it comes to analyzing it, I can’t advise enough caution.
For example, at one point, the Brazilian self-storage industry grew 100 percent in a short six- to seven-year period; however, that amounted to only an additional 100 facilities. Today, that growth is continuing at a fast pace of 25 to 30 new properties a year. Here’s another example: While year-over-year growth estimates in Mainland China for 2015-2016 show a 52 percent increase, that may be only 75 additional facilities. However, the market appears to be increasing at a faster pace each year.
Though international development projections are low compared to the 600 to 1,200 new facilities projected to open in the U.S. in the next few years, what stands out is the overall potential of these emerging markets. For example, it’s estimated there are 550 to 600 storage facilities in all Latin America, which is roughly the same number of facilities in the Atlanta self-storage market. However, the total population in Latin America is more than 647 million compared to Atlanta’s 5.49 million.
This type of potential is consistent in almost all markets around the world. It’s generally understood that self-storage demand metrics are different outside the U.S.; however, even if you extrapolate generally accepted analytics (i.e., a target audience of 20 percent of the population and an equilibrium of only 2 square feet per person), the capacity is still huge.
The metrics also change as industry awareness increases. For example, Mexico now has had a robust development cycle. The estimates are that the country’s target audience for storage is now 30 percent, with a demand equilibrium of 3 square feet per person.
Spreading the Word
One of the things that is clearly helping to spread industry awareness and spur development is the rising occurrence of international self-storage events. For example:
- In October, the Federation of European Self-Storage Associations will host its annual tradeshow, this year in Berlin. Last year’s record-setting event in Barcelona, Spain, clearly reflects the growing interest in this segment.
- In May 2018, the Self-Storage Association of Asia will host its fifth annual conference, in Bangkok.
- The third annual LanAm Expo, designed for the Latin American market, will be held at the end of April in Miami.
- The association for the Australia and New Zealand market alternates each year between hosting an owner’s summit and a tradeshow.
Another key factor is industry reporting. For example, JLL Capital Markets compiles and distributes an extensive report focusing on the industry throughout Europe. In Asia, Ipsos Business Consulting surveys and produced statistics on that market. Colliers International has begun gathering and presenting data for Latin America.
The reports show consumer awareness is growing, and global investors see huge growth potential. However, there are still many challenges. For example, government regulatory issues persist. There’s still a basic lack of awareness of just what our industry is and how local laws should be applied. So, while awareness is rising, much work still needs to be done.
Watching Some Major Players
Though there’s a willingness of major investment firms to partner on self-storage projects, a shortage of qualified platforms hampers expansion. Several transactions over the past few years exemplify this need. Here are just a few recent transactions:
- Goldman Sachs invested almost $200 million in MetroFit’s expansion in Brazil.
- Fremont Reality Capital purchased Bluespace in Spain and made a major investment in MyPlace Self Storage in Germany.
- Calzada Capital Partners LLC acquired Aki KB Minibodegas in Chile.
- M3 Capital Partners acquired Quraz in Japan.
- Pátria Investimentos Ltda, the Brazilian office of The Blackstone Group, merged its Kipit brand with GuardeAqui in Brazil.
Global self-storage growth, though statistically still occurring on a relatively small scale, perhaps offers the greatest development opportunities. As awareness of the product continues to flourish, demand from consumers and businesses will increase. When developers and operators build quality, investment-grade, well-managed facilities, investment funding and rapid expansion follows. Expansion feeds the cycle of awareness, and metrics in these markets will multiply.
David Blum owns and operates Better Management Systems LLC, a consulting practice he launched in 2003 to assist self-storage professionals worldwide with issues of development and management. He’s worked in Europe, Greece and Israel, and currently has clients in Mexico, South America and the United States. Since entering the industry in 1996, he’s worked as a district manager for Storage USA and vice president of operation for Budget Mini-Storage in South Florida. He helped co-found the Florida Self-Storage Association in 1998 and is a frequent contributor to industry publications. He can be reached at 954.255.9500 or [email protected].