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Demand Drives Self-Storage Evolution in South Africa

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Like many young industries, self-storage in South Africa faces obstacles. Fortunately, an increase in demand for the service is driving its evolution.

In 1998, my dad, Jimmy Visser, and I started participating in a lesser-known sport called freeride jet skiing in our hometown of Durban, South Africa. Little did I know when I just 12 years old that this sport would lead me to open a successful self-storage business one day.

By 2001, we were competing internationally, traveling to various competitions around the world, always finishing with one of us in first or second place. In 2005, we went to a competition in California. This is where we first learned about self-storage. The local sponsor with whom we stayed sent us to collect his motorhome from a storage facility. I was 16 years old and didn’t really think much of it. But my dad’s eyes lit up with the exciting possibilities of self-storage in Durban. He said, “James, we’re going home to do this. It’s brilliant!” To which I replied, “It’s absolutely the worst idea you have ever had, and will certainly never work in Durban.”

Once back in our city of Pinetown, my dad quickly moved to establish Lock Up Storage. I joined later to manage the day-to-day business. To my surprise, I was wrong. Self-storage was a booming business! To this day, it’s my game. We’re currently the largest owner-operated storage company in the KwaZulu-Natal province, with four facilities, including a newly opened location in the Cornubia Mall in Umhlanga. The following offers a glimpse of the industry in my country, including how it was impacted by the pandemic and what’s next for self-storage.

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An aerial view of Lock Up Storage in Pinetown, KwaZulu-Natal, South Africa

An Overview

Self-storage in South Africa started mostly with individual property developers who saw industry success in the United Kingdom and United States. By finding large, cheap parcels of land to build drive-up units, these developers generally developed and rented up in phases over a few years.

The industry then became dominated by two major players, real estate investment trust Stor-Age Property REIT Limited and XtraSpace Self Storage, each with locations countrywide. Both acquired, converted and built at a rapid rate to solidify the market. Although most provinces have multiple owner-operated facilities, the standout locations and markets are dominated by these two national brands. However, both are accommodating and helpful to owner-operated facilities within each province and assist greatly with standardizing and marketing the industry as a whole.

Pandemic and Lending Problems

The state of the self-storage industry in South Africa has been relatively stable since the COVID-19 pandemic began. Most facilities experienced an increase in demand as businesses needed space for stock that they couldn’t sell, and large sections of the population had to downsize their homes. However, the unstable economy did make most facility owners nervous about taking on expansion risks. Although occupation rates have been good countrywide, there have been few new developments.

The major problems that we face to facility growth is acquiring financing. Unfortunately, due to the month-to-month nature of lease agreements, most national banks find lending money to new locations risky. Even with years of consistent history of existing locations, owners still have difficulty acquiring bank loans for new projects. This leaves us few options. Either we have an investor partner who can put up the capital, or like myself, get financing off a different property within our portfolio that has a longer, less risky lease agreement. This unfortunately forces owners like me to keep a large factory or warehouse within our portfolio to use for collateral for bank financing.

Customer Awareness

Once a facility is built or converted from a different use, advertising is the next major headache. Due to the industry not yet having a generally used and respected third-party aggregating website, it’s “every man for himself.” This means that most operators who have facilities that aren’t visible on major transport routes end up spending large portions of their profit obtaining higher rankings on Google, advertising billboards and radio campaigns. This makes the viability of storage for newcomers unappetizing.

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Lock Up Storage in Pinetown, KwaZulu-Natal, South Africa

Even so, South Africa does have a solid client base, and it has evolved slightly over the last year. With a less-than-strong economy and unemployment sitting around 30%, our nation has always been forced to be highly entrepreneurial, so many South Africans start their own small business. This has always been great for self-storage operators as there has always been a steady supply of small businesses looking for space to store stock or equipment.

With the COVID-19 pandemic, the country has been in and out of different levels of lockdown. This has affected our small-business clients to a great degree, causing a large percentage to move out or even go out of business. Luckily for self-storage operators, lockdowns led many people to downsize, causing an influx of household clientele looking to store excess goods.

Innovation Is Key

The self-storage industry in South Africa is still full of opportunities for the innovative operator. Our clients are looking for cost-effective, convenient storage. This is opening avenues for new facilities with creative construction methods, facilities on rented land and rented warehouses, unmanned sites, and operators willing to go the extra mile on customer service. There are even whispers of the owner-operated sites coming together to create an aggregator website for South Africa.

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Lock Up Storage in Umhlanga, KwaZulu-Natal, South Africa

Going forward, I anticipate the conventional self-storage facilities to be stable in occupation, with perhaps a few major cities seeing a little growth. The price and location sensitivity of the clientele will become our driving factor, thus making new facility placement and capital costs crucial. However, the need for storage space will never cease in South Africa. Service will play a greater role as facility standards normalize. Innovation will be key for expansion, but it’s exciting and fun!

I’m enthusiastic about the self-storage industry in South Africa. Lock Up Storage will continue to modernize and invent new ways to service our clients’ needs, plus fuel expansion of our creative new product lines.

James Visser owns Lock Up Storage with his father in KwaZulu-Natal, South Africa. They have four facilities totalling 140,000 square feet of rental space. To reach him, email [email protected].

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