The self-storage industry in the United States is close to 60 years old and has seen a lot of sunshine. At almost 8 square feet of storage per capita, I’d say that’s a walk in the sun!
The Asian self-storage industry dawned in Japan in the 1990s, followed by Hong Kong in 1997, Singapore in 2003, and then the rest of the region in the 2000s. While potential users in these countries are becoming more aware of self-storage, especially in the ever-densifying cities, the sun has yet to shine in countries including Cambodia, Myanmar and Vietnam. It has risen, however, in some major India and Indonesia cities.
Asian self-storage has its own nuances in ownership, real estate, culture, and consumer wants and needs. The early-bird and savvy investors, suppliers and consultants are finding their way and have been in touch with the Self Storage Association Asia (SSAA) to discover more about the ins and outs of the region.
As executive director of the SSAA, I’m happy to see these groups not only have the foresight to consider all that’s going on, but the desire to learn, get involved in the region and grow their network. In the three years that we’ve been hosting our annual Self Storage Expo Asia, we saw our largest contingent of attendees at our last event in Hong Kong in May. We’re expecting even more in Bangkok in 2018, and we look forward to experiencing the exchange of ideas among the 200-plus global professionals.
One of the major themes that emerged at the 2017 expo was, “It ain’t all rainbows and sunshine.” No doubt about it—the industry is hot. However, exciting opportunities generate excited investors. Some expect a quick return, and that’s not generally what happens. In Asia, property can be expensive (if it’s available), cultural differences abound, there are ownership limitations, there’s no freehold in some countries, there are language barriers, and there’s a lack of industry awareness on behalf of customers, governments, investors and lenders. The “glass-half-empty” folks may see these as unsurmountable obstacles, whereas the “glass-half-full” folks see them as pure opportunities.
To be sure, there’s still a lot of work to be done to get the Asian industry up to speed. A lot of this work entails education. Country by country, self-storage is understood differently and, therefore, faces different standards for fire safety, building and construction codes, and best practices. Doing the right thing isn’t always the easiest route, but it ensures a sustainable industry in the long term. Encouraging this is the sole directive of the SSAA. The need for higher standards has especially come to light since the tragic June 2016 fire in Hong Kong that killed two firefighters and brought the industry to its knees.
Catalyst for Learning
More than a year after the fire, the industry is essentially starting from scratch. Retroactive rules put in place by the fire-services and building departments have forced many existing storage operators to re-evaluate their budgets and consider reconstruction. Some investors have seen this as a fantastic opportunity given the perfect storm of potential: high demand coupled with increasingly smaller apartments, increased consumerism and higher storage rates. Those companies that have had to shut down have opened the door for consolidation.
In the end, there’s been a lot of learning, sharing and encouragement across the region for sound industry standards. While we continue to work with the fire and building departments among others, including government and enforcement agencies, the core of what we need is a safe and sustainable storage industry. Knowing what we now know, the business needs to move forward and continue its progress toward best practices.
We never want what happened in Hong Kong to happen anywhere else, so we need to proactively prepare and increase awareness, especially among government bodies. It’s imperative for self-storage professionals in each country to find an appropriate definition for the product and shape standards according to local fire and building codes. This will ensure peace of mind for investors and lead to years of uninterrupted growth.
The SSAA has been engaged with members to build codes of conduct, policies and procedures. In our member meetings throughout the region, this has been met with 100 percent agreement.
Bright Days Ahead
In light of what industry stakeholders have learned in Asia, they know the path they need to take: safe and sustainable growth. Knowing the industry isn’t all rainbows and sunshine may give investors pause. However, if it eradicates those who wish to proceed in a manner that’s detrimental to the health of the business, we’ll have done our job for the betterment and continued growth of the ever-bright self-storage industry in Asia.
Luigi La Tona is executive director of the Self Storage Association Asia, which is dedicated to assisting self-storage operators and industry suppliers working in emerging markets along the Pacific Rim. For more information, visit www.selfstorageasia.org.