Prosperity in a Pandemic Environment: Self-Storage Industry Growth in Brazil

The COVID-19 crisis has impacted countries around the world, including Brazil. With restrictions being imposed on peoples’ movement, the transit of goods has become crucial. The importance of logistics in urban mobility is increasing and will continue to grow in the coming months and years.

This creates a great opportunity for the Brazilian self-storage industry, which offers convenience and security for those who wish to store personal objects as well as a solution for e-commerce and delivery companies. These are growing markets to be explored, with the potential to contribute to the sustainable development of urban centers.

In several areas of the country, self-storage facilities have maintained full operation during the pandemic, as they’re considered essential. By offering new uses for the product and attracting new types of customers, the sector has been able to grow and succeed, even in one of the most delicate moments of the world economy.

A Focus on Urban Centers

Since its formation in 2013, GoodStorage has concentrated its operation in São Paulo, Brazil’s biggest city. To get a better sense of its magnitude, understand that if São Paulo were a country, it would rank among the top 40 global economies! It’s home to more than 11 million citizens, with a proportional amount of challenges to overcome.

For a business to grow in this region, it must have good strategies, a sense of opportunity and creativity. Our expansion has been guided by the very best locations. We have facilities in the most affluent neighborhoods, with 16 freehold stores in operation and 12 developments coming online in the next 18 months.

Location is critical in urban centers where self-storage can offer many benefits. First, we provide extra space in areas where there are many small apartments and residents need storage, particularly now that juggling home offices with domestic activities has become a major issue for millions due to the pandemic. Beyond that, self-storage can help improve community well-being, supply-chain efficiency and ecological sustainability.

Community Well-Being

In São Paulo, self-storage is extremely valued by customers. According to the Real Estate Market Union, apartments of less than 45 square meters are leading in the market, both in availability and popularity. Being able to free up space for a home office or even to achieve more general comfort eases the fatigue of staying inside for so long during COVID-19, which results in a positive impact on mental health. In the pandemic, self-storage helps people work from home with greater convenience, indirectly increasing their productivity and well-being.

Supply-Chain Support

Well-located self-storage facilities also increase the efficiency of the Brazilian supply chain. This is especially true in relation to online sales, in which the “last mile” or “last touch” is so important. When sellers can keep their inventory as close as possible to customers, it reduces the wait time between purchase and delivery.

The coronavirus has definitely led to an increase in online shopping in Brazil. Until last year, Internet sales represented only 6 percent of total retail, compared to an average of 15 percent around the world, according to data from Associação Brasileira de Comércio Eletrônico, also known as ABComm. Thousands of consumers bought products and services online for the first time ever in 2020, a trend that’s being embraced even in sectors that were previously lacking in digital platforms.

In the two first weeks of April, there was a 30 percent surge in Brazilian e-commerce, compared to average growth of 20 percent per year, ABComm reports. This increase was followed by a process of “disintermediation” in the supply chain, which has been intensified by the pandemic. The more digital the consumer experience, the more cities need to provide infrastructure to answer a demand for a fast delivery. Here at GoodStorage, 35 percent of our customers are companies that participate in e-commerce.

Ecological Sustainability

Finally, self-storage helps reduce traffic congestion and the resulting environmental impact. By shortening the distance between our stores and customers' homes or delivery destinations, we create routes that can be covered on foot, or by bicycle or electric scooter. Thus, we encourage active, clean travel.

While social isolation forces us to review our habits, it also allows us to seek better models. The look and feel of urban centers are being transformed, and we have a chance to help convert ordinary cities into smart cities—places that works efficiently and sustainably, with a better quality of life. Through entrepreneurship and a strong sense of commitment to creating healthier urban centers, we at GoodStorage remain engaged and optimistic about what’s ahead for the self-storage and global cities. Our industry can contribute to a pleasant, promising future.

Thiago Cordeiro is CEO and a founding partner of Brazil-based GoodStorage, a self-storage company he launched in 2013 with Evergreen Capital Partners and Hemisfério Sul Investimentos. He’s been involved in real estate investment since 2003, raising and managing funds and developing various assets classes.