Shortage reported countrywide as downsizing trend continues
Flexible living and property downsizing trends are creating growing opportunities for commercial property investors in the self-storage industry around the world, and South Africa is no exception.
Small retail shops are also increasingly looking for storage space.
Most of the conveniently situated facilities are already full and Chris Cilliers, chief executive and principal for Lew Geffen Sotheby’s International Realty in the Winelands, says it is becoming increasingly difficult to find units to rent in most towns and cities around South Africa, especially at short notice.
The shortage persists despite a number of new facilities becoming available in the area.
Cilliers says: “We recently listed units in a new facility and they are rapidly selling out – the smaller ground floor single garage size units have
already been snapped up, and the
larger size selections suitable for
both personal and business use are
Bidding for such lots on the auction market has been described as “fast and furious”, says Joff van Reenen, lead auctioneer and director of The High Street Auction Company.
“Stock is scarce, especially in densely populated areas. Although they are building a lot of these facilities in Joburg now, when they do come on to the market – old or new – they are snapped up quickly.”
In a property market that has been in the doldrums for some time, this is one sector that offers prospective investors a promising return.
“If a storage unit is in a well-positioned area it can be a very good investment as it is cheap to maintain with little or no water usage, little electricity required and security the only real priority. It can offer a great rental return with low expenses.”
Such “robust property fundamentals” – including high profile and prime locations which offer easy access both in and out, high visibility to commuters, and are situated in dense urban and suburban nodes – is what national self-storage company Stor-Age considers before purpose-building their stores in the country’s main cities, says chief executive Gavin Lucas.
The commercial property market on the Atlantic seaboard and in the city bowl has shown “excellent returns” for storage operators, says Chad Shapiro, commercial specialist for Lew Geffen Sotheby’s International Realty.
In addition to the requirement for storage coming from homeowners and tenants downsizing, these units are also used by many of the new commercial ventures that have popped up on the Atlantic seaboard.
“The concept has succeeded and demand is ever present for companies wanting to do storage venues here in Cape Town.”
Although the South African self-storage industry is “well-established and fast developing”, Lucas says it remains relatively young in comparison to first-world market peers.
“That said, there has undoubtedly been a significant increase in demand in South Africa over recent years.
“A clear indication of this is the fact that in 2013 Stor-Age had a total of 33 properties across South Africa, and today we have 50.
“We have also trebled our asset value since we listed the company in November 2015, in line with the growing demand within the industry.”
Lucas says an increasing number of South Africans are becoming aware of the benefits offered by self-storage.
“Convenient locations across the country, competitive pricing and flexible lease options have become very attractive for South African individuals and businesses.
“The digital age has also seen a rise in the number of online start-ups requiring adaptable storage options when growing or downsizing their businesses.”