The self-storage market has fascinated me since I first started to notice the proliferation of Kennards, Storage King and many others 15 years or so ago. The basic concept is that as the cost of property rises and many down-size to smaller dwellings, we require a place to store the precious possessions that we can no longer house in our town house or apartment – so we hire a space elsewhere. Makes total sense, I’ve used Kennard myself for over a decade. Very convenient, allowing me the time and space to put-off the decision to dispense with items that may or may not be needed in the future.

In my case this process took over a decade! Until one day I did the maths, following yet another price hike, typically two every year from Kennards. Which frustratingly bore no relation whatsoever to inflation rates! Similar to insurance premiums (don’t get me started!). The math’s were as follows: $600 per month or $6,600 a year, for the privilege of storing Christmas decorations, some outdoor furniture, my grown-up kids’ surfboards and golf clubs – total replacement value $2,400. This realisation was quickly followed by a WhatsApp notice to the family, “I’ve given notice to Kennards, 1 week, if you want your stuff be my guest, otherwise its Vinny’s or the tip – love Dad x” .

Seriously, this is a fantastic business model for the self-storage guys. We get to store the stuff we don’t need, for a rental fee which is often an annual multiple of the value of what is being stored! And yet we have seen significant expansion in the sector which has bafflingly included a proliferation of self-storage locations in rural and semi-rural locations. Clearly, I was wrong, and down-sizing is perhaps not the only driver of this phenomenon.                                                   

The same has happened in the US. Martha C. White wrote an interesting piece in the AFR on May 6^th called, “Door rolls shut on self-storage boom as supply peaks.” So maybe there is an end to the amount of stuff we want to store! There was a significant increase in demand from 2020-2023, with Covid driving significant levels of relocation in both Australia and the US, with 735 new centres, up from the average of 439 in the previous decade. Since then, the US has seen a big drop driven by people not relocating as much. White reports in her article that even the Self-Storage Association, suggesting there are 60,000 facilities operating with about 11% of households in the US using some sort of self-storage. Currently there is currently not enough new demand to meet the current capacity. One forecast suggest that rentals will fall in 2024 for the first time since the GFC in 2008.

Will this happen in Australia? Certainly, we are seeing a slowing of the move to the country from the Covid period levels, however the fundamental driver, other than the building of new centres, is surely our desire to hold onto items, irrespective of the uneconomic value proposition!

Watch this space – we would love to hear from you so let us know what your experience of self-storage has been and why you use it or don’t use it.

Good luck and stay safe.                                                            

References:

       [1]      AFR 6^th May 2024 page 34 article by Martha C. White.  https://www.afr.com/property/commercial/americans-went-all-in-on-self-storage-that-demand-is-suddenly-cooling-20240505-p5fp0z