The rise of Australian self-storage

The Australian self-storage sector is small compared to the US. Australia has 0.21sqm of space per person¹ compared to 0.6sqm per person in the US². Australia’s self-storage sector is however aligned to significant structural trends which will see sustained growth in demand. In this article we explore what these drivers are, how the sector is evolving and what the planning implications are.

Mega-trends: Powerful growth drivers

Australian self-storage is experiencing sustained demand growth from four structural changes. These include demographics, ecommerce, densification and lifestyle (Figure 1).

Figure 1 – Four megatrends driving self-storage demand growth

Last year saw approximately 200,000sqm of new self-storage built in Australia. But despite this new supply, utilisation rates remain high at approximately 90%. However, the self-storage development pipeline is now falling due to a lack of new sites and construction challenges. Demand is likely to continue outstripping supply in the short and medium-term.‍

‍Evolution: Hybrid typologies

Self-storage was traditionally a static property segment. It comprised of low value, low tech facilities and single-location businesses owned by individuals. This is fast changing as large operators enter the market and consolidate facilities. Evolving the product offer to reflect modern consumer expectations and technological change.

At the asset level, product is being standardised for efficiency and improved security. Incorporating cameras, motion sensors, individual unit door alarms, PIN-coded access and remote monitoring. Specialist space is becoming more common. With multi-storey facilities built to maximise land use and co-locate with other uses.

At the operational level, flexible short-term leases for a month or even a week are readily available. Technology allows operators to offer contactless 24-hour access. Customers can rent space without ever needing to interact in person with someone. Leasing is quicker, easier and provides a better experience.

More sophistication is coming too. Survey evidence from European markets indicates that operators continue to improve their offer (Figure 2). Operators in the US, the most mature global market, are even adopting biometric access.

In Australia, groups like Trumen have had success combining self-storage with a mix of commercial floorspace. No longer is self-storage a single use, it can be co-located with other uses.

‍Figure 2 – Operator survey: Features which new storage facilities will include⁵

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Space needed: Planning support required

In summary, demand for self-storage is rising and its offer is rapidly evolving. This will requires new space, but delivering sufficient new supply is challenging. Self-storage facilities are locationally inflexible. To be competitive they need to be close to customers and easily accessible via the road network.

Self-storage facilities are usually sited in industrial precincts. So, they can struggle to compete with alternative higher value uses. They may also be viewed as low economic value generators. With many modern facilities being entirely automated. This can represent low direct capital investment value.

Self-storage facilities are not generally viewed with the same favour as a commercial office or medical centre. Like data centres and waste recycling facilities, they are viewed as being ‘unsexy.’ But regardless, they are necessary facilities that society depends on to function.

These days, innovative design has shown that a self-storage facility is not the single dimensional built form of yesterday. The co-location of different uses within the building can result in a facility that is visually pleasing.

The reality is that self-storage is essential to supporting Australia’s economic growth. As well as underpinning demographic growth with a rising, urbanising, ageing population. It is also supporting new industries like ecommerce and the sharing economy. Self-storage supports our evolving high-quality lifestyles.

Its value is far more than its direct economic impact. Planning authorities need to recognise this in helping to support its expansion.

This could include a positive approach to self-storage development applications. These could include identifying land specifically for such uses. Aiding the delivery of innovative facilities in new and existing locations. Such as mixed-use, co-located self-storage facilities with office, retail or even residential components. Planners must start thinking in new boxes to support this burgeoning property segment.

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¹ Self-Storage Association of Australasia. (2024). “Industry Snapshot 2023”. Available from: SSAA Insights (selfstorage.org.au)

² Nuveen (7 May 2024). “Self-storage: creating its own market”. Available from: Real Estate | European self-storage | Nuveen Real Estate | Nuveen

³ Centre for Population Projections. (September 2023). “2023 Intergenerational Report: population projections, Australia, 2022-23 to 2062-63”. Available from: https://population.gov.au/data-and-forecasts/projections

⁴ Yahoo Finance. (2024). “Australia E-Commerce Market Report 2023-2027: Firms are Extending their Strategic Collaborations to Further Strengthen their Position”. Available from: Australia E-Commerce Market Report 2023-2027: Firms are Extending their Strategic Collaborations to Further Strengthen their Position (yahoo.com)

⁵ CBRE & FEDESSA. (2023). “European Self-Storage Report 2023”. Available from: European Self Storage Industry Report 2023 | CBRE UK