The trouble that many industries have in the U.S. is that it is only a matter of time—and usually not that much—before any successful enterprise gets copied. Before you know it, the market is saturated and the task of making a profit gets a whole lot tougher. The self storage industry has found that when the going gets tough, they can just head to another country.
There are over 58,000 self storage facilities in operation worldwide; over 46,000 of them are in the United States alone. Canada runs a distant second with about 3,000 facilities followed by Australia with around 1,000.
For many countries, the count is even smaller as the industry is still relatively new and working on gaining a foothold in local economies. One country in which it appears to have caught on quite well is Singapore.
There are now about 20 self storage facilities on the island nation that is home to just over 5 million people. As housing and office space gets more expensive (and smaller) the need for space to rent to store one’s precious belongings has become a brisk business.
People have latched onto the industry there for many of the same reasons as in the United States. According to Lock + Store Self Storage, about 30 percent of tenants in Singapore are business owners.
“As your business grows you can scale your warehousing needs according to your needs as well. If we need a bigger space, we can negotiate with management, say ‘hey, we need bigger space, we’ll just pay you more’,” said Yitch Cheng, maker of scented pencils called ‘smencils.’
Needs such as the aforementioned, have helped the industry grow to roughly 1.3 million square feet in Singapore. Profit margins have grown as well. Storhub Self Storage, one of the first self storage facilities in Singapore, has seen its revenue go from less than $1 million a year when it started back in 2003 to over $13.4 million in 2009. Profits have gone from being nonexistent to $2.4 million in 2009.
Being a business that is in demand certainly helps pad the bottom line. One Singapore customer using a self storage space in the Tanjong Pagar Distripark for his own business is renting a 120 square foot space for about $400 a month.
An Extra Space Storage facility in Indianapolis, IN, offers a 750 square foot space for roughly the same price.
Michael Hagbeck, CEO of Extra Space Storage describes the industry in Singapore to be somewhat recession proof, just line in the United States:
“When good [the economy], people are buying houses, they are going out and buying things…When the economy is down, businesses get conservative, so instead of signing a long lease they’ll rent a storage space on monthly basis…”
It definitely sounds as if the self storage industry is as dependable an investment as you can get.
“Self-storage business booming in Singapore.” Singapore News; 24 September 2011.
“Renting self-storage space a brisk business.” AsiaOne Business; 17 March 2010.
2011 SSA Fact Sheet; Self Storage Association.