MALAYSIA is, in the words of EZ Secure Storage (M) Sdn Bhd chief executive officer Rizal Shah Amat, a green market for self-storage. And while there are a few self-storage players here, it can hardly be called an industry.
Malaysians are generally not starved for space.
Although some urban areas are densely populated, they are nowhere near crowded cities like Hong Kong and Singapore where shoebox units are considered normal-sized homes.
Nonetheless, the cost of space is becoming pricier and new homes are becoming smaller. This means storage space will become more valuable, thus, presenting self-storage businesses with a great opportunity.
However, Rizal points out that established self-storage markets like the US is not exactly space-starved either.
“It’s really about a lifestyle,” he emphasises.
Self-storage reportedly started in the US in the late 1950s. The Self Storage Association (SSA) was formed there as early as 1975 and currently represents more than 48,500 facilities in the US, which makes up about 2.5 billion sq ft of rentable self-storage space.
According to SSA, the self-storage industry in the US generated a turnover of US$27.2bil in 2014 and has been growing steadily year-on-year. Occupancy rates for self-storage facilities were about 90%.
Interestingly, SSA notes that as of mid-2015, the majority of self-storage facilities in the US were located in suburban areas (52%) compared to urban locations (32%) where space scarcity would be more of a concern.
Additionally, it found that a significant percentage of self-storage renters already have access to storage space in their own homes like a garage (65%), attic (47%) or a basement (33%).
It is estimated that about 9% of US households rent a self-storage unit. Self-storage has provided good business opportunities for the enterprising lot. About 90% of all self-storage operators in the US are small business entrepreneurs.
In Asia, the business is relatively new, except in mature markets such as Hong Kong, Japan and Singapore.
A CBRE report notes that as at end-2015, the market size for Hong Kong was 3.1 million sq ft of rentable space, operated by 111 companies through some 459 facilities. In Singapore, about 16 operators were operating 53 facilities with a total rentable space of 1.6 million sq ft.
Malaysia has many years of catching up to do to even reach such a market size.
No doubt, there is plenty of room for self-storage businesses to grow in this part of the world.
Additionally, Asia’s middle class is projected to grow from 525 million in 2013 to 3.1 billion by 2030, which means potentially more demand for self-storage.
“There is no reason why the business won’t work in Asia. We are looking at Asia and we are going to grow fast,” Extra Space Asia chief executive officer Kenneth Worsdale had told The Star.
The local self-storage market was pioneered by Singapore-based Extra Space Asia in 2012.
The company, which is also present in Korea, Taiwan and Hong Kong, opened its first 117,000sq ft facility in Jalan Chan Sow Lin, Kuala Lumpur. Subsequently, Extra Space opened another two facilities in Segambut, KL and Section 51A, Petaling Jaya.
Other companies including smaller Malaysian players such as Flexi Storage and The Storage People have also come into the market.
The key drivers for self-storage businesses are death, divorce, dislocation, density and business activity.
The growth of e-commerce is expected to boost demand for self-storage. Rizal also expects demand to come from hobbyists looking for extra room to store their collections.
According to EZ Secure, the cost of setting up a storage facility can range from RM700,000 to RM10mil, depending on the size and the area it is in.