New Way To Beat Rise In Storage Costs

Source : The Business Times, Mon, Aug 13, 2007

(SINGAPORE) With rising office rents and thousands of en bloc sellers moving house, demand for 'do-it-yourself' storage is soaring.

Companies offering such facilities are reporting an explosion in business over the past few years.

Three major players BT spoke to - Storhub, Lock+Store and Store-It, which between them offer more than 4,000 self storage units in total - have seen their business grow by as much as 60 per cent over the past year.

The companies said that the surge in demand is driven by two factors - small and medium enterprises moving archives and inventories out of their main offices to save on rising office rents, and homeowners storing less-frequently used items while they move homes or downgrade to smaller flats.

'For sure, the demand has been picking up,' said market leader Storhub's vice-president for marketing, Anthony Chua. 'People stay in small flats, and many move homes regularly - they have to put their stuff somewhere.'

For example, one customer uses a unit to store her 70 pairs of shoes and drops by to pick up a pair whenever she wants to wear a particular one, said Mr Chua.

Yet another customer keeps a Barbie doll collection. And one expatriate, who spends most of the year outside Singapore, uses a large unit to store his prized Harley Davidson motorbike.

Companies are also contributing to the demand.

Said Lock+Store general manager Lee Seng Chee: 'Companies are feeling the office squeeze. By storing archives and small inventory items here, they can take advantage of the fact that the per square foot price is lower than in the central business district.'

Prices, for example, range from about $75 per month for a 16 sq ft unit to about $600 for a 200 sq ft units.

In addition, the companies get flexibility when they use self-storage. Unlike the use of a warehouse, there is no fixed one-year or two-year lease. Companies pay on a monthly basis - and when less space is required, they can 'downgrade' to a smaller unit and pay less rent.

The concept works mainly because it is so simple, said Storhub's Mr Chua. Once the units are rented out, customers can then lock their self-contained storage rooms with their own padlocks. They can then stop by at the 24-hour facility at any time to retrieve items. Security is maintained with a sophisticated security system, with CCTV cameras and a security presence at all times.

'We are kind of like a goods hotel,' said Lock+Store's Mr Lee.

In the face of strong demand, some operators are planning further expansion.

Storhub, which introduced the concept of self-storage to Singapore in 2003 with just one facility in Kallang, now has about 2,500 units across three facilities in Toa Payoh, Kallang and Changi. The company, which is owned by SGX-listed Hersing, has big plans.

It will add at least another 200 units in Toa Payoh, while the Kallang facility will also be ramped up by another 600 units or more. In April this year, Storhub bought a two hectare site at the corner of Tampines Street 92 and Simei Avenue for $8.7 million. The company plans to build an 8-10 storey storage facility in one to two years' time on the site.

Storhub is confident that its investments will pay off as revenue from the business has grown over the past few years. Hersing's financial data shows that revenue from Storhub increased to $6.2 million for the 2006 financial year, from $4.3 million for 2005.

Similarly, business is also booming at Lock+Store. Mr Lee said that the company saw turnover growth of at least 60 per cent year-on-year.

On the back of this, Lock+Store, which is owned by Temasek subsidiary Mapletree, is looking to add another 1,000 units.

And over at Store-It, the number of storage units has grown from around 200 when the company first started in 2004 to 650 units now.