Australian Investors Looking for Self Storage Opportunities

About a year ago, two pioneers of the Australian self storage industry, Dallas Dogger and Sam Kennard, reported in Inside Self-Storage that the Australian self storage market was starting to decline. New inquiries about self storage in Australia had, as of last November, dropped about 10 to 20 percent from their peak in 2007 and 2008, possibly in response to the global recession. Earlier today, though, several investors reported in The Australian that the Australian self storage market is beginning to heat back up.

Lisa Murdoch, of Australia’s independent valuer LandMark White, told The Australian that today self storage is considered to be a good investment for institutional investors. “The self-storage industry on the Gold Coast has the attention of merchant banks, property trusts and property syndicates at the moment,” she commented, continuing, “Although vendor expectations remain high, the self-storage property market has yet to find its equilibrium...No doubt there are still long-term operators with an eye to exiting the industry, however some expectations will not be able to be met by purchasers.”

Murdoch noted, however, that self storage investments were bringing in yields of nine to 11 percent in some areas.

Tony Grbcic of Just Real Estate Investments agreed, noting that Australia’s fastest growing city, the Gold Coast, was attracting international investors.

“We are currently searching for self-storage investment opportunities ranging in price from $2 million to $5 million in prime industrial areas,” he told The Australian.

According to the Self Storage Association of Australasia, Gold Coast currently has 53 self storage facilities, or one self storage unit for every 37 people in the city. A 2010 study conducted by the SSAA indicated that almost six percent of the population of Australasia (including Australia, New Zealand, and Asia) currently use self storage.

Larger self storage companies such as Storage King and National Storage have been expanding in the Australian market lately. But the market also supports smaller, independently-owned or family-owned self storage companies, some of which have grown into larger companies. Kennards Self Storage, for example, which opened Australia’s first self storage facility in 1973, has since grown into a behemoth of the Australian storage industry and caters to niche storage, such as wine storage, gun storage, and motorcycle storage.

Australian investors are also buying self storage facilities elsewhere in the world. Early in September, Australia-based Babcock & Brown sold four self storage facilities in the Chicago area for $11.8 million.

Sources used:

Dogger, Dallas and Kennard, Sam. “Aussie self-storage: changes in the Australian market.” Inside Self-Storage. Nov. 22, 2009.

Dunlevy, Maurice. “Self-storage sheds find place in the sun: Gold Coast.” The Australian. Reprinted in Business with the Wall Street Journal. Sept. 23, 2010.

Kennards Self Storage.

Lane, Yvette. “Gold Coast becomes self storage shed.” International Business Times. Sept. 24, 2010. http://au.ibtimes.com/articles/64790/20100923/gold-coast-becomes-self-storage-shed.htm

Roeder, David. “Storage facilities become hot properties.” The Chicago Sun-Times. Sept. 1, 2010. http://www.suntimes.com/business/roeder/2659924,CST-NWS-roeder01.article

Self Storage Association of Australasia. “Demand study.” http://www.selfstorage.com.au/scripts/cgiip.exe/WService=SSAA/ccms.r?PageId=10127

Self Storage Association of Australasia. “Industry statistics.”