The self-storage market in South Africa is enjoying a boom period, reflecting the huge demand for storage solutions among businesses and individuals as flexible working, urbanisation and the rise of small businesses fuel the sector’s growth.
XtraSpace marketing manager Maxine Forero said national demand for commercial storage solutions has dramatically increased because businesses require storage for inventory management due to the growing online retail sector.
“Flexible working arrangements, minimalist living, and the need for more space have grown. Economic developments, shifts in consumer preference, and the rise of e-commerce have also played a pivotal role in the market’s expansion,” she said.
The self-storage market in South Africa has seen remarkable growth over the last decade due to its versatility, accessibility and security amid the demand for space to store valuables such as furniture, vehicles, inventory, tools, and critical documents.
Self-storage is also considered a solid investment by people outside the sector. In the 2023 declaration of MPs’ interests, public enterprises minister Pravin Gordhan declared shares in a leading self-storage company, alongside other blue-chip shares.
Besides XtraSpace, another prominent player in the burgeoning industry is JSE-listed Stor-Age Property Real Estate Investment Trust. Stor-age’s rental income and net property operating income for the year ended in March 2023 were up 17% and 15.3%, respectively.
Rental income was up from R446.5m in 2022 to R507.2m in 2023. Stor-Age said its net investment property rose 12.2% to R10.4bn in value this year. By the close of trading on Friday, its share was trading at around R12.45c.
Stor-Age CEO and founder Gavin Lucas said the company delivered a strong performance in the 2023 financial year, featuring “exceptional growth” in its portfolio, record levels of demand, resilience and an effective growth strategy in South Africa and the UK.
“We have grown our portfolio since listing in 2015 from 24 properties to 93 across both markets, increasing the value of our portfolio, including properties managed in our joint venture partnerships, from R1.3bn to R12.9bn. At year end, the maximum lettable area, including the pipeline and ongoing developments, exceeded 620,000m²,” he said.
This year Stor-Age also developed properties in Bryanston in the north of Johannesburg, and Pinelands and Paarden Eiland in Cape Town, under a joint venture with Nedbank. Its Century City site, under construction, is a joint venture with Rabie Property Group.
The four developments represent an estimated 22,800m² gross leasable area and are being developed at an estimated cost of R343m. This year, Stor-Age also announced that it had concluded the acquisition of Think Secure in Cape Town for R65m.
Lucas said although the company has not been entirely immune to domestic economic shocks and volatility, the self-storage sector displayed resilience during economically stressful periods, including the global financial crisis and the Covid-19 pandemic.
“Self-storage is a needs-based business that benefits from a diverse set of demand drivers which remain present throughout all economic cycles.
Self-storage is a needs-based business that benefits from a diverse set of demand drivers which remain present throughout all economic cycles
“Demand is underpinned by life-changing events and dislocation, whether positive or negative, and customers use our product for various reasons across economic cycles. Positive structural trends accelerated by the pandemic continue to support demand,” he said.
While the industry is growing, it remains vigilant for risks undermining the sector, including criminals looking to abuse the service by storing illegal goods.
Forero said XtraSpace’s self-storage facilities have established procedures to promote legal and responsible usage of units throughout its branches, including background checks during the rental process to ensure compliance with the law.
“Additionally, XtraSpace is a reputable storage provider that adds emphasis on co-operating with law enforcement agencies when necessary. In the event that illegal items are discovered or reported, XtraSpace facilities are committed to co-operating with the relevant authorities to address the situation and maintain a safe and lawful environment for all tenants.”
She said the growth witnessed in the industry is influenced by several factors, including South Africans moving abroad who seek secure places to keep valuables, people who semigrate between provinces or immigrants moving to South Africa.
“Although the scenarios above are factors, [they] are not the only factor that contributed to this growth. Lifestyle changes, urbanisation, and businesses growing or downscaling are among other factors,” she said.
While XtraSpace holds a prominent position in the self-storage sector, it operates within a dynamic and competitive landscape featuring other significant players and the possibility of new entrants, she said.
“Definitively pinpointing the major players at any given moment can be challenging. The typical rental per unit per month varies based on factors such as location, amenities, and unit size. Therefore, it’s important to note that rental prices may fluctuate based on market conditions, demand, and other factors,” Forero said.
StoreSmart, another competitor in the sector, has operations in Sandton, Parktown, the Cape Town CBD, Wynberg’s Maynard Mall and Century City. StoreSmart’s storage units range from 1m² to 15m². It makes use of a “storage calculator” to help clients determine the best price and space needed.
Think Secure, which was acquired by Stor-Age in 2023, specialises in personal storage, business storage as well as car, boat, and caravan storage.
