- Strong demand for self-storage units has recently been driven by private sector interest
- Price of self-storage rising due to housing shortage and high demand
- Construction pipeline includes 50 new self-storage developments across the country
Demand for self-storage units remains strong across the country, with the private sector increasingly interested in the asset class, according to Ray White Commercial, head of research, Vanessa Rader.
Rader noted that, over the last 12 months, there has been $132 million in sales of self-storage units, however, the results have varied.
“Quality assets have maintained low yields, however, assets have recorded capitalisation rates as high as 8% in some regional markets,” said Rader.
“Enquiry levels have been elevated across the country from the private sector including syndicates and high net worth individuals looking for the security of these assets and their stable income streams.
“There has been an increase in buyers venturing interstate to secure these assets with high population growth zones across the country the key focus for these buyers.”
Rising costs, and elevated demand
Like other industrial assets, Rader noted that substantially rising rents have hit end users hard. Rising costs were attributed to higher insurance, increased land costs and taxes, and the overall high demand keeping vacancies low.
The housing crisis is a factor leading to elevated demand, with Rader noting that the challenges in securing a rental property have fueled the need to store goods for a prolonged period.
“This is most apparent in highly populated areas or those which have seen strong migration growth such as southeast Queensland, Perth, and western Sydney, while there has been some move away from regional markets as post COVID-19 some population flows have come back to major cities.”
Self-storage projects underway
Strong construction pipeline
According to Rader, over 300,000 square metres of industrial storage space is currently under construction across 50 self-storage developments.
“Development is heavily dominated by east coast markets, with southeast Queensland expected to enjoy the greatest new project completions, mostly across metropolitan Brisbane and Gold Coast.”
“These high population areas are currently hampered by the housing shortage, keeping residential vacancies low which historically has a strong correlation with the occupancy of self storage, which is currently high.
She said new developments in self-storage have grown in sophistication, including technological and security advancements, multi-storey facilities with flexible spaces, and more.
“As end user activity remains high, demand to purchase self storage facilities is expected to grow.”
Vanessa Rader, Ray White Commercial, Head of research
“The stable income stream is a drawcard for buyers, together with the continued appetite for industrial assets in the current environment.”
