6 Apr 2018

According to the property consultancy firm Urbis, 45 new self-storage facilities are in the pipeline across the three eastern seaboard capitals, Adelaide, Perth and the Gold Coast – a 10 to 12 per cent increase in existing supply based on available lockers.

Of these new facilities, 20 are under construction and a further 15 have received development approval.

“It’s the highest level of self-storage development activity we have ever observed,” Urbis senior valuer Tim Creighton said.

In its latest Urbis Storage Index report, the firm says average eastern seaboard occupancy levels have fallen by 2 percentage points over the last six months, from 87 per cent to 85 per cent.

At around 82 per cent, Sydney and Brisbane’s occupancies lag Melbourne’s 89 per cent.

Perth is a notable underperformer with occupancy of only 72 per cent, reflecting the mining state’s “more constrained economic conditions.”

It’s the highest level of self-storage development activity we have ever observed.

But while average occupancy levels have decreased, average storage fees have increased by 3.4 per cent to $341 per square metre across the eastern seaboard – well above the inflation rate.

“It’s important to look at both variables when assessing the trading performance of a facility,” Mr Creighton said.

Given the lead time between development approval and practical completion, any oversupply issues would take some years to emerge and were likely to be confined to specific markets.

“Self-storage facilities are local businesses, new facilities 15 kilometres away will not be of operational concern,” he said.

“But trading issues will arise when new facilities open in customer catchment areas (of existing facilities) that do not have the required levels of additional self-storage demand.”

Mr Creighton said new supply in Sydney was centred around the north-west growth area, with seven new facilities slated over the next three years in locations including Marsden Park, Box Hill and Rouse Hill.

The above is a snippet from the original article published by The Age.  Read the full article here.