The self-storage sector in Asia has emerged as a thriving and distinctive real estate class, witnessing a remarkable ascent in recent years.
Unlike traditional warehousing, self-storage facilities cater to the temporary needs of individuals and businesses by providing secure and flexible storage solutions on a smaller scale. They offer a personalised space for customers to store inventory or equipment, ensuring accessibility and convenience. This innovative approach sets self-storage apart from conventional warehousing, which typically involves larger spaces for bulk storage. The unique attributes of self-storage, such as adaptability, cost-effectiveness and scalability, position it as a dynamic player in the real estate landscape, catering to the diverse storage requirements of a rapidly changing economic and entrepreneurial environment in Asia.
Singapore’s self-storage sector is no exception, emerging as a pivotal player in the city-state’s post-pandemic real estate landscape, influenced by diverse trends shaping its economic trajectory. Despite pandemic challenges, the demand for self-storage in Singapore has remained robust, fuelled by e-commerce growth, evolving work dynamics, and a growing emphasis on environmental, social and governance (ESG) considerations. The e-commerce sector, while experiencing slower growth post-pandemic, continues to impact the self-storage industry as online shopping convenience drives the need for storage solutions catering to retail inventory. Additionally, the rise of hybrid work options has led to professionals creating home office spaces, resulting in an increased demand for self-storage.
Another trend is the rising need for storage facilities among micro, small, and medium-sized enterprises (MSMEs). These entities constitute the backbone of Singapore’s economy, and their demand for storage solutions is indicative of their dynamic operations and growth trajectories.
Supporting MSME growth
Beyond its primary function of providing storage space, the self-storage industry plays a crucial role in supporting the growth of MSMEs in Singapore. Start-ups and MSMEs are increasingly turning to self-storage for cost-effective and flexible storage solutions. Approximately 45% of self-storage customers in Singapore are businesses. These encompass smaller and solo operations, right through to larger organisations, across a wide range of products and categories. By reducing their reliance on permanent warehouses, they also reduce their fixed costs. This cost-effectiveness enhances competitiveness in the global market, allowing businesses to reinvest in core operations, innovation, and talent acquisition.
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Business users who use self-storage have informed operators that the benefits go beyond simply providing them with a storage unit; they also enjoy many valuable benefits and services within their business value chain, such as onsite goods pick-up and drop-off services and dedicated space to sort, pack and label goods for shipping, positively impacting their business growth and bottom line. In the absence of self-storage services, MSME tenants would be forced to either use residential storage, downsize operations or move storage abroad with considerable economic implications.
By aligning seamlessly with the dynamic needs of the entrepreneurial ecosystem, the self-storage industry provides a valuable resource for businesses looking to optimise costs and scale dynamically.
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Air-con storage units
Boosting significant foreign direct investment
The self-storage industry’s impact extends beyond physical storage solutions, contributing significantly to the economy. Over the past seven years, self-storage operators have made a significant and lasting impact on Singapore’s economic development. Their collective direct investment of approximately $630 million* stands as a substantial commitment to the nation’s growth, transcending immediate economic benefits. A substantial portion of this investment is dedicated to construction, development and other fixed capital expenditures, directly strengthening Singapore’s real economy. The average annual investment in value-added activities has consistently been around $20 million, totalling $147* million over the past seven years. Notably, in the last three years, this figure has surged to $25 million*, highlighting the operators’ proactive and committed approach, even in the face of challenges posed by the pandemic. The multi-million-dollar strategic investment in self-storage provider Extra Space Asia in October 2022 by APG and CapitaLand Investment illustrates this appeal.
Stimulating economic activity and creating jobs
Beyond the immediate financial commitment, the industry has played a pivotal role in stimulating economic activity within a confined space of approximately 278,000 sqm* in total, showcasing impressive land efficiency while bolstering industries engaged in industrial and related activities such as manufacturing, warehousing, and distribution. Estimations based on data provided by operators show slightly more than 50% of MSME tenants are engaged in activities directly or indirectly supporting industrial operations, which reflects how the industry fosters a cohesive ecosystem and which underscores the economic impact generated through strategic land utilisation in Singapore.
The industry has also created employment opportunities in the midst of a challenging employment landscape, employing Singaporeans in the areas of accounting, customer service, data analytics, facilities management and more, providing a silver lining amid gloomy employment prospects.
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Helen Ng, CEO of General Storage Company and chair of Self Storage Association Asia
Self-storage is inherently ESG-friendly
Singapore’s self-storage facilities are not just practical; they also stand out as energy-efficient, green and sustainable storage solutions. Self-storage operators refurbish and retrofit existing buildings that are no longer suitable for today’s manufacturing and logistics sector. This results in significantly less carbon emissions than the construction of new buildings. With higher land use efficiency and strategic proximity to users, the facilities minimise environmental impact, reduce transportation costs, and lower carbon emissions. Some operators are going the extra mile by adopting renewable energy sources such as solar energy and installing EV charging points on their premises, showcasing a commitment to eco-conscious practices and attracting customers seeking sustainable storage solutions.
In conclusion, the self-storage industry transcends its primary function of fulfilling storage requirements, playing a pivotal role in fostering economic expansion and sustainability, and cultivating an atmosphere conducive to entrepreneurial endeavours and innovation. With Singapore experiencing an increasing demand for self-storage facilities, particularly driven by businesses seeking flexible storage solutions for their equipment and inventory, there is evident potential for further growth. Although Singapore currently trails behind other developed markets such as the US, Europe, Japan and Hong Kong in terms of facility numbers and gross floor area dedicated to self-storage, this indicates promising prospects for expansion and heightened economic contribution in the future.
*Figures based on data provided by member operators of Self Storage Association Asia in Singapore.
Helen Ng is CEO of General Storage Company (Lock+Store Singapore and Malaysia, The Store House Hong Kong) and chair of Self Storage Association Asia
