New storage facilities for South Africa

31st October 2008 By: Loni Prinsloo

SA Self Storage Investments (SASSI) is in the process of rolling out a number of new self-storage facilities throughout South Africa.

The first of the planned self-storage facilities being developed by SASSI was launched in July this year, on the N14 on the West Rand of Johannesburg.

The N14 self-storage facility forms part of an estimated R125-million being spent on development projects during the next 9 to 15 months. The new facilities will cover about 30 000 m2 of space, with 2 850 units coming on line. The current development pipeline consists of an additional four new facilities, which are all at an advanced stage of planning. In addition, SASSI intends securing a further three to five new opportunities before the end of 2008, which will see its pipeline growing to between eight and ten new self-storage developments for the following year.

“Unbeknown to most South Africans, the estimated R2-billion-plus South African self-storage industry currently ranks in fifth position globally in terms of the number of facilities currently trading,” comments SASSI Self Storage Group CEO Gavin Lucas.

The US industry is the global leader, followed by Australia, the UK, Canada and South Africa. This emerged from the ‘StorAge Self Storage National Research Study August 2007’. “The South African self-storage industry is highly fragmented and is dominated by small independent operators.

It is SASSI’s view that this will start changing over the the next five years. This will be consistent with recent trends seen in the more advanced self-storage industries internationally,” says Lucas.

He adds that SASSI believes that now is the right time to launch a self-storage investment brand that the South African investment public at large will be able to identify with and which will position it at the higher end of the self-storage market. “SASSI is the first company of its kind in South Africa and the decision to move forward with it is based on the fact that South Africa shows lower penetration rates than US, Australian and UK markets,” Lucas notes.

He reports that operating facilities continue to deliver on key performance indicators. Increased enquiries are resulting in strong number of new lets. The company continues to see growth in occupancy, increased rates to each square metre and ancillary sales growth, which are all contributing to an increase in revenues.

He adds that despite the fact that the self-storage industry will be affected by the downturn in the residential market, now is most definitely the moment to roll out an aggressive but well-planned and structured expansion in the South African market. “SASSI’s role is to look through current short-term market trends and business cycles.

There is a strong market demand for the product and it is important for SASSI to position itself to take advantage of that on all its stakeholders’ behalf,” he adds.

SASSI is a self-storage-based property investment group, with its head office in Cape Town. The company focuses on promoting the development of, and investment in, institutional quality self-storage assets throughout South Africa. Lucas notes that the company’s investment strategy is built on that of traditional hotel development models, in that it seeks to retain a significant interest in all new developments. SASSI’s own self-storage management company and brand, StorAge, manages all new self-storage facility developments.

Over the last four years, SASSI has invested significant resources in researching the international and domestic self-storage industry. Lucas explains that SASSI’s service offering allows investors an opportunity to invest in self-storage developments and participate in capital and income returns as an equal stakeholder with SASSI.

The SASSI Self Storage Group is the fastest-growing self-storage company in South Africa. The group features a portfolio of seven self-storage facilities in operation and under development throughout South Africa.

Future Investment

Lucas says SASSI has a number of future investment opportunities in its development pipeline. The company offers astute property investors the opportunity to partner with the company and develop the new facilities together, thus sharing in the risks and rewards of the new development. The company terms this investment strategy equity partnerships.