Urbis Think Tank
Self Storage proves to be a strong performer
Content provided by David Blackwell
You might be surprised at the rate of return and relatively low risk that can be achieved from self storage. The Urbis BSI self storage indices for the March quarter showed that rates of nearly $400 per square metre are achieved within the Sydney Inner Zone with occupancy rates in mature facilities of between 80-85% achieved across most geographies.
All zones have achieved strong increases in Storage Fee Rates (SFR) over the past 4 years, but there has been a noticeable slowing in the most recent quarter, with very little change in SFR across the eastern States.
The Urbis BSI tracks self storage performance over three primary performance measurements across seven geographic zones in East Coast Australia and Auckland, New Zealand. The index commenced in June 2008 and tracks the following key performance indicators:
- Average Achieved Storage Fee Rate Index (SFR Index)
- Area Occupied Index (AO Index)
- Monthly Revenue Index (MR Index)
Overall the self storage industry has proven resilient over the recent difficult economic period and has provided operators and investors with stable, sustained cash flows. This contrasts with evidence of increased vacancies in some segments of the industrial markets and office market over recent years which have shown unstable and uncertain cash flows, particularly where larger tenancy areas have fallen vacant. The self storage industry has not needed to offer the substantial incentives that are being applied to secure new tenants or retain existing tenants in both the industrial and office markets.