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STATE OF THE INDUSTRY 2022
State of the Industry 2022 State of the Industry 2022 State of the Industry 2022 State of the Industry 2022 Exploring the current state and future outlook for self storage across Australasia.
Exploring the current state and future outlook for self storage Exploring the current state and future outlook for self storage Exploring the current state and across Australasia. across Australasia. future outlook for self storage across Australasia.
State of the Industry is the leading research report for the self storage sector, combining property, operating and people insights to explore the potential for self storage across Australasia. The 2022 edition showcases the resilience and record growth of the sector in these remarkable times.
More than just storage
With thanks to our industry partners and all those who contributed data and insights in support of this important research. A year in perspective, our achievements in 2021
• Consistent stakeholder engagement • Regular team events • Interactive training • Innovative Marketing Programs • Superior Trading Results.
Key Insights:
2022 delivers another year of record performance across the self storage industry
Self storage continues to demonstrate its resilience and provide strong returns. Increases in occupancy and average storage fee rates have driven record performance, outperforming traditional asset classes.
Consumer expectations are changing as the shift online accelerates
Prospective customers are increasingly turning to digital sources to find self storage. They are open to technology-enabled solutions, cementing the importance of customer experience.
Macroeconomic factors continue to shape the outlook
The challenging macroeconomic environment will affect operators and customers alike. While operators are cautiously optimistic, the self storage customer of the future is concerned about the rising cost of living.
Changes in lifestyle and living spaces are driving demand for self storage
Three fundamental shifts are changing how we live. Smaller living spaces, working from home and moving to the regions are all driving demand for self storage. Severe weather events also contribute to disruption, affecting demand and supply.
Business use is increasing, and opportunities abound
The way people use self storage is changing, with business users on the rise. Supply chain challenges, the increase in online retail and the growing importance of last-mile distribution all present opportunities for self storage.
There is untapped storage demand across both markets
More than 2.8 million Australians and 660 thousand people in New Zealand needed storage recently but didn't use it. Breaking down category barriers and promoting storage benefits will be critical to unlocking this latent demand.
After a transformational 2021, 2022 offers more stability
Following a record year in 2021 with more than $1.3 billion in self storage transactions, market activity has slowed, and capitalisation rates have stabilised in the rising interest rate environment.
The customer of today will be the customer of tomorrow
Customer satisfaction with the self storage offer remains high. The relationship between past and future use has strengthened, with nine in 10 current customers indicating they will use storage again in the next two years.
Growth is expected to normalise in the near term
Changes in discretionary spending, softer housing markets and record levels of new self storage supply are expected to bring revenue growth back to sustainable levels in the near term. Density, displacement and disruption will continue to drive demand for self storage.
Industry partner perspective
The State of the Industry 2022 report emerges from the volatile and disruptive era of the Covid global pandemic.
The pandemic and the subsequent governments’ reactions were catalysts for significant society-wide disruption and change. Businesses and households changed the way they did things and where they did them. Our sector turned out to be a beneficiary all over the world. No one imagined that a global pandemic would prove to be a boost for self storage demand. The sector is increasingly attractive to new investment. Demand for operating centres has pushed capitalisation rates lower and a substantial amount of new supply is planned to enter many markets. Overbuilding is always a risk. In some detail, this new supply pipeline is explored in the State of the Industry report. The new demand emerging from late 2020 followed a relatively benign growth period in self storage in Australia. With the rise of inflation and the pressure on energy, wages, and other input costs, particularly property taxes, the sector is entering another challenging phase in the coming years. Higher operating expenses, increased supply and interest rates are sure to feature. The State of the Industry 2022 report contains several important data points. It reveals that current use has reached 9.4% of all adults in Australia and New Zealand, an increase from 8.6% two years earlier. The Valuation Drivers matrix with ‘traffic light’-green, orange, red -assessment over eight years is an insightful perspective on the sector. This report is another valuable contribution to the Australasian self storage industry and everyone involved. We are delighted to be supporting this worthwhile initiative from the SSAA.
Sam Kennard Chief Executive Officer Kennards Self Storage
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Strong fundamentals underpin the return to stabilised growth
SSAA Performance Indicators
The SSAA has developed a range of trackers and indicators that measure the strength and performance of the sector over time.
In addition to a range of standalone data points, State of the Industry 2022 comprises the SSAA Macro Influence Tracker, Valuation Drivers matrix and the SSAA Storage Industry Gauge. The SSAA Storage Industry Gauge measures the strength of the self storage market at a point in time, taking into account six key drivers: movement of people, disruption, discretionary spending, residential sales, new apartments and new storage supply. The 2022 SSAA Storage Industry Gauge result of 3.24 is 49 points below the record 2021 year (3.73) and 95 points above 2020 (2.29). The softer 2022 result can be attributed to downward pressure on discretionary spending and a reduction in housing turnover volume.
Positively, the continued movement of people and ongoing uncertainty brought about by disruption have contributed to a healthy score in 2022. The most significant risk to the 2023 result will be the high volume of anticipated new self storage supply scheduled to come onto the market across 2023. The continued movement of people through interstate migration and returned immigration will assist the 2023 result.
View the SSAA Storage Industry Gauge online to explore each of the six demand drivers in more detail.
In each edition of the Insider across 2023, we'll explore a section of State of the Industry 2022, helping members turn research into strategy and practical actions for their businesses.
