Stor-Age sees big chance for microwarehousing

SA’s only specialist self-storage real estate investment trust (Reit), JSE-listed Stor-Age, launched its first microwarehousing facility in May at one of its properties in Sunninghill, Johannesburg, to tap into the fast-growing sector.

Microwarehousing combines the convenience of secure self-storage with traditional working space, culminating in a one-of-a-kind workspace for business owners to run and expand their business from one location.

“We see microwarehousing as the next generation of flexible workspace and an attractive portfolio growth opportunity for the business,” CEO Gavin Lucas told Business Day.

He said the move to launch this offering was informed by a steady increase in its commercial consumer base with many expressing an interest in such a product. The company had about 8,500 commercial tenants at the end of March 2022.

TREND

The trend of businesses moving away from occupying traditional retail or office space to an online environment has given rise to the need for microwarehousing, which offers a cost-effective solution, particularly for ecommerce.

Lucas said microwarehousing is designed for high frequency active use, and is different from its traditional self-storage core product offering and the last-mile delivery hubs which the company launched in November 2021.

“Our microwarehousing units offer customers unique enhancements, including dedicated power supply, lighting, internet connectivity and enhanced fire protection,” he said.

These enhancements allow the small business owner to work comfortably in their storage unit, managing and dispatching stock, with space available for desks and other traditional office comforts.

A key differentiator of StorAge’s microware housing product is the short-term nature of the leases, which is suitable for small, medium and micro enterprises (SMMEs) that require flexibility and a low-risk operating environment.

Stor-Age, which listed in 2015 with 24 properties valued at R1.3bn has grown its portfolio to R9.26bn in SA and the UK. It is also differentiated by its quality properties being located in areas with high visibility to passing traffic, easy access off busy arterial routes and proximity to middleto upper-income suburbs.

In June 2021, Stor-Age launched the Business Hub, a complementary platform for its SMMEs who use self-storage as an extension of their business borne out of a need to support its commercial tenants who were affected by the Covid-19 pandemic and several lockdown restrictions.

Lucas said Stor-Age’s selfstorage product acts as a business incubator for SMME customers, enabling them to employ more staff and further contribute to the local economy.

“Our recent customer profiling indicates that business customers have on average, created more than six jobs since becoming a tenant with Stor-Age,” Lucas said.

According to New York Stock Exchange-listed global real estate company Jones Lang LaSalle (JLL), the industrial property sector continued to outperform the retail and office sectors at the start of 2022 with demand outweighing supply in some instances.

The sector is driven mainly by logistics, distribution centres, data centres, storage and warehousing space. Over the past two years, the rapid uptake of ecommerce and global supply chain disruptions have accelerated demand and uptake of well-located stock, said Mieke Purnell, research manager for JLL Sub-Saharan Africa.

The likes of DSV, Pick n Pay, Shoprite, TFG and Massmart have all expanded their physical footprint nationwide recently, helping to drive demand for space in the sector, she said.

“Another influential aspect of industrial property market performance is the relative affordability of the sector and the adaptability of accommodation such as warehouses.”

PARK-LIKE

There has been a trend of older industrial buildings being subdivided and reconfigured into an industrial park-like set-up allowing easier access to the market for small users. Landlords benefit from decreasing vacancies and achieving higher rentals.

“Given that current demand for industrial property is vested in logistics, storage, and distribution-type properties, the relative increase in rentals is expected,” Purnell said.

Lucas said to maintain StorAge’s leading position as SA’s largest self-storage property fund, it remains focused on developing quality properties in visible, convenient and accessible locations.

The company’s secured development pipeline in SA comprises 10 properties with a development cost of about R850m.

“Self-storage benefits from being an inherently low intensity property type in terms of electricity and water consumption, as well as in respect of greenhouse gas emissions,” Lucas said.