The inflation-beating property investment

Even though the 15-20 per cent yield growth experienced in StoreLocal’s existing 30-asset portfolio over the past two years had already moderated it would keep allowing for inflation-beating growth, chief executive Hans Pearson said.

“For us, the managed portfolio is currently running at an annualised rental yield (rate per square metre per year) growth rate of more than 10 per cent, but we are seeing variability in performance in different markets,” Mr Pearson told The Australian Financial Review.

“Our forward-looking expectation is for revenue to track ahead of inflation.”

Brisbane-based StoreLocal is counting on changing lifestyles and housing arrangements to underpin growth in the self-storage market as people, driven to increasingly smaller dwellings by reasons of affordability, seek ways to store and manage belongings.

It already has 30 traditional self-storage sites across the country, making it the country’s fourth-largest operator.

StoreLocal will, however, increasingly open facilities that combine self-storage space with coworking accommodation in a four-level building. The self-storage reception and coworking space is on the ground floor, with storage room above.

They also contain what the company calls workstores or factoryettes – standalone units between 50sq m and 150sq m in size that can contain office and workshop space for tradespeople and small-medium-sized enterprises already using the self-storage space.

“There’s take-up from SMEs, from tradies as well as hobbyists like collectors of cars – they’re man caves,” Mr Pearson said.

StoreLocal has piloted the design at one site in inner-Brisbane’s Hendra and will extend it for the first three facilities – in Berrinba, Perth and Melbourne – that it already has underway for the new fund, Mr Pearson said.

“As we build our next three assets under the fund we’re adding additional workstores,” he said.

“We’re adding more of those due to the increase in tradie and SME demand, and we’re also increasing coworking space incrementally.”

Both residential users and business users were responding well to the option of a self-storage facility that gave them space to perform tasks as well because both were pushed by affordability concerns into smaller permanent spaces and needed extra storage as a result, Mr Pearson said.

“Effectively, the product is then becoming a place to do business,” he said.

The sites, typically occupying between 7500sq m up to 1 hectare, were also increasingly likely to operate facilities for last-mile logistics, he said.

“Business customers are saying ‘We want to receive and dispatch goods’,” he said. “It’s an example of the intersection of self-storage and logistics. Self storage is effectively now several hundred warehouses under one roof in the middle of residential rooftops.”