As office and shop rentals rise, storage space providers see brisk business. But for how long?

SINGAPORE: Storage space providers are seeing brisk business, with some planning to quickly double their capacity in Singapore by next year.

As office and shop rentals continue to climb, many companies that are trying to keep costs low are turning to commercial storage space as a cheaper alternative. 

But storage providers too, are not immune from the very same rental pressures, especially with rising inflation, said observers. 

OFFERING FLEXIBILITY FOR A RANGE OF BUSINESSES

Home-based business owners, for instance, are increasingly looking for external storage spaces to park their goods. 

Ms Priscilla Lee, who has been running her home-based business selling lifestyle goods for nearly a decade, started renting such a storage space a year ago. 

As more orders come in each day, space has become a crucial need, said Ms Lee, who owns lifestyle concept store heyhappypuff. 

“The number of brands that we bring in has been growing quite rapidly. And we have too many things at home and we're getting a bit too overwhelmed by the amount of things that we store at home. So we decided to bring it to a place to store.”

Getting a physical shopfront is out of the question at a time when rents are only going up, said such business owners. 

A short-term lease at a storage space can cost up to five times less than typical shop rentals.

Besides storing their goods, business owners said this alternative is also a way to help them separate work from their personal life. 

Storage company Work+Store said demand is up 20 per cent over the last few years, as such spaces offer flexibility for a range of businesses.

“They want to declutter their office, they have unused furniture they don't want, as well as e-commerce where they sell things online,” Mr Danny Wong, chief executive officer of Work+Store. 

“Instead of putting their stock at home, they can find this storage space to put their stock, as well as do their picking and packing here and for last mile delivery.”

PRESSURE TO PASS COSTS DOWN TO CUSTOMERS

Another storage provider, EZ storage, has plans to increase its number of warehouses to nearly 30 by next year. It currently has 12 warehouses. 

Demand for such storage solutions has increased by a third over the last three years, as some companies have downsized to cope with high rentals for retail and office spaces.

However, storage providers themselves are now becoming victims of rising rentals, since not all of them own the properties they are in.

The pressure is mounting on these storage providers to pass costs down to customers.

Recent quarterly data shows industrial rents are still on the rise, even when more supply of spaces, such as new warehouses, are entering the market. 

Some providers are hoping economies of scale might help them.

“Some storage companies will increase the storage price (by) up to 40 per cent,” said Ms Rainie Han, assistant operation manager at EZ Storage. 

“For us, we have retained the same storage fee, which we will consolidate and manage all the personal items into a larger warehouse to bring down additional costs.”