Business Nedvizhimost taps Moscow’s rapidly growing self-storage market

04/09/2019

As Moscow’s residents and businesses become more mobile, the demand for storage facilities continues to grow, Knight Frank data suggests. Russia’s self-storage market is relatively young and draws its roots to 2008-2009. The emergence of the first players in the business is often seen as the outcome of the 2008 crisis with floor space being cut across all segments creating the need for external storage space.

According to Knight Frank, in 2018, total area of self-storage facilities amounted to 158,745 sq m, occupancy was up 4.4% y-o-y to 90.2%, the highest since 2014, average storage period increased by 13% y-o-y, to 8.5 months, up from 7.5 months in 2017. The number of self-storage facilities in Moscow increased by 8, bringing the total number to 62 in 2018.  

The report by Knight Frank suggests that individuals made up the majority of the demand (81.5%) in 2018, while businesses were responsible for the remaining 18.5%.  AKIH (Self-storage Association) expects demand to grow by 20-25% over the coming years. Experts have estimated the market’s capacity at 500,000 sq m.

Business Nedvizhimost, a Sistema company specializing in leasing of own real estate assets and real estate assets under management, is entering the self-storage market through a joint venture with Kladovkin, an operator of several storage facilities in Moscow. The companies are planning to launch up to ten self-storage facilities, which would put the JV in the market lead. The companies are looking to develop the business at Business Nedvizhimost’s existing ATS properties.

The first joint project with an anticipated launch in late 2019 will cover an area of over 5,000 sq m and will be located in Northern Moscow inside a former ATS building.

Real estate consultants polled by Vedomosti, Russia’s premier business title, say high residential construction rates within Moscow will continue to fuel demand for self-storage space. JLL consultant Ksenia Kolyadina notes that transforming an ATS building to suit self-storage business needs is a smart move, since renovation costs are fairly low, which provides for higher yield.

Other advantages of self-storage facilities over other types of real estate include: less staff at facilities, since customers rarely visit their storage units; high turnover, since new tenants are able to rent the unit once it’s vacated; the business virtually eliminates the need to work with brokers and, therefore, commission payments.