December 2005 Issue
 Market Trends: Self Storage Warehouses As An Investment Product
In recent years large corporations and listed companies such as Valad, Abacus and APN have entered this high yield storage business and are now offering a range of investment opportunities to small and large investors.
The self-storage industry in Australia has its origins in the suburbs of Sydney, catering for the needs of the 'small end' of town. Now everyone from families who need additional storage space for furniture, through to vineyards and other businesses with inconsistent product delivery schedules, use these flexible facilities on a short or long-term basis. Two-thirds of all customers are still 'mums and dads' whilst businesses of all sizes take up the balance of the market.
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As the industry has become more sophisticated, large operators such as Kennards, Millers, Global and Storage King have entered the market, offering greater flexibility, security and quality to customers.
Strata self-storage units are now available for purchase as investments or for owner occupation. Listed and unlisted trust vehicles also promote self-storage as a stand-alone form of property investment. |
MJM is currently working on two projects with clients who are pursuing this strategy in two distinctly different ways. Firstly, Metro Self Storage has agreed terms to lease a high clearance office and warehouse building in George Place, Artarmon, from Caltra Pty Ltd who were advised by MJM in the long-term lease negotiations.
Storage King and Abacus Property Group have established an unlisted trust of 16 properties in Australia and New Zealand, which may be expanded and listed on the stock market. The trust will be offering an 8% yield and there will potential for growth in the portfolio, with the returns enjoyed by investors in the months and years ahead.
MJM Property Group will be advising Storage King on potential acquisitions, property valuations and undertaking comprehensive market research programs for investors and self-storage business operators. |
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Growing Businesses Looking To Move Should Seek Independent Advice To Get A Great Leasing Deal
Many growing small businesses are questioning whether they need to be located in a Central CBD location when there is a diverse range of office markets on the fringes and in the suburbs.
But the $64,000 questions are, "Where, what style of property and how much should I pay?" Two new clients of MJM Property Group who have decided to move to new premises weren't sure where to start.
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We sat down with the tenant company and prepared a highly specific client brief which covered location, public transport needs, staff demographics, ideal quality of building, preferred inclusions, parking and above all else THE BUDGETTED COSTS.
Fitness NSW of St. Leonards and Business Diagnostics and Solutions (BDS) of Rozelle retained MJM to research the market for alternative locations that met the brief and to compile a report for analysis. A short list of properties was compiled and internal inspections arranged at short notice. |
Neither company had to call any real estate agents for building information or to ask advice on the market. MJM acted as the buffer, which allowed both organisations to continue operating without being distracted by the property search process.
The result was a 'win - win' with the lessees receiving an independent market research report, which recommended locations and specific buildings for inspection and further analysis.
In one case Fitness NSW 'thought' they wanted to stay in the same area to retain the same phone number and mail box address. There seemed to be FOR LEASE signboards everywhere, but as they discovered most of those properties were totally unsuitable for their needs.
They chose to pursue a totally different set of locations south of the Harbour Bridge to ascertain if the city fringe office market offered more opportunity.
In August 2004 BDS sought MJM's advice on the proposed purchase of a strata office and warehouse building in Homebush. They chose not to proceed and now the move is on again but as a tenant not a buyer. |
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BDS wanted to explore a wide range of locations from day one and weren't sure where to start. MJM's first task was to provide a market overview and to help them narrow down the spread of locations. The full report with all the potential options allowed the client to nominate a short list for inspection purposes.
The BDS budget gave them greater flexibility and once a more specific location was established, then the style of building and rental budget parameters could be explored further.
The main lesson to come out of these appointments is that you may think you know the best location for your new office but once you look into it further, the input of an independent advisor can make that decision easier to process and less stressful.
The year in review: Questions and Answers
12 months ago we asked several questions as we headed into a new year.
Q: Can The High Flying Property Stock Multiplex Ltd Keep Soaring?
A: After hitting a high of $6.15 per share the Wembley Blues hit home and saw the price plummet to $2.27 before recovering some of the lost ground.
Q: Will The Mirvac/James Fielding Marriage Work?
A: Just ask Mirvac founder Bob Hamilton, who doesn't work there anymore!
Q: Will Residential Property Make A Soft Landing?
A: Contrary to the doom and gloomers, interest rates DID NOT soar and as a result the development and investment markets are the only markets truly suffering - but we knew that already.
Auction clearance rates have fallen but the only blood on the streets was from off-the-plan punters who thought they were going to double their money overnight.
MJM Spotted in Bottom-Of-The-Harbour Scandal
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Could this be MJM principal Michael Mannix spotted living the life aquatic during the annual Dawny's Cockatoo Challenge swim around Sydney's Cockatoo Island? |
Merry Christmas from MJM!
On behalf of all of us here at MJM Property Services, I'd like to thank you for your continued custom this year, and to wish you all the best for a happy and safe holiday season.
Yours sincerely, Michael Mannix. |
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