U-Storage to Launch Storage Asset ManagementBy Andrea Villar | Thu, 03/18/2021 - 05:00
Bill Gates, Founder of Microsoft, one of the world's largest tech companies with a market capitalization of US$1.7 trillion by early 2021, said in one of his books: “Our success has really been based on partnerships from the very beginning.” After a year of living in a new reality due to the pandemic, the business ecosystem has realized that one of the keys to navigating these troubled waters is to rely on collaboration between suppliers, companies and sectors, be it allies or competitors.
One sector that has been a role model in terms of collaboration is e-commerce, which has leaned heavily on logistics, software and real estate companies. The latter has played a crucial role in providing strategic locations for companies to achieve same-day deliveries, while also supporting individuals looking for more space in their homes to balance their work and personal life.
In Mexico, the self-storage industry has grown by leaps and bounds. However, according to experts, its potential is even greater. According to the Mexican Self Storage Association (AMDAAC), by the end of 2019, the national industry had almost 200 establishments. Of these, just over 25 percent are located in Mexico City and its metropolitan area. In cities, according to real estate advisory firm Newmark Knight Frank, there should be 25 self-storage establishments per 1 million inhabitants. This means that Mexico City and its surrounding areas, with its more than 20 million inhabitants, could potentially be home to 500 facilities.
This market opportunity has led self-storage provider U-Storage to think of a new business model to accelerate the adoption of this service: third-party management.
Why Is Third-Party Management Necessary?
Diego Ysita, CEO of U-Storage in Mexico, told MBN that the self-storage business might at first glance seem as simple and unsophisticated as “renting brick and mortar.” However, once you understand it, you realize it comes with many complexities. “A platform and a team of professionals in areas including revenue management, marketing, customer service, budget control and even maintenance must be available and focused on generating value in each of these areas,” he explained. “It is like the franchise business. Why do people go into a franchise business? Because they know that their resources are backed by a whole platform or company with manuals, good practices, a proven track record and safeguarded operations.”
U-Storage seeks to offer investors, operators of existing properties and local developers a formula in which they can participate in the growing self-storage business, through a robust and also growing platform. Under this model, U-Storage operates the asset as one of their own, which includes access to tools such as the company’s website, through which today more than 50 percent of its tenants arrive. The model includes everything from the pre-development and design phase, the construction and the integration into their operational platform.
In the US, the largest self-storage company, Extra Space Storage, currently manages more than 500 third-party properties. This has become the company’s most successful business vertical. David Eldred, one of Extra Space Storage’s clients in this division, says on the company’s website that before joining this business, his property was poorly managed. By allying with Extra Space Storage, the goal was to increase its value and income. “My experience as a partner has been very positive and it has led to a definite increase in cash flow,” he added.
“Third-party management in the self-storage industry gives local investors opportunities to partner with us. They can be sure that their assets are operated under the highest quality standards in the industry,” stated Ysita.