Self-storage space is booming in Canada and areas that are seeing the most rapid growth are also those building the most new high-rise apartment buildings.
That’s according to a new study from Ontario’s Municipal Property Assessment Corporation (MPAC), which raises a chicken and egg question about this relationship: Do Canadians living in new high-rise apartment buildings have too much stuff, or are the new high-rises too small to contain the stuff Canadians are accumulating?
Overall, MPAC found there’s 37.3 million square feet of self-storage in Ontario, which grew by 9 per cent in the last three years with 4.2 million square feet added. MPAC’s assessment is that some of the key drivers for storage growth appear to be folks downsizing, clearing space to allow for more work from home options, and smaller living spaces.
In 2022, MPAC reported that the average Ontario condominium is 35-per-cent smaller than it was 25 years ago, and according to Greg Martino, MPAC vice-president and chief valuation and standards officer, that trend really picked up about a dozen years ago.
“We saw a change in average unit size starting in mid 2015: typically units built in the nineties were in the range of 1,200 to 1,400 square feet, now typically it’s 650-850 square feet,” he said.
Tens of thousands of new condo apartments have been added to Ontario’s cities in that time, but the smaller unit size has also helped create new markets for off-site storage.
“Where growth has occurred in the condo and high-rise sector, those areas also experience an increase in self-storage: four of the five top municipalities in condo construction and self-storage growth are the same,” Mr. Martino said. The top four with both new condo and self-storage construction are Mississauga, Vaughan, Ont., Toronto and Ottawa; the fifth-highest municipal leader in condo construction – Markham, Ont. – was still in the top 10 for new self-storage.
“That 100 per cent lines up with our focus in those markets and those same primary drivers,” said Mike Miske, who works with Vaultra Storage Inc. as the president of its door-to-door business. Vaultra’s seeing rapid growth in this concierge-type service where they will come to you and pick up your stuff and take it back to one of their 11 facilities (with 13 more in planning). Clients can rent a traditional unit, but Vaultra will also pick up items that it will catalogue and store with a bunch of other client items on a per-item fee basis.
The door-to-door business means clients have to describe what they want picked up, which has given Vaultra a unique dataset about what kind of junk Canadians want out of sight but not on the curb. So far, the largest category its customers ship out are larger boxes and bins: about 15 per cent of items are large boxes, and 12 per cent are storage bins (about 4 per cent is smaller banker box size items). Tires alone – winter or summer – make up about 5 per cent of items Vaultra picks up, and super-bulky items (large furniture, appliances or essentially two-man lifting jobs) are about 16 per cent of stuff stored. Among the other items they see a lot is sports gear: hockey bags, golf bags, bicycles, skis, etc.
Self-storage companies with a similar service model to can be found in major urban centres in Asia such as Hong Kong, and in the United States there are companies such as Clutter, a venture-backed company that has raised $300-million and is available in more than 6,500 cities and towns.
Mr. Miske said more than 60 per cent of its concierge storage business comes from condo-dwellers, the remainder are detached home and townhouse residents. In Canada, most operators stick to the traditional model where you haul your own stuff, but the concierge model is also helping Vaultra crack a key barrier to customers in big cities: geography.
“Whereas a typically a storage location has a five kilometre draw, now the whole GTA is our market,” Mr. Miske said. That allows the company to service customers in increasingly expensive built-up high-rise neighbourhoods – King-Spadina, Liberty Village, Yonge-Eglinton – without having to pay top dollar for land or office space in pricy downtown neighbourhoods. Vaultra also finds success in reaching out to condo boards, real estate staging companies and contractors who refer customers in need of a moving/storage solutions. Some are even beginning to use the company as a one-stop estate shop where the company will do the footwork of donating some goods, auctioning off others like in long-running TV series such as Storage Wars, and storing the rest.
The self-storage industry has been on a buying and investing spree as a business that was once dominated by mom-and-pop operations is consolidated. As an example, in its annual report StorageVault, a Canadian publicly traded self-storage company, announced it spent $241-million on acquisitions in 2022 (it now has more than 200 locations) and reported revenues of $261-million. By contrast, the company’s 2015 revenues were just $11-million.
But Mr. Martino said while self-storage is a fast-growing category, the fastest growing industrial property sector in Ontario is warehousing and fullfillment centres to service e-commerce businesses. If that’s the case, it’s likely Canadians will keep accumulating more stuff than they can keep in their primary dwellings for some years to come.