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The PROPERTY DOCTORS, Sydney Australia Novak Properties
EP. 1397 Storage King and Kennards Make Money?
Have you ever driven past those massive Storage King and Kennards facilities popping up everywhere and wondered how they make money? We certainly did, which sparked our deep dive into the fascinating economics behind Australia's booming self-storage industry.
What we discovered was genuinely surprising. These businesses charge extraordinary rates – up to $1,010 per month for a garage-sized unit or $405 monthly for a space comparable to a bedroom. Even the smallest lockers command $37 weekly. Despite these premium prices, occupancy rates consistently hover near 100%, with some facilities housing over 1,000 units under one roof. Most fascinating is how direct competitors like Kennards and Storage King frequently establish locations directly beside each other (breaking conventional retail wisdom) yet both remain fully booked.
The customer demographics tell an equally compelling story. Downsizers form a significant market segment – older Australians unable to part with decades of possessions when moving to smaller homes. International travelers store their belongings during extended absences. Some speciality users emerged in our research as well, including someone who rents a unit exclusively for Christmas decorations. The industry has masterfully tapped into our emotional attachment to possessions, charging rates that exceed any other property class on a per-square-meter basis. Ground floor units with drive-up access command the highest premiums, while upper floor spaces cost significantly less due to accessibility challenges.
What does your relationship with possessions look like? Could you adopt the ruthless approach of the executive we discussed who discards anything that doesn't find its place within a month? Or are you more like those willing to pay hundreds monthly to maintain connections to rarely-used items? Let us know your thoughts and whether you've found self-storage units to be worth the investment!
This morning we conduct an interview, a biopsy in the Storage King and Kennards world. How do they make money?
Speaker 2:I'm the ringleader, so I'm gonna. Is that David Attenborough with us this morning, is it? Yes?
Speaker 1:The Serbian version is David Attenborough.
Speaker 2:How good, how good. Storage King Kennard, make money. Mark, do you want to start us off? Yeah, you know what it's intriguing these guys like.
Speaker 1:You want to start us off. Yeah, you know what it's intriguing these guys like and what really got me going is you know you see Kennards everywhere and you see Storage King everywhere and these storage guys everywhere and you're thinking is there that much bandwidth, is there that much depth in market? How are they opening up? How are they staying open? I never see them go out of business, but I see them popping up. So we wanted this morning to go through with people, um, you know, who are using these, these storage rooms, what are the rates you're you're paying in these, in these things? Um, and just giving you a bit of an in-depth look towards, um, how these guys function, because you may not know some of the things we're going to tell you how these guys function, because you may not know some of the things we're going to tell you.
Speaker 2:Yeah, very, very interesting. I mean, if we look at the ones just closed by Brookvale, we've got some at French's Forest. I've just had a little look at the occupancy rates myself and every one I'm looking at there's two remaining low supply. I'm pretty certain that the ones up at French's Forest are pretty much booked, much booked out, and there's about thousand in. How much is in each month? I think was about a thousand. Was in there in in storage getting all all the caught effect.
Speaker 1:This cause got hundreds and facilities all around the country. But for instance, kennards, it's a family-owned business but storage King is like it's more of an institution, um, you know, stakes and a trust sort of business. Um, the one up in french's first, in rod bra, one of them's got a thousand storage units, the storage king and the kennards one directly next door to that one has got 650 storage units.
Speaker 2:So there's 1650 storage units just in one suburb and don't you think it's crazy them opening up side by side, like you know? I mean you wouldn't see a mcdonald's and kfc side by side.
Speaker 1:so I mean it goes against all the rules, um, and and it's telling by the fact that the place is full- they're full and you know we've been on site up there from a property we're selling next door to it and like we do a barbie there every Saturday, and the amount of cars that are rocking in and out of storage at Kennards is incredible, incredible.
Speaker 2:It is, and so, I think, is some of the pricing that some of these people are paying there. I mean, when looking at sort of ranges between three, six, 12, up to 30 square meters and just remember, guys, these are only about 2.4 meters high, um, starting from around 300 bucks a month all the way, working up to around 1100 bucks a month for some of these ones that are about five meters wide by six meters deep, um, so you know, it's not like they're the old 50 bucks a week, 75 bucks a week, um, anymore. So really surprising when I had to look at those figures and the fact that they're pretty much full, Let me quantify this for people that are watching, because I think a lot of people struggle with size.
Speaker 1:As agents, we get our head around it easily. Now, if you look at a bedroom, a small bedroom would be maybe two and a half by two and a half let's just say a regular room at three by three, that's nine meters squared. So when you're renting through storage, they don't just give you a meter inch squared, they give you a cube. So they say let's look at the, let's look at the width of the room, let's look at the length of the room and furthermore, cubic, let's look at the height of the room. So if you look at an apartment at a ceiling, at a ceiling height of 2.7 meters, just call 25, so it's easy for my maths. So we've got a room that's nine, three by three, nine meters squared, and it's two and a half high, so cubic meters we're going to be sitting at. What's that? Nine? Um, can you do that? Nine by 2.5 in 24.5, so 24.5 cube, how much does that rent for?
Speaker 2:that one there rents for. You're looking at about. Um, if I'm going off the prices here now, you'd be looking at like 565 dollars a month such a lot of money.
Speaker 1:Um, now here's, that's a lot of money. Here's the hack, here's the trick. Um, you cannot, um, normally, get these storage areas easily on the ground floor. You cannot drive up to them. Why does that matter? If I'm going in and out of them, I have to get in a lift or stairs every single time. So you've got to look at whether you're ground floor, whether you're third floor, fourth floor, how far at the back you are.
Speaker 2:Yeah, that's a massive point. The accessibility definitely plays a role in that. I know for myself. I have an older lady that I look after and sometimes she needs some things moved between places and you get in the lift. You go up, get your number, you're down at the back right-hand corner, you're back in the lift down. You know if you've got a full storage unit. It's a. It's a few trips between um, between exits and entries it is now let's talk more about these guys.
Speaker 1:Who owns these guys? So the kennards family is. Um is behind the kennard storage, obviously, but not obvious for some. Um storage King is sort of a bunch of investors that are doing that. Now, something that you and I spoke about, josh, this morning, and this is on storage. These rental rates are higher than generally a residential property or an industrial property. They are probably the highest rent per square metre than any other asset class for rent.
Speaker 2:Oh easily, and from just looking through inquiry levels, there seems to be more and more uses popping up for these spaces as time goes on. I think you know all these latest developments and people getting their own foot in the door. It sort of opened up and expanded people's um ideas of what they can do with these spaces. So, um yeah, crazy. You know from cars lips, you know from businesses. We had, like we, we got told about a golf simulator in one. I mean the uses for these, for these spaces, is just unreal the type of person that.
Speaker 1:What are? What are people using these canards and these, these storage king store um units for why? Why would you pay rent when you've just got your house? Why wouldn't you store stuff in your house?
Speaker 2:Well, if you think about the current population, we do have an ageing population. So, as we're probably moving forward now, we'll see a large amount of the market be downsizes. So you're coming from your traditional, you know four or five bedroom homes along the beaches. You know, you've been there for 20 years. You know every time you do a spring clean or you end up moving, you go. You know there's at least a room full of boxes going. Where the hell did that come from? So I think a lot of it is either you know you downsize a market where they don't want to let go of a few things, but they've moved into this, into the unit now and and's no room.
Speaker 2:And I think the other thing as well is there's quite a lot of travellers, a lot of people that you know have family overseas, have family here, and what I've heard a lot of stories about is you know people where they've been being their house out for six months, so things that they can't keep in there. Well, they'll rent a space like this and leave it in there for the six months they're not here. Come back pick it up. I've seen a lot of that come um recently, so that's also, I think, a large part of the market I'll give you a story.
Speaker 1:I got a, I got a person that I know, a friend, good friend, um, that he's in a very, um big executive. So he's a strong, strong character. Strong, strong character. And I'm going to give this example for storage, because this is why storage makes money and you'll understand it better when you understand what this gentleman doesn't have this trait. He moves countries, so he gets employed all around the world. He's in a family of five. They, they pack up, um, and they often are told within days of the new country they're going to or the new state they're going to. He, when he gets there, he tells the removalist. When he gets there, he tells the removalist to put everything in the double garage of the home, everything. Him and his family spend a month picking everything out of the garage. So obviously you know you'll get your fridge put where the fridge goes and the couch put where the couch goes, but everything else goes into the garage.
Speaker 1:after one month what doesn't come out of the garage gets thrown away wow after a month where non-essential, non-essential, not necessary and he thinks he can double down on more. And what's important, there's why storage is popular. People don't have that attitude and it's probably a little you know. Storage plays on a little bit of that like, yeah, you know it, it would be nice to keep it, but it costs you money.
Speaker 2:Exactly right, exactly right. Yeah, that's a really good way of putting it, mark, I think you know the little baby boots and you know the old school assignments. I know my mum still hangs on to those things and you know it ends up piling up after 20-odd years. Putting it all together, you seem to run out of spaces and and there's really no other way to turn it's a bit like icloud storage it just keeps getting it.
Speaker 1:Just it's like you know, I really want to keep those photos or whatever, and it's like you just keep paying more and more.
Speaker 2:Oh, I've got a customer that uses one only for Christmas decorations. So she's big on Christmas, doesn't want to keep that Husband doesn't want to keep it in the house. So she rents the storage unit just to throw in the old Christmas decorations and then every 1st of December heads over, collects all her goods and ships it all back over home and does her setup and then end of you know, halfway through Jan it's back in the storage.
Speaker 1:Oh my God, oh my God. So we're going to sign out. And can we sign out before we go on the rates, the rates that people are paying, for instance, on the Northern Beaches, french's Forest, for instance on the northern beaches, french's forest, for a storage unit. And let's quantify it. I'll ask you it this way if it's as if it's as big as a garage on the third floor, what would I pay? So what's that? 13 meters squared.
Speaker 2:Again a large car garage you're looking at about $1,010 per month and that's level three, $250 a week.
Speaker 1:Level three there you go, wow, wow, okay. Next example. Next example the size of a bedroom which is three by three. Uh, on the third floor again, what would I pay?
Speaker 2:second floor three by three three by two, which is the closest to it, you're paying 405 a month and that is one on the ground floor. So that's just showing you mark there that you do pay for that access, um, you know, because that's about a third of the size for the one that was paying. A thousand and ten, um, but half the price.
Speaker 1:So again, another big thing yeah, so anall bedroom one you can almost knock at a bed into, on the ground floor gets about $120, $110 a week. Okay, what's the smallest area they'll rent?
Speaker 2:The smallest area they'll rent is a one-by-one for $37. This is a locker, not for 37. This is a locker, not an actual room a locker a one by one locker 37. A walk-in robe 245 a month. A large closet 185 a month. Closets $185 a month. Walking robes like a walking robe is even $405 on the ground floor. It's insane.
Speaker 1:And they are full and they are full. You know what it's? Two wonderful businesses supporting our communities across Australia. Well done to Kennards for identifying the market and building on that market. Well done to everyone that's doing these guys and there's obviously a huge need to it. I personally feel you get to improve your home when you have a wonderful storage area that you can buy or rent your home's cleaner, but I personally chuck it out. It's another thing.
Speaker 2:Exactly right? Yeah, no, I think you put it exactly on the right there, Mark. These storage things are a game changer and something people should um keep their keep their eye open for you're a legend.
Speaker 1:Have a great day, josh. Everyone, I hope we helped you out there today on storage. Thanks guys.