Stor-Age Property Reit’s proposed acquisition of Xtraspace’s Western Cape portfolio would make competition near impossible in the province. The company announced in August that it is in the process of buying a portfolio of 10 self-storage properties from private group Xtraspace Properties for R387m, alongside a management agreement for Xtraspace’s other six sites in the Western Cape. These deals lift Stor-Age’s South African footprint to 80 properties with some 500,000m² of gross lettable area, making the group the dominant storage operator in both Gauteng and the Western Cape.
From garage rentals to a listed giant
Brothers Gavin and Stephen Lucas and their university friend Steve Horton formed the Stor-Age group in 2006. The three chartered accountants took a gamble on entering the self-storage sector. At the time, very few companies and private individuals owned and operated formal storage space. Instead, South Africans had access to makeshift space, often unused garages rented out. A difference between South Africa and markets abroad was that South Africans were used to buying multi-room homes with cupboard space and gardens. People in London, New York and Berlin were more likely to stay in densely populated apartment blocks and store goods at industrial warehouses.
Stor-Age launched with a property in Edgemead, Cape Town. The company was listed nine years later in November 2015 as a real estate investment trust (Reit). Since then, it has expanded across South Africa and bought Storage King in the UK. While new private entrants have entered the market, Stor-Age has remained the largest and most advanced player. Listed landlords have considered investing in the property type in the past, but it requires specific operating software, procedures, maintenance, and security. Growthpoint even considered buying Stor-Age around when it listed. JSE-listed SA Corporate Real Estate invested in a business called Storage Genie which it later exited.
An industrial challenger arrives
Enter Inospace, an entrepreneurial group which owns industrial business parks and has recently entered the self-storage market. The industrial group was launched by entrepreneur Rael Levitt and his business partners in 2016 when they acquired an 11,000m2 industrial property in Epping, Cape Town. They wanted to serve clients who needed small to medium industrial space, often complemented by serviced office space. The business park concept had performed well in Germany and the UK.
Inospace next bought and repositioned Hewett’s Business Park and relaunched it along with the Inospace brand in 2017. It then acquired a second industrial building in Bofors Circle, Epping and named it Bofors Business Park, and a third in Maitland in Cape Town in partnership with the Buffet KLT Consortium. This was branded the Maitland Business Exchange. By 2018, Inospace was growing at pace and acquired a R300m parcel of SA Corporate Real Estate assets, opening its first Johannesburg park in Wynberg, Sandton.
Read Also: RICS Africa Conference a roaring success
Expanding into storage
Favourable economic conditions, including decreasing interest rates and the availability of smaller micro-industrial spaces, helped Inospace. In 2019, it launched its first sectional title scheme. All owners would jointly own the land and common property, but Inospace would manage the park. In April 2019, private property group Setso Property Fund invested in Inospace, which launched two new business parks, Wadeville Works and Electron Exchange, in a partnership with Fortress Income Fund. By the end of the year, Inospace had more than R1bn in assets.
The group has grown more than seven years down the line. Its diversified industrial real estate platform comprises more than 50 properties across three complementary asset classes. Its R3.2bn-plus portfolio is strategically concentrated in high-demand urban nodes and is structured to capture income across multiple tenant segments, from established operators to high-growth SMEs and now storage users. It serves more than 2100 tenants.
A new asset class for the portfolio
Inospace’s expansion into storage enhances the group’s income granularity, reduces lease duration risk concentration, and introduces higher-margin, service-driven revenue streams. The company has launched self-storage properties in Cape Town already and offers rental space for consumers in the Mother City’s CBD, Maitland, and Salt River. Storage assets are distinct from the group’s other two park types. Its Core Parks are large-scale, multi-building industrial estates typically exceeding 7,500m².
Originally developed for owner-occupier manufacturing and industrial use, these assets have been repositioned for modern, diversified multi-tenant occupation. Its Serviced Parks are actively managed and on-site operated multi-tenant estates larger than 5,000m². They provide flexible small-format industrial units, micro-warehouses, workshops, and office suites for SMEs, e-commerce operators, and light distribution users within branded environments and integrated business hubs.
The new Storage Parks are dedicated self-storage facilities which are normally larger than 2,500m². They provide secure, scalable storage for businesses and households. While Stor-Age may have formed 20 and listed 10 years ago, it is still operating in a market which is in its infancy. Inospace deserves the opportunity to play in a competitive and fair market. It can add choice and competitive pricing for users. The group wants to expand its storage assets into Cape Town’s northern suburbs, and then the metropoles of Johannesburg and KwaZulu-Natal.
