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Kennards Self Storage News & Updates

Posts by Sam Kennard

Is Self Storage Overbuilding Imminent in Australia? A Prominent Operator Examines the Market

Despite high property prices, new self storage projects continue to spring up across Australia. The managing director of the Kennards Self Storage brand questions whether overbuilding is on the horizon and offers a performance overview of existing operations.

Kennards Self Storage Rydalmere, NSW

Despite high property prices, new self-storage projects continue to spring up across Australia. The entrepreneurial spirit is high “down under,” with many established operators adding new locations, and small and new investors entering the sector.

The investment metrics for new projects are increasingly marginal, but the lack of alternative opportunities and the continuing capitalization-rate compression are still justifying new development—for now. Is overbuilding imminent in this well-established market? Let’s look at local operating performance and other factors.

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‘Crazy Projects’ as Capacity Booms In Self Storage

Experienced Business Writer Tim Boreham interviews Sam Kennard. Published in The Age and The Sydney Morning Herald 24th March, 2018.

Self-storage mogul Sam Kennard has warned of “crazy projects” in development at a time when the sector faces a record increase in new capacity across the key capital city markets.

The head of the family-owned Kennards Self Storage, Mr Kennard said he had rejected project proposals in the past – only to see them funded and built by another party.

“The problem is that asset prices are quite high which makes it difficult for new projects to stack up,” he said.

“There are some crazy projects planned and I hope good sense prevails: the bank doesn’t fund them or the developer realises the capital costs are way higher than thought.

“But some have been built and they are struggling with anaemic occupancies.”

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Challenges Confront the Self Storage Disrupters

Kennards-Self-Storage-Hoxton-Park-2

There has been some noise recently in Australia about self storage industry disruption from peer-to-peer storage providers. Unsurprisingly, this noise often corresponds with capital raising efforts and web site launches. Consequently, I am frequently being asked for a view about the impact and risk to the industry.

I appreciate that by diminishing the impact, I may appear as the arrogant ignorant incumbent. Some may even see Kennards Self Storage as the likely Kodak of the self storage sector. None the less, here I go.

Recently one Australian self storage disrupter start-up, Spacer, has stated an ambition of growth to achieve 8-10% market share of the markets it operates in. It has also raised capital and successfully acquired a US peer known as Roost.

Spacer were not the first, joining a list of peer-to-peer storage disrupters who attempt to match people with some spare room with people who need more room. In principle, the idea seems sound and should get some traction.

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Grading Self Storage Centres – A Guide For Investors And Analysts

Kennards Self Storage Frenchs Forest - snapshot5Many property asset classes differentiate the investment quality of particular assets with gradings of A, B and C to help investors, valuers, analysts understand the transactions and value of assets. In Australia and NZ, the self storage industry has not consistently proven to price assets according to varying quality.

The self storage industry will gain standing and improve professionalism if practice like this gets traction and use. It would provide valuable insight for investors, valuers and lenders who try to assess the assets they have an interest in.

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“Low taxes Will Drive Growth, says Sam Kennard”

SamKennardTheAustralianNewspaperMichael Roddan of The Australian interviews Sam Kennard, Published on November 23rd, 2015.

Self-storage mogul Sam Kennard, the Liberal Democratic Party candidate vying for Joe Hockey’s recently abdicated North Sydney seat, says Australia should become a tax haven to encourage investment and job creation.

Mr Kennard, who is the managing director of the $1 billion self-storage company that bears his name, said a dramatically lower tax regime and less red tape would foster economic growth, even if it brought increased competition to the sector that Kennards Self Storage now dominates.

The comments came ahead of the North Sydney by-election, which takes place early next month, sparked by the retirement of former federal treasurer Joe Hockey.

Mr Kennard’s Liberal Democratic Party, one of 13 parties running for the seat, rose to prominence after outspoken NSW senator David Leyonhjelm was elected in 2013.

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Time To Put Red Tape In Storage

Daily-Telegraph-Dec-3-2015-Article-Sam-KennardThis Op-ed by Sam Kennard was published in the Daily Telegraph on Thursday December 3rd, 2015.

CANBERRA’S parliament house would make a fantastic new ­location for the company I manage, Kennards Self Storage. It has 4500 secure, air-conditioned and easy to access rooms, many of which are not used for anything useful most of the time.

Imagine turning the nation’s greatest sinkhole for taxpayers’ money into a money spinner. But my dream of filling the Great Hall with storage units is not why I am running as a candidate in the North Sydney by-election.

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The Flaws of Leasing Self Storage Premises

Kennards-Self-Storage-Waterloo-17

Self storage is a capital intensive and location sensitive business. The globally preferred modus operandi is to acquire and own the real estate that the business occupies. This has proven to be the successful and enduring MO for a number of reasons.

Having debated this idea for many years with people who firmly believe leasing storage premises is the ‘new way’ or superior to the classical self storage investment strategy, I remain amused that it persists. It is apparent my arguments are not convincing enough.

The temptation for a self storage operator to lease a self storage property often come with the arguments that:

a) The accountants say a business shouldn’t have such a ‘lazy balance sheet’ holding so much capital in real estate;

b) There is a scarcity of property to be acquired, so leasing is the only way to grow; or

c) The operator lacks the capital to acquire so leasing helps fund the real estate.

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Culture at Kennards Self Storage Receives More Recognition

Kennards Self Storage and Human Synergistics

It was again a delight to receive a Culture Sustainability Award for our continued constructive results in our annual culture survey. This was our 4th Culture Sustainability Award from Human Synergistics. We also received a Culture Transformation Award in 2006. The efforts and commitment of the KSS team in the journey to make our business a great place to work cannot be overstated, and there is great pride that this is recognised.

At Kennards Self Storage we have been measuring culture since 1998. The decision to undertake the first survey occurred when I was given an icy cold shower of reality and learned that my business was not as good as I thought it was. An email broadcast throughout the company by one of my key support people outlined a bunch of apparent problems. Until this moment, I had not grasped the possible scale and weight of the issues within KSS.

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Kennards Innovative Office Conversion Wins Interior Design Award

Kennards Self Storage Team Headquarters

In a delightful surprise Kennards Self Storage new Headquarters Office has won the 2015 Australian Interior Design Award for Workplace Design (any scale).

We engaged SJB Interiors to capture the culture and essence of our family business. Our business commonly adapting re-uses of existing obsolete buildings. So undertaking this for our corporate headquarters makes sense.

SJB successfully captured our innovative, collaborative, fun and open culture, while also including our distinctive Brand colours in subtle and unexpected ways. We are pleased the office illustrates the nature of our open, candid, relaxed yet professional family business.

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Hawthorn Property to be Kennards 12th in Melbourne

Kennards Self Storage Hawthorn
Kennards Self Storage has acquired an office warehouse in the Melbourne eastern suburb of Hawthorn.

With 5,056 square metres of land and 9166 square metres of improvements, Kennards will convert and re-use the buildings to create its 12th Melbourne storage centre.

The property is located adjacent to the Toorak Road and Monash Freeway intersection, giving excellent access in every direction.

Kennards identified the undersupply of storage in Hawthorn and its surrounding suburbs over 10 years ago. Until now, the company has not been able to secure a suitable property.

The Kennards project in Hawthorn will ultimately offer over 900 storage spaces and as always will offer compelling value for money to the local residents and businesses to store their goods.

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