Storage In Hong Kong: Solutions For Space Restrictions & Limitations

Hong Kongers are known for their entrepreneurial spirit, but shrinking apartments and the increasing difficulty in finding spaces for commercial purposes have created an obstacle for citizens who wish to start their own business. However, they found self-storage to be a solution to the problem, which resulted in an increased demand for facilities in the region.  

Hong Kong at night from Victoria Harbor

According to Andrew Work, executive director of Self Storage Association Asia (SSAA), who has worked in Hong Kong for the past 28 years, when you take into consideration that around 70 percent of people using the facilities are paying with a personal credit card, it could fool an untrained eye to believe businesses makes up only 30 percent of the customer base. This is something Work knows not to be true.  

“Many people paying with their personal credit cards are using the space for inventory for a side business, developing prototypes, or storing frequently used tools or other equipment. Like anywhere, many entrepreneurs mix their personal and business goods in a locker. So, the real usage is probably closer to 50/50 personal and business,” he states. “Consumers are always finding new ways to use storage to support their businesses and personal aspirations.” 

Work is a Canadian expat with a business background who entered the self-storage world when his experience running the Canadian Chamber of Commerce in Hong Kong caught the eye of Jonathan Perrins, former CEO of Steel Storage Group, acquired by Janus International in 2020. “Jon asked me to help create the Self Storage Association Asia in 2014. I did, then returned every year to host the Self Storage Expo Asia,” he says. “Jon wanted to popularize self-storage as a business concept so he could sell more steel.” 

In 2019, he officially became the executive director of the association, when Luigi La Tona, the SSAA’s founding executive director, who had up until that moment been responsible for growing the association to global recognition, was hired as the COO of Storhub, Singapore’s first and largest self-storage operator. “He told me it was time to return and run the organization. I couldn’t say no!” 

Storhub in Hong Kong owns 100% of its properties (not one is rented or leased). 

Self Storage Expo Asia  

Since the beginning, the Self Storage Expo Asia has always been the highlight of the year for the Asian self-storage industry. According to the event’s official website, it has been put together by the association in the Hong Kong region for the past 10 years, attracting over 2,200 industry leaders, investors, stakeholders, and service providers who come together for an insightful and education-rich week.  

“It’s more a CEO Summit with top people from around the world joining in a five-star location with an awards night and a top-secret ‘experience night’ that runs long and hot,” says Work. “In most Asian companies, English doesn’t penetrate too far down from the C-suite, so we tend to cater to that group via our lingua franca, whether at the expo or in our CEO-oriented magazine, STORBOSS.” 

The awards ceremony was first implemented in 2022, when it was hosted online due to the COVID restrictions in Asia. “The awards reward innovation and excellence across a wide range of operating expertise and give companies a benchmark for excellence,” he says. “There is an overall Asia winner in each category, but we also recognize a winner in each territory from which we receive entries.” 

Early Enterprise  

Teaching Hong Kong customers the value of the offer was surprisingly easy, as most of them were already familiar with the concept. Once the very first facilities opened in the region around 20 years ago, word-of-mouth quickly spread. “Hong Kong has a phenomenally international makeup,” adds Work, “and the number of expats plus the mass of Hong Kongers who have worked or been educated abroad is astounding compared to anywhere else on the planet. So self-storage took off very, very quickly.” 

The first self-storage business in the region started with lockers in retrofitted, old industrial buildings. Companies would lease or buy around one to three floors in a building. However, as time passed, the industry grew, institutional money started to come in, and the industry expanded with companies acquiring entire individual buildings, which can cost between $80 million and $250 million (USD). “This has resulted in operators controlling the entire building experience and not depending on a building owner committee to deliver a high-quality experience from the ground and lobby to the [actual] self-storage spaces,” Work adds. This has also been a factor in allowing the businesses more visibility. “Where you used to only see small signs on buildings, now entire buildings up to 10 stories high are being wrapped in a company’s livery boldly branding the facility.” 

The award-winning Store House in Hong Kong  

Restrictions And New Tech 

One of the obstacles the industry has found in the region is that operators are restricted to industrial buildings by law. And, after a fire that happened in 2016, the local fire department installed a few more restrictions to the mix, such as a rule that states that lockers must have a corridor of at least 2.4 meters wide (around 7.8 inches) corridors between them when their doors are open. “This led to the use of innovative doors that didn’t necessarily swing out into a corridor [like] roller doors or folding doors.” 

Another new restriction states facilities must have at least the equivalent of 1 meter (3 feet 3⅜ inches) of space between the lockers and the ceiling. “These two measures pose some constraints on efficiency and maximum volumes of lockers,” says Work. “We’re working with the fire department, the main regulator, to look at new materials and fire detection and suppression technologies to improve safety standards in a way that allows customers more efficient and cost-effective use of their space.” 

One of those technologies is the famous robotic storage, installed by Storefriendly in their facilities in Hong Kong and Singapore. “They’ve combined it with facial recognition so that you enter the building on the ground floor and ‘face check’ to be recognized,” he says. “Then, you head for the loading bays. By the time you get there, ideally, the robots have cleared a path for your locker to roll up to you so you can load or unload it. It’s a little like the improved efficiency of getting more cars into a parking lot when you have valet parking.” 

Storefriendly, which has 100+ facilities across Hong Kong

Facilities tend to be very tech-driven in the country, often combining three or more technologies to provide a completely contactless experience for customers. “Facial recognition, dynamic pricing, complex apps, sophisticated energy monitoring, solar panel energy generation, cutting-edge access control, and more are all being used,” says Work. “Electronic door locks, like the Nokē access systems, allow customers, especially business users, to change how they think about the storage and their staff’s access to improve distribution or realize other efficiencies.” 

These technological efforts have been getting noticed by customers looking to start their own companies, as many of them have chosen to try to start their operations from self-storage facilities. “Nascent entrepreneurs start to think of storage as a place where they can get a new business going,” Work says. “Tech is making it a smarter option for them, where they can make their operations more efficient, and they can be more creative with how they operate in their early days.” When it comes to choosing a facility, customers tend to replicate the pattern noticed in more mature markets, prioritizing location and price to different degrees. “The use of apps has picked up, and people seem to respond well to options to sign up and pay online without even speaking to a sales representative.” 

Specialty storage is also a big market in the country, especially when it comes to wine storage, which has been increasing in demand over the years. “In terms of consumer demand, the wine storage market has been very lucrative, and new supply hasn’t caught up to demand yet,” he states. But as the industry grows, they can cater more to other specific local customers’ needs. “One company has a great niche for serious cyclists: narrow lockers designed specifically for bikes, paired with tire repair stations and showers for post-ride clean-up. Hong Kongers are creative and will no doubt find more uses for self-storage.” 

Hong Kong’s self-storage industry has been having a steady growth for the past few years, and occupation rates are constantly at around 80 percent. However, the penetration rate is still low for a region with more than 7 million residents in a continent of over 4 billion people. According to market research conducted by Mordor Intelligence, the market size is currently estimated at 3.67 million square feet and is expected to reach 5.39 million square feet by 2029. 

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Victória Oliveira is a freelance writer based in Brazil.  

Click below to read about the Lindsey brothers' experience in Hong Kong!