At the end of the 90s, our founding partners decided to launch an American self-storage business model in Central America. Founded in 1998, Mr. Bodeguitas, now known as Mr.[B] Self Storage, continued its first development in Guatemala, the largest economy in the region and the country with the most populous city on the Isthmus, which connects the Atlantic and Pacific Oceans through the Panama Canal.
The region is made up of seven small nations – Belize, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama – with a combined population of 48 million and a gross domestic product of $ 279 billion. Many companies approach the region as a combined market, in order to better exploit its advantages. In fact, this point of view has been central to our own state of mind. After more than 20 years, Mr.[B] has become a pioneer and market leader, replicating our model across borders. Today, our portfolio includes 12 facilities totaling 430,000 rentable square feet in three countries.
Along the way, we have attracted wonderful attention. In 2016, we were honored to receive the International Installation of the Year award for our Juan Pablo II installation in El Salvador. In 2017, we partnered with Metro Storage International LLC, a subsidiary of Metro Storage LLC, based in the United States. This collaboration added a global component to our local experience, and due to our capital structure we have been able to explore growth in Spanish speaking countries.
We have learned that seizing business opportunities is imperative. All of our systems and operations have been designed to integrate new facilities quickly, as we are able to complete new turnkey additions in a very short time.
An industry on the move
Compared to the United States, self-storage in Central America is still a largely unrecognized product. Through our research, we’ve measured that even two in 10 people can’t properly articulate what self-storage is or how facility operators can solve personal and business storage needs.
Over our two decades, we have seen a constant change in the way customers use the service. During the 2000s, we focused primarily on small business owners looking for secure, conveniently located warehouses to incorporate into their distribution model. At the time, the cost of the land allowed self-storage developers to build large facilities with many drive-up units. But after the turn of the decade, the region experienced rapid urban transformations. Many suburban dwellers chose to relocate to dense urban areas, which meant living in smaller spaces and a greater need for storage. As a result, self-storage developers have increasingly embraced US-influenced components designed for residential customers.
As in most parts of the world, the storage industry in Central America is growing. Facilities have been deployed throughout the region with different characteristics and quality levels. But across Central America, it is common to see an emphasis on security measures and a shift towards more institutional quality structures.
Almost all of the self-storage developments here are purpose-built projects except for a couple of large warehouses, which have been converted. Over the past five years, we have also seen a rapid rise in land prices, which has triggered more multi-story buildings.
Overcome the challenges
Challenge is the name of the game for self-storage developers and operators in Latin America. In addition to a lack of knowledge of consumers, the product is unknown to municipalities. Building permits take a lot of time and effort to get because we have to inform the local government about the business. Regulations also vary from city to city, which means we need to be able to convince officials of the importance of adding self-storage to specific neighborhoods under existing business or industrial requirements.
A significant complexity on the operational side of the business is the lack of regulations for dealing with delinquent tenants. Evictions and lien sales are complicated to execute, emphasizing collection strategies as a large part of operational expertise.
Another important hurdle to overcome is adapting industry systems to local practices and laws, especially in countries where tax laws and billing systems require special integration with licensed banking or billing institutions. Having robust and versatile tools is essential when your vision is to expand beyond borders.
Finally, the pandemic has had an impact on business practices around the world. With our remarkable team of human resources professionals, Mr.[B] has been able to quickly adapt to the measures required by each government and adopt practices to make our customers and employees feel safe. We implemented contactless access control where possible and hand sanitizer dispensers when human contact was required. We have also been able to digitize some processes, which allows us to rent units remotely and then let our 24/7 on-site security guards complete the process when new customers arrive to access their premises. units.
As urban density increases and consumer demand requires more urban storage, we expect the self-storage industry to grow across Central America. Lenders are starting to understand the industry and its diverse customer base, which means that local banks are increasingly interested in funding established and diverse self-storage portfolios. We hope to see international lenders focus more on these markets, which would foster even more growth in the region.
The M. [B] the platform has grown and we continue to explore business opportunities through acquisitions and strategic partnerships. We’re also focused on helping our customers thrive, one storage solution at a time. We hope this service-oriented philosophy will help the industry thrive across the region.
Federico RÃ¶lz is CEO of Sir.[B] Self-service storage, which operates 12 facilities in Costa Rica, El Salvador and Guatemala. With three projects in development, the company’s portfolio will soon have more than 592,000 rentable square feet. Sir.[B] actively seeks expansion opportunities in the region.