Commuting to work aboard a Boeing 727 recently, I looked out the window and caught a magnificent view of a snow-covered volcano peak above the clouds. I was so taken by this view that the gentleman sitting next to me apparently thought I was praying because of the turbulence we were experiencing. He kindly explained that the choppy weather is quite normal in the Andes. When I pointed out the cause of my commotion, he immediately went back to sleep. Obviously, he has seen the view so many times before he is used to it to the point of boredom. Meanwhile, for me it was the equivalent of Christopher Columbus when he first laid eyes in America.
What does this have to do with self-storage? Well, it has occurred to me more than once that the United States has grown accustomed to self-storage, but Latin America is seeing it for the first time—and is in awe.
A Quick Overview
When I meet with local owners and operators of self-storage in Latin America and show them how this business is handled in the United States—from due diligence to operations—I see excitement in their faces. You know what I am talking about: that same excitement you got years ago when you first realized what a great business this is.
The fact that I fell in love with this mountain does not make me ready to climb it; I need training. The same is true for newcomers to the self-storage industry. With networking at industry tradeshows and timely information from magazines like this one, they can get the much needed knowledge that can help them reach the summit. I feel blessed with the fact that I can help them along the way.
At this early stage of discovery, we are still gathering data, but what we have discovered so far is quite impressive: There are self-storage facilities in almost every country in Latin-America. For the most part, facilities are mainly brick and mortar, but the more developed countries—such as Brazil, Chile, Colombia, Costa Rica, Ecuador, Mexico, Panama and Puerto Rico—have third-generation facilities like the ones we are accustomed to seeing in the United States.
The Challenges Ahead
It’s estimated that there are more than 250 facilities in Latin America and a lot more coming on line in the next couple of years. The leading country is Mexico, in which we have identified at least 36 operators, most of them owning more than one facility.
One challenge they are facing, like in the United States, is finding suitable real estate, especially in large metro areas. Therefore, we are starting to see a tendency toward more multi-story facilities. This multi-story development is a big shift since most of the customers are use to drive-ups, but it does make it easier to identify older facilities knowing most are single-story types.
In order to compete with new businesses on the block, most operators have added services such as free lifts for tenant use or personnel assistance to carry items to storage. Of course, these practices are easily provided due to inexpensive labor and the lack of security enforcement in most of these countries.
Another interesting shift in Latin American countries is owners/developers are taking advantage of old warehouses with the right height, installing mezzanines and converting them for self-storage use. This is quite common in Puerto Rico, where the manufacturing industry has moved to the Dominican Republic and Chile.
Opportunities for North America
Latin America is looking to learn from North American self-storage standards, which in return provides an excellent opportunity to both regions. First, it offers opportunity for U.S. vendors to showcase the products and services that took this industry to a complete new level. Second, it provides examples for Latin America to gain that competitive edge that characterizes U.S. business models.
Much of business news these days focuses on globalization and how it has forced the implementation of free trade agreements with all its pros and cons. The fact is the world has become one big market, especially when we consider that 95 percent of the world’s population lives outside the United States.
It’s a great time to fall in love again with self-storage and feel proud to be are part of a truly international industry. In Latin America, many owners and operators speak Spanish, but self-storage is quickly becoming an international language.
