Cape Town is about to get South Africa’s first head-to-head battle between rival self-storage skyscrapers, with two well-capitalised operators breaking ground within a few blocks of each other in the city centre. Complicating matters: they are simultaneously chasing the same acquisition target.
This week, JSE-listed Stor-Age announced it has agreed to acquire a portfolio of 10 self-storage properties from Xtraspace Properties for R387m, alongside a management agreement covering Xtraspace’s other six sites. Together, the deals lift Stor-Age’s South African footprint to 80 properties with nearly 500,000m² of gross lettable area.
Stor-Age CEO Gavin Lucas called the acquisition a natural extension of the company’s five-year strategy to 2030, describing it as an “earnings accretive” move to consolidate metropolitan markets across the country. His company launched 20 years ago with a site in Cape Town.
Not everyone is celebrating. Rael Levitt, CEO of rival operator Inospace, says his company lodged a formal objection with the Competition Commission in June.
“This deal is completely anti-competitive,” Levitt said, noting that Xtraspace was the only other national-scale operator besides Stor-Age. “This deal takes that away, leaving Stor-Age with no national competitor at all. That’s just not good for consumers — it removes choice and the competitive pricing pressure that a second national operator provides.”
Levitt does not hide his own interest — he says Inospace has itself explored acquiring Xtraspace, which, given Xtraspace’s footprint across Cape Town, Jourg and Durban, would catapult Inospace into a much larger national operation. “I am obviously interested, but I am actually fighting a fight for consumers,” he says. “For Stor-Age, [the deal] just gives them complete dominance of the entire sector.”
The rivalry is literally playing out in concrete. Inospace, until now known chiefly as a last-mile logistics and small-format warehousing group, is close to completing an 11-storey, 13,000m² building in the Cape Town city centre that will serve as its new head office and be the city’s largest storage facility.
That status won’t last long. Stor-Age is developing a 13-storey site in the De Waterkant development, which will be the tallest self-storage building outside the US.
Inospace built its business leasing small industrial units to businesses in Cape Town and Joburg. It piloted a dedicated self-storage facility about two years ago and has since scaled the model quickly: four facilities are now operating, six more are in the pipeline, and additional space is being added at existing sites in Cape Town’s northern suburbs. The Western Cape remains the immediate focus, Joburg is already part of the footprint, and Levitt says KwaZulu-Natal is next.
Inospace is privately held by management in a 50/50 joint venture — Inofort — with listed property group Fortress. Investors include Buffet Investments, led by Jonathan Beare. Levitt says the company has attracted takeover and listing interest but will stay private for now. He puts the value of property it owns and manages at about R3.2bn, across 50 storage parks — soon to be 52, following a recent Joburg acquisition — and close to 2,100 tenants.
Stor-Age, by contrast, has been listed as a Reit since 2016 and has grown mainly through ground-up development rather than via the Inospace route of converting existing buildings. More than half of Stor-Age’s business now comes from the UK, where it owns Storage King, though the group has renewed its South African growth push this year after a period focused overseas.
Two structural trends are fuelling demand, according to Levitt: the growth of e-commerce and the densification of urban living.
Stor-Age’s most recent results show about 40% of its self-storage customers nationally are businesses rather than individuals, while the proportion is closer to 60% at Inospace, reflecting its existing base of small-business tenants. For online retailers in particular, self-storage offers a cheaper, more flexible alternative to traditional industrial leases, letting them scale space as stock levels fluctuate.
On the residential side, the rise of compact “micro apartments” in dense developments around the Cape Town CBD means new tenants often have nowhere to put belongings that wouldn’t fit in a double garage. “People don’t have an extra garage or extra space to store their goods,” Levitt says. “There is actually a shortage of storage in the city.” That demand is concentrated in the same central neighbourhoods where both operators are now building. Customers want storage near where they live and work, not out on the industrial periphery.
Levitt argues storage behaves more like a retail business than conventional real estate, given its month-to-month leases and large, fragmented customer base — and he believes South Africa remains undersupplied relative to more mature markets such as the UK and Australia.
Globally, the physical storage market is estimated by Precedence Research to be worth $67.7bn this year, growing to $113bn by 2035, with North America accounting for 47%–48% of the total.
South Africa’s storage market is still small by global standards, but with two well-funded operators now building competing towers in the same postcode, and a Competition Commission review hanging over the sector’s biggest recent deal, an industry long defined by a single dominant player looks headed for a lively few years.