2021 Self-Storage Market Analysis: Montreal
There are many differences between the Canadian and US self-storage markets, including higher construction costs and capital gains taxes in Canada, and a much lower amount of storage per capita. And these disparities are amplified in Montreal, the second largest city in the country, which serves as a cultural and economic center for Quebecers. It has its own unique laws and regulations, including the mandatory use of French in the conduct of (most) business. It’s almost like his own little nation.
While there are many things American self-storage investors need to learn when trying to break into the Montreal market, the first is storage, the French word for storage. “French Canadians are very proud of their language and their heritage,” says Alain Gingras, senior manager at StorageMart, which has eight facilities in Quebec, including five in the Montreal area. “Anyone who does not understand that [pride] going to be in for a surprise.
Supply and demand
Like other major Canadian cities, Montreal is an attractive market for both long-time self-storage owners and new investors. With more than 4 million people living in the metro area, the demand for storage is increasing, albeit at a slower rate than in the United States. Still, rents are high, coming in at around C $ 200 per month for a 10 x 10 unit.
Demand alone ignores solid pricing. The metro has a relatively low supply of self-storage facilities (about 136), which represents about 1.39 square feet of storage space per person. This is a low penetration rate compared to other major cities in Canada, according to Radius +, a company specializing in self-storage data, analysis and location intelligence.
Several reasons explain the low supply, notably the fact that the city is an island at the confluence of the Saint-Laurent and Outaouais rivers and that it does not have a lot of space available to build. The cost of land is quite restrictive and it is difficult to find an affordable development space. Montreal is also an older city, so converting buildings is generally the way to go for most developers.
Even though you can find a suitable property, zoning and permits are difficult, increasing the time and cost of construction. And those costs are already high, as they are in most parts of Canada, even compared to the increasing rates we are seeing in the United States.
The lack of available land coupled with strict zoning restrictions has tended to push new self-storage construction in the suburbs. Even in these regions, the pace of development is slower than in other parts of Canada, according to industry officials.
It should also be taken into account that modern self-storage, that is, multi-storey facilities with sophisticated air conditioning systems, is relatively new to Canada. “People here are just discovering self-storage,” explains Simon Berman, co-founder of Montréal Mini-Entreposage, which operates 14 facilities in Quebec and has two conversion projects underway. “Awareness is relatively low, but it is increasingly accepted. People are realizing that they need space.
There are also cultural barriers that can make it difficult for some non-French speakers to do business in Montreal. “It’s different from doing business in Quebec in general,” says David Allan, vice president of Apple Self Storage, which operates 36 facilities in New Brunswick, Nova Scotia and Ontario. “Montreal is such a wonderful city. They are very proud of their heritage, so they have specific laws to protect it. It’s small things that can be a challenge, like [having to conduct] digital marketing in both languages.
Additionally, French Canadians tend to like doing business with local or regional companies when possible, so big brands, including national (or continental) self-storage operators, may be at a disadvantage when it comes to doing business with local or regional companies. it is about attracting certain customers. Consumer sentiment and other high barrier factors partly explain why there are relatively few large self-storage players in Montreal compared to the rest of the country. For example, about 50% of self-storage facilities in Toronto are owned by national companies. In Montreal, this figure is around 15%. The reluctance of developers and investors to enter the market may also play a role in keeping this number low.
Ultimately, Montreal’s overall attractions, including its size, growing demand for storage, and solid pricing, should outweigh any challenges in the long run. It is a unique city and a good self-storage market, with great potential for growth. Just remember, this is storage, no storage. Or self storage service (self-storage), if you really want to impress the locals.
Monty Spencer is CEO of The Storage Acquisition Group, which specializes in acquiring off-market self-storage facilities and portfolios nationwide. The company also offers market analysis reports, underwriting and closing support. For more information call 757.867.877.