As vacancies in commercial real estate, including retail spaces and knowledge industry centers, continue to persist, there is a growing movement to repurpose these empty areas. Self-storage, driven by rising living costs and an increase in single-person households, is emerging as a new use for commercial properties.
Nam Seong-hoon, CEO of IMBOX, recently told Aju Economy, "Self-storage is not heavily dependent on location or market conditions, so it can be established in areas with high vacancy rates. It can be one of the solutions to the vacancy problem."
Nam's decision to enter the self-storage business stemmed from a simple experience. Near the end of his college years, he left his belongings at a friend's house, only to be asked to retrieve them quickly. This led him to realize that there was a need for temporary storage space for individuals, particularly for single-person households and students.
He had previously gained experience in various ventures, including startups and online shopping platforms. However, he recognized the limitations of online platforms, which struggle to generate revenue and grow without external investment. While searching for a business model that combined online and offline elements, he encountered the self-storage market abroad.
"In the U.S. and Japan, this business had already become a significant industry, but at that time, there was no well-established market in Korea," Nam said, which motivated him to start his own company.
The name IMBOX originated from the initial business model, which involved storing customers' belongings in boxes. In 2015, he opened the first storage facility in a basement space in Samjeon-dong, Songpa-gu, Seoul. By taking advantage of relatively low rental costs, he stored items sent by customers in boxes on shelves.
The initial customer base consisted mainly of single-person households and students. People needing temporary storage before moving or students vacating dorms would send their belongings via courier, which IMBOX would then store and later return to the desired location. However, after about seven to eight years of stagnation until 2022, Nam felt the limitations of the business.
The breakthrough came unexpectedly from the real estate market. Since self-storage requires initial costs for facilities and rent for each new location, rapid expansion was challenging. Nam then focused on the issue of vacancies in commercial real estate.
He devised a model where landlords with vacant properties would cover the facility costs, allowing IMBOX to operate the space and share the profits. He promoted the idea of opening self-storage locations to landlords through a blog, leading to the swift signing of the first contract.
The first location opened in Nonhyeon, Incheon. At that time, the concept of self-storage was unfamiliar, leading to a situation where family members of contract signers requested to cancel the contracts. Nam noted, "People were not well aware of the self-storage business itself, but now the market atmosphere has completely changed."
Currently, IMBOX operates 280 locations nationwide. Nam emphasized that self-storage is less dependent on location or market conditions compared to traditional commercial facilities.
He predicts that the issue of vacancies in commercial real estate will worsen. Many commercial facilities and knowledge industry centers developed during the construction boom remain unoccupied, while the demand for tenants continues to decline.
Conversely, the environment supporting self-storage demand is expanding, particularly due to rising living costs and the trend of downsizing living spaces.
Nam explained, "In the past, moving to a larger home was natural, but now it has become difficult due to the burden of living costs. As people downsize their homes, they need to reduce their belongings, but they cannot simply throw everything away, leading to an increased demand for personal storage."
Profitability is another key focus for IMBOX. Nam stated that the company operates primarily on its own capital without external investment, achieving an average annual return of nearly 30%.
IMBOX's business model aims to minimize facility investment costs. By utilizing door locks and QR code access systems, they have reduced the need for large-scale investments required for full automation. In contrast, some competitors have incurred higher costs due to significant investments in app development and automation systems, according to Nam.
IMBOX aims to secure a significant market share within six to twelve months after opening a new location, with a goal of achieving stable market share within one to two years. Nam explained that they expand according to demand, opening additional locations when the occupancy rate in nearby spaces exceeds 80%.
However, as the self-storage market grows, increased competition is an inevitable challenge. If competitors cluster in prime locations, profitability for individual locations may decline.
From a regulatory perspective, Nam mentioned that future fire safety regulations could impact business expansion. However, he noted that IMBOX's storage facilities currently use less flammable materials and electricity than typical restaurants or residential buildings, and are equipped with heat and smoke detection sensors to reduce fire risks.
IMBOX aims to secure 400 locations by the end of this year and expand to 1,000 locations nationwide by 2029. The company plans to achieve sales of 100 billion won and an annual profit of 30 billion won, with long-term goals of acquiring assets through funds.
Nam concluded, "The self-storage business is not just about placing storage units in empty spaces; it connects the changing residential environment with the commercial real estate market. As both the vacancy issue and the shortage of living spaces emerge simultaneously, the market will continue to grow."
* This article has been translated by AI.
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