icro-apartments are a fairly new construction concept in Western countries, but they have been a part of the real estate market in Tokyo since the 90s. Even though the architectural style, known as kyosho jutaku, or just jutaku, is nothing new in the region, videos of locals and foreigners touring their micro living spaces, sometimes as small as 30 feet long, have been appearing all over social media.

The trend makes more sense when you remember the city is the largest in the world and heavily dense, so the need to house an abnormally inflated number of people while offering affordable accommodations was one of the factors that led companies in the country to invest in this type of construction. Regardless of how you might feel about the trend, it is a fact that the self-storage market got its jump-start in the country around the same time the micro-apartment movement started to take hold.

During the very first years of early investment, the self-storage facilities would usually be in vacant office buildings that would be renovated by investors. However, as its popularity grew, companies started to invest in the construction of new facilities.

This is the case of Quraz, the biggest indoor self-storage company in Japan, founded by Matt Ward, an American expat living in Tokyo who had previous experience working in the U.S. self-storage market. After some time living in the country, he noticed the need for extra space, as houses in Japan were much smaller than those in the U.S. and other parts of the world. This gave him the idea to import the self-storage business model to the country.

He was soon able to secure funding from M3 Capital, a private equity firm in 2001, and started the business under the corporate name Piedmont Storage Management, which was changed to Quraz two years later. After much growth, in September 2013, the company was acquired by Evergreen Real Estate Partners LLC, an American Real Estate Fund backed by US Institutional Capital.

Until the company opened in the country, storage was mostly made by warehouses in a service often referred to as trunk rooms. According to an article on Tokyo Cheapo’s website, the name derived from the Victorian era, when homes typically had a room for storing trunks. When warehouses started to offer this type of business, they made the connection and the name just stuck, becoming a popular way to refer to self-storage companies in the country to this day.

Quraz was responsible for importing the U.S. self-storage business model to Japan, and Ward is still considered a pioneer in the industry for completely changing what the market looked like in the country. It did, however, suffer some slight changes to better cater to the Japanese customers. A big example of that is some niche storage solutions often referred to as “hobby storage.”

Quraz CEO Stephen Spohn says they are currently working on opening the company’s first wine storage facility this summer, which falls under the “hobby storage” category. This will be their very first step into the wine storage market, which is so far fairly small. “We will be using one floor in one of our newer properties,” says Spohn.

The company also offers a storage model called “garage storage” in some select facilities, a service usually used by customers who have expensive sports cars or motorcycles, as the latter is considered to be at high risk of theft in the country. As of now, they offer two types of motorcycle parking: the basic plan, which resembles a garage with lines on the floor delimiting each parking spot, and a premium version, which offers a separate unit complete with a garage door where customers can store their motorcycle as well as their equipment and tools. This version, however, is also considered hobby storage.

Another tactic the company uses to distinguish itself from competitors is having a full-time staff working on site during business hours. “The staff is there for customer service but also for sales and security. None of our competitors have staff on site, so you can imagine that if you need storage immediately you can just drive up to one of our facilities, park, sign up, and put your property into one of our storage units that same day,” says Spohn.

Most self-storage businesses in the country are unmanned but don’t have the technology you would expect from Japan. “In some of our competitors’ [storage facilities], it would sometimes take several days to process the transaction through the mail, or you would have to set up an appointment, visit, etc.”

Japanese culture is very traditional, so visiting the installations before signing a contract is a usual practice. During the tour, customers will make sure the space is clean and in good conservation. They have also been accepting of the bureaucracy of having to go through the hassle of getting in touch with the company and dealing with most of the legal process being completed primarily through mail. However, the fact that the biggest company in the country is the one that keeps a staff on site does say something about this antiquated process.

A staffed facility also allows Quraz to provide some extra services, like the Quraz Shuttle, where they will send a small delivery van driven by a staff member to a customer’s home to facilitate the loading of their property. The shuttle driver then takes them to their storage facilities and helps unload their items into their unit. “The service is free for first-time users,” Spohn says.

Another differential is their delivery support service, a no-contact model where, for a monthly fee, customers can send their personal property through their delivery method of choice to their facilities and staff will place their belongings into their storage unit. The service also gives customers access to an app that can be used to retrieve their items, allowing staff to pick up the item from their space and ship it to their residence. This allows the company to broaden its customer base beyond its district and grants customers access to a high-quality facility without even going to one of its 67 properties.

This fully remote service was the steppingstone that led Quraz to recently take home the Technology & Innovation award from the Self Storage Association Asia (SSAA) earlier this year. “We are quite proud of that service because we had to leverage technology and integrate it with our local operations at the property,” says Spohn. “It turns out it is a service a lot of customers really value, and it’s a huge differentiator.”

The company’s investment in customer service resulted in its demographic reaching a total of 80 percent of customers looking to store personal items in units, versus only 20 percent of businesses looking for extra storage.

In the realm of technology, Quraz already had a fully operating business website once the COVID-19 pandemic hit, so most of their effort at the time went towards how to service new customers without contact. “Our security system allows us to centralize the management of our security system, so it allows us to let customers into the property remotely, allow access to the elevator, and sort of give them an assisted tour remotely through the phone, which we didn’t do until COVID,” Spohn says.

For Aaron Farney, CEO of Unwired Logic, a technology company specializing in the self-storage market, Japan’s technological advancements weren’t translated for the self-storage market, as companies often prefer to follow a very traditional business approach. However, he has noticed more traditional businesses updating their business models to better appeal to customers due to worldwide technology advancements.

“[Unwired Logic focuses] on digital transformation. In a lot of cases, self-storage companies in Japan have old, outdated tech. They do most things manually, so we go into those companies and help them define new model processes for automated payments, online bookings, sophisticated access control, and more. Once we have those, we will help them select and implement the technology,” Farney affirms. “We do the whole technology stack, [such as] leads, invoice management, reporting, and access control.”

Farney has over 30 years of professional experience working with technology in the self-storage market and believes the next big trend will be chat commerce. “[It gives customers] the ability to use an app such as LINE, Whatsapp, or Facebook to do their whole transaction,” he says. “As the demographics get younger and younger, no one wants to pick up a phone; they don’t even want to go to a website. They are going to see something on Instagram, WhatsApp, or online, and then they will want to do the whole interaction and contracting process within the app.”

To stay ahead of the curve, Unwired Logic created its own Chat Commerce for Self Storage app that launched at a 2024 SSAA event in Hong Kong. “It allows customers to find the location of a self-storage business, choose the type of unit, pay for the service, sign the contract, get the access code—all in just a few minutes,” says Farney.

This solution is a great tool for self-storage companies in the Japanese market, as the entire process is usually manual and can take weeks to be finalized. “People use this to various degrees. China uses this [method] predominantly, and we are starting to see a little bit more of this in Asia, especially Southeast Asia,” he affirms. “For instance, in Indonesia, everyone does everything through WhatsApp. We will start to see that more and more as customers start to demand to not only chat with the business in those apps but also be able to complete the entire transaction.”

Farney’s prediction was validated by a trend report published this year by the Rental Storage Association of Japan. The report said, “More people are using social media, and more customers are using mobile apps, resulting in a higher proportion of internet contracts. Approximately 35 percent of members of the association can tour facilities on the website, 65 percent can reserve rooms online, and 48 percent can make online payments. As it is now possible to make contracts online, the proportion of younger generations in their 20s to 40s using the service has increased.”

According to the same report, the current market size of the self-storage market in the country is estimated to generate a total of 80 billion yen in annual sales, with 14,500 facilities and a total of about 650,000 units. The average occupancy rate of facilities opened for over one year in the country is 85 perent. Most of these facilities are in metropolitan cities such as Tokyo and Osaka. Rural areas are a practically untapped market waiting for investment, with many vacant properties suitable for storage just waiting to be renovated, following a few color regulations that change within each city.

In the country, there are two types of facilities: the indoor and outdoor. The first constitute about 42 percent of facilities. Most of them are climatized and overall more secure, especially when taking into consideration Japan’s weather (the summer heat sometimes surpasses 100 degrees and during winter it snows). All of that, of course, comes at a higher price range. The outdoor type constitutes a total of 58 percent of facilities and is often located at parking lots on the outskirts of metropolitan cities. In them, customers’ belongings are at the mercy of temperature and humidity changes, but they tend to attract a clientele mostly due to their lower rates.

“The problem with outdoor storage is that sometimes they stack the containers on top of each other, depending on the facility,” says Farney, “so you might have to schedule some time for them to put it down.”

The market has seen a yearly increase of around 9 percent for the past years. “We do our own internal capacity survey [at Quraz], and we have been measuring the market size for 15 years now. Sometimes it’s 7 percent or 8 percent and sometimes it’s 10 percent or 11 percent, but over the long immediate term it’s always been 9 percent,” says Spohn.

Currently, only 1 percent of 55 million households use self-storage, but the Tokyo metropolitan area has 2.3 percent of demand, making it quite saturated. The future of the market in the country seems promising, as it is estimated to reach 100 billion yen in annual sales by 2027. “Two percent of households in Tokyo currently use self-storage,” Spohn says. “We have a long runway of growth. In the future, I believe we will be expanding perhaps a little further outside of Tokyo to accommodate more suburban demand.”

As for the future of the market in the country, Spohn believes it tends to grow, especially as more international investors join the market. “The entrance to the market of new global institutional capital will over time transform the industry with better products and services, and perhaps even better real estate evaluations for self-storage, as equity at the market increases,” says Spohn, who’s excited to have more competition join the Japanese market, as he feels it will enhance the quality of the product and service. “That will have an ongoing effect of improving the quality of storage in Japan, and I think that is going to be good for the whole industry.”