The storage asset market has remained resilient into 2025 driven by increased uptake in self-storage and large-scale industrial storage facilities.
Alongside increased demand for e-commerce businesses, storage facilities also house sizable operational equipment and containers.
However, given the nature, scale, size and operational requirements, storage assets can pose many challenges and risks.
Understanding these risks is key to ensuring the successful investment and development of storage assets.
In 2025, several emerging trends are shaping the risk landscape for the storage asset sector. Here’s a look at the top five risks and effective management strategies.
State and local governments’ increased focus on sustainability and urban planning is expected to advance new regulations regarding zoning, building codes and environmental standards.
These regulatory shifts can affect development timelines, operational costs and the overall feasibility of storage assets.
Investors and developers should stay informed about upcoming regulatory changes.
Being proactive and conducting compliance audits and feasibility studies during the planning stages can reduce the risk of costly surprises.
Some market participants are investing in sustainable and energy-efficient technologies with a view to managing compliance and operational costs.
For example, property developers must adhere to government-mandated environmental, social and governance (ESG) standards in response to increasing regulatory demands.
Non-compliance with these regulations can result in legal and financial penalties.
Moreover, institutional investors are increasingly prioritising ESG criteria when making investment decisions.
Developers who integrate sustainability measures into their projects may avoid penalties (for example, in NSW corporate fines can be up to $5 million for significant environmental breaches under the Protection of the Environment Operations Act 1997).
Maintaining high occupancy rates is crucial for ensuring the success of a storage facility.
From an insurance perspective, occupancy rates are crucial in assessing the risks associated with a storage facility.
Low occupancy can signal potential vulnerabilities, as it may indicate that the facility is not in demand.
Tracking occupancy rates is one way to monitor actual usage and potential exposure.
Business Interruption insurance can be beneficial for property owners and developers of storage assets, as it can help reduce the financial impact of unexpected disruptions—such as low occupancy rates, allowing them to focus on restoring operations.
The rise of innovative storage solutions, automated operations and digital platforms has transformed how storage facilities are managed and operated.
However, these advances have also introduced the risk of obsolescence for traditional facilities that fail to adapt.
Competition is intensifying, particularly in urban areas where space is limited and demand for storage continues to grow.
While technology can be advantageous, investors and developers must understand and implement cybersecurity protocols to protect their assets.
For example, review security technical controls, identify third-party cybersecurity risks and conduct scenario-based cybersecurity exercises and infiltration testing.
Property damage from severe weather or intentional harm can have a significant impact on storage facilities, disrupting operations and creating financial challenges for owners.
Storage contracts outline exclusions for certain items, which are reviewed by underwriters to ensure that insurers are comfortable with the goods stored.
A consideration which can help protect against the above, is an Industrial Special Risk (ISR) policy which helps transfer this risk to the insurance market.
This comprehensive policy is designed to protect commercial and industrial properties and can offer seamless coverage from construction to operation, while minimising the administrative burden by utilising information gathered during the construction phase.
Additionally, an Environment Impairment Liability insurance policy can help to mitigate against exposure to potential liabilities and the potential financial risks associated with pollution or environmental incidents.
The importance of Environmental Impairment Liability insurance has grown significantly due to stricter legislation and a heightened awareness within communities about environmental issues.
The demand for storage assets is increasingly influenced by changing consumer behaviour, such as the growing popularity of e-commerce and the rise of remote work.
This has created an evolving demand for different types of storage, including personal storage, commercial storage and distribution hubs.
To address risks arising from shifting demand, savvy developers may look to focus on flexibility and adaptability when designing storage facilities.
A detailed market analysis, including consumer preferences and industry trends, should guide development strategies.
By identifying and addressing potential risks early, investors can protect and enhance the value of their assets and reduce operating costs.
Risk mitigation strategies can safeguard against potential losses and present opportunities for growth and innovation.
For example, implementing green technologies and upgrading to more efficient systems can lower operating costs and may attract environmentally conscious tenants.
Investors and developers can strengthen their position in a competitive and volatile market by anticipating emerging risks and preparing for them with the right strategies.
Staying proactive, flexible and informed will help protect storage assets.
In short, the market for storage assets in Australia is full of potential, but only for those who recognise the risks and take a considered approach to any investment or development within this space.
To understand more about storage asset risks, speak to our team of experts.
Stephen Cooper, general manager, global real estate and construction
Phone. +61 401 322 358
Email. Stephen.Cooper@lockton.com
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