Time for a cool change
A lack of available cold storage property in the leasing market is creating robust competition from occupiers and signalling a need for further investment in the sector.
Industrial - Workplace October 2021
Globally, the cold chain sector is one of the fastest growing segments of the industrial property market and the pandemic has only escalated this.
Bayleys’ national director industrial, Scott Campbell, says over the past 12-24 months, demand for specialist property that serves the cold chain sector has been amplified – from a number of quarters.
“Driving this demand for cold storage is the requirement for safe vaccine storage, chiller and freezer capacity for New Zealand’s primary export sector on the back of global demand for our commodities, and changing consumer habits,” he explains.
“The pre-prepared and convenience food segment of the market has really rocketed in recent years as people embrace the food box shopping model, utilise food delivery apps and look for time-saving shortcuts in food preparation.
“But it’s the general uptick in online grocery shopping that has seen industrial property with large-scale integrated cold storage capacity truly come into its own.
“As the provision of produce and food is an essential service across all alert levels, there has been an unprecedented surge in requirement for cold chains with integrity and often, needing that all-important last-mile location.”
Grocery giants Foodstuffs and Woolworths NZ Ltd have both recently committed to huge distribution facilities with cold storage capacity to cater to the growing demand for online shopping, and the need to streamline logistics.
Campbell says developing purpose-built cold storage facilities requires deep pockets, with ongoing maintenance costs over these properties’ lifespan also significant in return for longer than normal leases.
“New Zealand has a fairly limited amount of cold storage space and it’s not as though we can instantly create additional footprint or repurpose other facilities given the stringently-controlled and very specific conditions required.
“Retro-fitting is becoming more common place as technology changes and allows, however this can be expensive.
“Energy-efficiencies are increasingly important to occupiers from a sustainability stance, so the investment dollars required soon stack up.
“Additionally, the majority of the specialist equipment needs to be brought in from overseas and with global demand for cold storage not letting up, we’re likely to be in the long queue for parts and equipment.”
On a positive note, Bayleys currently has a large-scale food-related cold storage property available for lease in Golden Arches Place, Wiri, South Auckland.
Leasing agents Scott Campbell, and Greg Hall, say the current occupier Martin Brower, an international logistics provider that has occupied the property since 2007 operating a distribution centre for food products, will be relocating to a larger purpose-built facility early next year at Logos Wiri Logistics Estate.
“This creates an opportunity for an occupier in the food service sector to secure a total of 4,309sqm of well-laid out amenities including warehousing, dry store, chiller, freezer (including blast), canopy, yard, and generous onsite parking.
“The property has drive-around capability, good container set-down areas and the owner will be undertaking a range of upgrade works on-site ahead of a new lease kicking in.
“This will include a major canopy extension, extensive plant replacement, yard-resealing work, office upgrade and, if required by an incoming tenant, an expanded building footprint for further cold storage.”
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