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An undersupply of temperature-controlled storage has the sector nearing zero vacancy.
According to a report from CBRE, Australia’s current cold storage facilities must substantially expand over the next four years to meet the needs of the pharmaceutical and food and beverage industries, with the country subsisting on far less cold storage per capita than other comparable nations.
The commercial firm’s Cold Chain Logistics report reveals that Australia currently has 0.4 cubic metres of refrigerated warehouse capacity per urban resident, behind the US at 0.6 cubic metres and the Netherlands at 0.9 cubic metres.
It is estimated that in line with the country’s growth projections, at least 400,000 square metres of new temperature-controlled space will be required by 2028. That would bring it up to a level comparable to the US. For the country to have 0.9 cubic metres of cold storage for every resident, up to 1.3 million square metres would need to be constructed.
With the sector already reporting tight vacancy rates, Sass Jalili, CBRE’s head of industrial and logistics research, noted that “Australia’s cold store and freezer space has, on average, achieved close to double the average rent for a typical super prime grade industrial and logistics asset”.
“Strong occupier demand and almost zero vacancy in the sector is driving growing interest from developers and there has been a pick-up in speculative development activity, prior to which most temperature-controlled facilities were build-to-suit,” she shared.
CBRE industrial and logistics director, Adam Tresidder, noted that demand is particularly contracted around some major city fringes.
“We are seeing an influx of cool-room and freezer operators looking for space across western Sydney. On the back of this, some developers are investigating speculatively building fridge and freezer facilities in certain markets to capture these types of groups that are historically sticky tenants that commit to long-term leases,” he said.
One such facility set for completion this winter is Charter Hall’s Light Horse Logistics Hub Lot 4 development in Sydney, which will have access to 60 per cent of Sydney’s food logistics facilities within a 10-minute drive.
ABOUT THE AUTHOR
Juliet Helmke
Based in Sydney, Juliet Helmke has a broad range of reporting and editorial experience across the areas of business, technology, entertainment and the arts. She was formerly Senior Editor at The New York Observer.
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