This article is from the Australian Property Journal archive
WITH Australians expected to spend $200 billion on food retail by 2028, demand for temperature-controlled space is rising but Australia’s cold storage capacity is lagging and needs to catch up.
According to CBRE’s Cold Chain Logistics report, Australia is lagging the Netherlands, Canada, the United Kingdom and the United States.
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.
CBRE head of industrial & logistics research Sass Jalili said Australia will need at least 400,000sqm of new temperature-controlled space required by 2028.
“Just to reach US levels would require approximately an additional 400,000sqm of new warehouse space to be developed in Australia, stretching up to 1.3 million sqm to be in line with the Netherlands,”
CBRE estimates there is currently 10.2 million cubic metres of refrigerated warehouse capacity in Australia.
Jalili said the sector is attractive for investors as temperature-controlled 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 added.
Industrial & logistics director Adam Tresidder said demand is being driven by population, e-commerce spending, international trade activity, underpinned by government support and initiatives.
He said the main industries demanding cold storage food & beverage and pharmaceuticals and CBRE forecasts Australian consumers will spend over $200 billion on food retail by 2028.
Projects underway include ISPT/Aliro’s development at Greystanes and a NewCold development at Marsden Park. One of the most recent facilities, which is reaching practical completion in a few weeks, is Charter Hall’s Light Horse Logistics Hub Lot 4 development in Sydney for HelloFresh. The location of this development has access to 60% of Sydney’s food logistics facilities within a 10-minute drive of the site.
“We are seeing an influx of cool-room and freezer operators look 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.” Tresidder said.
