In New Zealand, cold storage-related property has been Identified as one of the leading growth sectors in the industrial property market.
This is largely due to the success of our primary industries and associated export activity, but also from the rise in online grocery and food delivery volumes, mirroring international trends.
Bayleys’ national director industrial, Scott Campbell, said anecdotally, the secure and safe storage of COVID-19 vaccines is also contributing to ongoing high demand in the cold storage sector in New Zealand.
“The Government roll-out of its vaccine programme requires a cold chain for the transportation and storage of the vaccine doses to preserve the pharmaceuticals’ integrity,” he said.
“As the vaccination programme ramps up in coming months, we’d expect to see further demand for secure, temperature-regulated transportation and storage to ensure time-sensitive distribution around the country.”
Campbell said importantly, the broader cold chain – including refrigerated containers, blast freezers and chillers, cold rooms, dedicated cold storage warehouses and refrigerated transport – is vital to New Zealand’s economy which is founded on the primary sector.
“Given our isolated geographical location, New Zealand’s export cold chains are some of the longest in the world requiring specialist logistics knowledge,” he said.
“The downstream effect of pandemic-restricted trade and disrupted supply chain movements throughout 2020, continues to put strain on the limited supply of property geared up to provide cold storage in our key centres and in regional New Zealand.
“Food producers and suppliers – particularly those with frozen goods for the export market – have been scrambling to find storage solutions, competing for space, and trying to get to grips with new health and safety protocols.
“It’s fair to say there’s still lumpiness in the sector as everyone tries to find a way forward under constrained and unparalleled conditions.”
Due to the specialised nature of the sector, developing purpose-built cold storage facilities requires deep pockets – particularly as energy-efficiencies are sought – and the ongoing maintenance costs over a facility’s lifespan are also significant.
“It’s not possible to instantly create additional footprint or repurpose other facilities given the stringently-controlled and very specific credentials required, and the fact that much of the equipment needs to be sourced offshore – adding to time lags.”
Campbell points to the investment made by grocery giants Foodstuffs and Woolworths NZ Ltd, with both entities building huge distribution facilities with cold storage capacity to cater to the growing demand for online shopping, and the need to streamline logistics.
“Supermarkets are investing heavily to create more resilient supply chains and ramping up their ecommerce capabilities to reduce travel and delivery times,” said Campbell.
“For example, Woolworths NZ is developing a 20,000sqm Countdown distribution centre in Wiri with large institutional developer Logos, bringing all its North Island fresh distribution under one roof.
“It neighbours a meat processing facility, run by global Hilton Food Group, linked by air bridge to the produce distribution centre, meaning one truck can be loaded up with a broad range of produce to be delivered to a store – which is better from a transport perspective as it minimises traffic movements and reduces carbon emissions.”
Bayleys recently concluded two significant transactions within the cold storage sector, with the sale of facilities in the Bay of Plenty and Hawke’s Bay.
A 5,961 square-metre cold storage facility on a 1.62-hectare site in Mount Maunganui, was bought by an Auckland investor for $16,126,000. The property is fully-leased to CSN, a leading player in New Zealand’s cold storage sector, and it intends to expand the facility on the underutilised site.
In Kirkwood Road, Hastings, a comprehensive cold store complex on 1.5 hectares, fully-tenanted by Lineage Logistics New Zealand Limited, sold for an as-yet undisclosed figure.
Lineage Logistics New Zealand Limited is a wholly-owned subsidiary of United States-based Lineage Logistics LLC, the largest cold store supply chain company in the world. Lineage recently acquired Emergent Cold’s operations around New Zealand which greatly expanded its Asia-Pacific footprint in the cold storage market.