The refrigeration real estate market is hotter than ever

0
39

[ad_1]

The surge in online shopping and food sales has led to a boom in global demand for refrigerators.

Companies that build cold storage warehouses say they are seeing growing interest from developers looking to build or buy premises in the sector, despite construction costs that are two to three times higher than those of a conventional logistics warehouse.

ARCO National Construction Co., which currently has about seven speculative refrigerator storage projects in the US, said the market has continued to expand since the start of the pandemic.

“I have weekly conversations with developers looking to work in cold storage,” Brian West, director of pre-construction at ARCO National Construction, told FreightWaves. “Some of them even want to enter the speculative cold space for the first time.”

ARCO currently has three cold storage projects in Texas, including two for developer Cold Creek Solutions LLC in San Antonio and Denton; and in Houston for CenterSquare Investment Management and Boomerang Interests.

Boomerang and CenterSquare are developing a 315,101 square foot speculative cold store called the Houston ColdPort, scheduled for completion in 2022.

“The pandemic has highlighted and accelerated the growing demand for online ordering of chilled and frozen food,” said Jeff Raeder, managing director of CenterSquare Investment Management, in a statement.

Online grocery shopping grew 81% to $ 55.5 billion in 2020 from 2019, according to the data. Coresight Research, a retail consulting and research firm based in New York City.

“We expect that a significant proportion of shoppers who turned to online grocery stores during the pandemic will not change their course once the pandemic dies down,” said Coresight Research in the US. “More than 60% of online grocery shoppers plan to buy groceries online more often.”

According to research company Global Industry Analysts Inc. from San Jose, due to increased demand from consumers, the cold storage construction industry could grow to $ 22.9 billion by 2026, up from $ 7 billion in 2019.

National Refrigerated Truck – Industry slang for temperature controlled trailers – Failure Index (ROTRY, USA) is currently 36%, which is significantly higher than in the same period last year. Temperature controlled equipment is now very popular in the transportation industry.

This FreightWaves SONAR chart shows the current rejection rate for US refrigerated truck orders (blue) compared to 2020 (green). To learn more about FreightWaves SONAR, Click here

In the United States, cold stores are mainly concentrated in California, Delaware, Florida, Georgia, Illinois, Indiana, Nebraska, North Carolina, Pennsylvania, Tennessee, Texas, Utah, and Virginia.

“There are a lot of cold storage facilities near ports and ships,” said Kurt George, assistant vice president of operations and sales for Property Damage Appraisers Inc.

“What is now being stored as a market is not just food and ice cream,” said George. “With COVID, we are now more active than ever in pharmaceuticals and timely pharmaceuticals such as vaccines, both during storage and in transit.”

One of the newest refrigerated warehouses to open in the United States is owned by a third-party logistics company. FreezPak Logisticswhich recently opened a 103,000-square-foot facility in Philadelphia.

The FreezPak Logistics Philadelphia office offers dry, cold and frozen temperature controlled areas, as well as 15 loading bays and 26 trailer locations. The facility opened on Wednesday and is already 100% leased.

Dave Saud, co-CEO of FreezPak, said the facility was built as a result of increased demand for cold rooms due to increased sales in e-commerce and grocery stores.

“Every day, our clients push us to start factories in all major markets,” Saud said.

Saud said Carteret, NJ-based FreezPak will soon announce a sixth site in upstate New Jersey to meet continued demand for cold storage.

The cold chain market has also seen several recent major global acquisitions. Line LogisticsThe largest operator in the industry announced last week the acquisition of the Esbjerg cold storage division, Danish Claus Sørensen Cold Storage.

Earlier in June, Lineage Logistics also acquired the Kloosterboer Group, based in Rotterdam, The Netherlands. These two acquisitions increase Lineage’s global presence to more than 2.2 billion cubic feet of temperature controlled capacity in 15 countries in the Americas, Europe and Asia.

Lineage Logistics, founded in 2008, is headquartered in Novi, Michigan.

“Demand from the electronics market and a shift in consumer habits in favor of fresh produce have led to increased investment in the industry in recent years,” Lineage Logistics FreightWaves said in a statement. “Cold storage is critical to transporting food to their final destination with food wholesalers, grocers, restaurants and other customers at the end of the food supply chain.”

In 2020, Lineage acquired 38 companies and expanded into eight new countries, adding over 130 offices to its global network of businesses. In March, Lineage announced it had raised $ 1.9 billion in equity from new and existing strategic partners, following a $ 1.6 billion increase in September 2020.

“Lineage is leveraging the funds for green global development from the ground up, capacity expansion, mergers and acquisitions and technological innovation to ensure end-to-end supply chain efficiency for customers,” the company said. “Lineage continually evaluates future acquisitions and builds for future growth to meet customer needs. As Lineage’s customers grow, so does its own service network and the ability of its businesses to meet demand. ”

The largest publicly traded cold chain investment trust in the real estate industry, Americold Realty Trust, located in Atlanta (NYSE: COLD), announced Sunday it would invest $ 84 million in its cold storage facility in Russellville, Arkansas.

Americold began construction of a 131,000 square foot refrigeration and distribution facility in Russellville, built to meet the production needs of Conagra Brands, one of Americold’s largest customers.

Americold operates 242 locations in the Americas, Europe and Asia.

Increased demand is seen not only among the large operators of refrigerated warehouses. Cold Chain Solutions in Laredo, Texas has seen a surge in business over the past year with products such as fresh and frozen foods.

Cold Chain Solutions serves a 15,000-square-foot customer transporting large quantities of perishable goods between the United States and Mexico.

“One of the reasons for the strong surge in cold store demand is number one, the biggest factor being load capacity,” said Gerardo Alanis Barrios, CEO of Cold Chain Solutions. “Truck capacity has been low for years.”

Alanis Barrios said limited capacity plays an important role in especially frozen foods such as frozen vegetables or pharmaceuticals such as Tylenol, Advil, or ibuprofen.

“Since the goods are not so urgent, they will stack them until they find a truck,” said Alanis Barrios.

“Since there are no trucks, they cannot transport these goods north to the United States. Sometimes even customers use trailers as storage facilities. We should be charged with detention for using trailers, ”said Alanis Barrios.

George of Property Damage Appraisers said cold storage operators were also targeted by cyber attacks.

“Cyberattacks have really started to morph into cyber ransom, and that’s what we’re going to do with cold storage,” George said. “When it comes to cold storage, pharmaceuticals, COVID vaccines, coldrooms are now much more important than just the loss of frozen food. We are not only talking about making sure you build securely for everything inside, but also about actually going in and making sure your systems are safe. “

Click to see more articles by Noah Mahoney on FreightWaves.

Other articles by Noah Mahoney

Mexico Commercial Vehicle Exports Up 277%

Rethinking global supply chains can be a long and arduous process

Mexico remains the top US trading partner



[ad_2]

Source link