Booming demand and record rents for Australia’s cold storage facilities

Australia’s cold storage capacity per person is lagging the Netherlands, Canada, the UK and the US, with at least 400,000sqm of new temperature-controlled space required by 2028, new CBRE research has found. 

CBRE’s Cold Chain Logistics report highlights 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.

Sass Jalili, CBRE Head of Industrial & Logistics Research, said, “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 Research estimates there is currently 10.2 million cubic metres of refrigerated warehouse capacity in Australia.

Ms Jalili added, “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.”

The main industry sectors demanding cold chain logistics services are food & beverage and pharmaceuticals, with both sectors expected to continue expanding in the Australian market. CBRE Research forecast Australian consumers will spend over AUD 200 billion on food retail by 2028.  

“Demand is being driven by population, e-commerce spending, international trade activity, underpinned by government support and initiatives,” CBRE Industrial & Logistics director, Adam Tresidder said. 

“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.”

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. The location of this development has access to 60% of Sydney’s food logistics facilities within a 10-minute drive of the site. 

Charter Hall is collaborating with industrial & logistics tenant customers to create customised temperature-controlled facilities tailored to their ongoing business requirements.

Charter Hall’s Industrial & Logistics Head of Development, Andrew Simons added, “Light Horse Logistics Hub in Sydney’s Eastern Creek is soon to be home to many food logistics tenant customers, offering businesses ease of access to Sydney’s major arterial road network and 4.5 million people within 60 minutes.”