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Home›Moldova real estate›Cold storage for food is a hot real estate game

Cold storage for food is a hot real estate game

By George Taylor
March 23, 2021
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A surge in online food shopping is intensifying demand for food storage warehouses, sparking billions of dollars in new real estate developments.

Online grocery shopping was taking off even before the pandemic. Services like Amazon Fresh, FreshDirect, and Misfits Market offered a convenient alternative to the supermarket. Demand exploded when people began to fear they could catch Covid-19 on a trip to the store.

Now companies like Americold Realty Trust and Lineage Logistics LLC are building or preparing to innovate on tens of millions of square feet of temperature-controlled warehouses that can store meat, dairy, fruit and other perishables. .

Many of the new facilities are located near residential neighborhoods and designed to respond more effectively to home orders. They also have advanced robotics and data analytics that will allow the service to pivot quickly if demand changes between households, restaurants, schools, grocery stores and other end stops on the supply line.

The global cold room construction market is expected to reach $ 18.6 billion in 2027, up from $ 7 billion in 2019, according to Emergen Research, a consulting firm. New players in the industry are “springing up everywhere,” said Kristin Gannon, managing director of real estate investment bank Eastdil Secured.

In 2019, only about 5% of groceries were purchased online, according to Bain & Co. This figure rose to 10% last year and Bain predicts it could reach 12% by 2025.

Many existing food buildings are old and inefficient and lack the safety features of a new development, said Neil Johnson, founder and CEO of Provender Partners LLC.

His company plans warehouses where perishable goods can be stored, processed and shipped home. These buildings can store food at different temperatures and provide room for food business tenants to prepare simple meals and prepare meal and grocery kits for home delivery.

Grocery chains are also rethinking supply lines after panic buying in the early days of the pandemic emptied shelves of meats, dairy and other perishables.

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The pandemic has turned the supply chain upside down, ”said John Carrafiell, senior managing partner and co-founder of real estate investment company BentallGreenOak, which has invested in cold storage. Distributors and warehouses, he added, “no longer knew where their orders would come from” after the closure of restaurants, schools, stadiums and other traditional outlets.

The developers say such shortages should be avoided in the future, as modern food storage facilities can adapt quickly when demand shifts, for example, from schools to households.

Americold, a real estate investment trust, developed a record cold storage facility of $ 461 million last year, more than double the upper limit of advice it gave to investors.

Billions of dollars of investment fuel the development of storage. Cerberus Capital Management LP agreed late last year to become the primary funder of Provender’s plan to build a multi-billion dollar portfolio of cold storage and processing facilities.


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Lineage, the world’s largest cold storage company in terms of space, recently completed a $ 1.9 billion funding round whose participants included BentallGreenOak, D1 Capital Partners and Oxford Properties Group. It has 21 new developments and expansions this year, compared to 10 in 2020 and 11 in 2019.

But the history of the cold storage industry has a turbulent past for investors due to the dangers of oversupply and the high cost of expanding frozen and perishable food storage. Vornado Realty Trust left the industry about 15 years ago after making a huge investment that did not pay off.

Prologis Inc.,

one of the world’s largest logistics companies is also moving away from the industry. “This kind of building is not what we want,” Thomas Olinger, the company’s chief financial officer, said on an earnings call last year. “There is a significant investment in equipment… and there is a significant labor component.”

Write to Peter Grant at [email protected]

Copyright © 2020 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8



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