More cold sheds needed to supply veg and meds
Charter Hall is building this refrigerated warehouse for meal kit retailer HelloFresh. Photo:

More cold sheds needed to supply veg and meds

The ability of supermarkets, pharmacies and groups such as HelloFresh to supply products to meet the needs of Australia’s booming population in coming years will require a significant investment in new refrigerated warehouses, a report from CBRE has warned.

Refrigerated or cold storage warehouses are specialist temperature-controlled facilities used to house fresh foods, frozen products and pharmaceuticals. They form the supply chain backbone of Australia’s $8 billion cold chain logistics sector, alongside specialist cold transport such as refrigerated trucks, rail cars and ships.

CBRE’s Cold Chain Logistics report highlights that Australia currently has 0.4 cubic metres of refrigerated warehouse capacity per urban resident, lagging the US at 0.6 cubic metres and the Netherlands at 0.9 cubic metres.

Charter Hall is building this refrigerated warehouse for meal kit retailer HelloFresh.
Charter Hall is building this refrigerated warehouse for meal kit retailer HelloFresh.

“Just to reach US levels would require about an additional 400,000 square metres of new warehouse space to be developed in Australia, stretching up to 1.3 million square metres to be in line with the Netherlands,” said Sass Jalili, CBRE head of industrial and logistics research.

While Australia’s cold storage capacity has been rising over the past decade – from 0.28 cubic metres per person in 2016 to 0.4 cubic metres now – there is almost zero vacancy in these facilities, due to population growth (which lifted total food spending to $170 billion last year), the rise of online food and liquor shopping and Australia’s expanding food export market.

“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,” said CBRE industrial and logistics director Adam Tresidder.

Just over 200,000 square metres of new cold storage facilities are due to be built over the next two years (including a 43,500sq m warehouse in Sydney for HelloFresh by Charter Hall due to be finished this year and speculative projects by NewCold and ISPT/Aliro). But there are no firm projects (either approved or under construction) beyond 2025.

To reach 0.6 cubic metres per person by 2028 and support the needs of another 1.9 million people who will come to Australia over the next four years, another 400,000 square metres of warehouses is needed, CBRE says. These facilities would need to have an average height of 11.5 metres to hold enough storage pallets to achieve the 0.4 cubic metres per person target.

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While construction and land costs are high due to the high specifications of these temperature-controlled facilities and the need to have them close to urban populations, they command a rental premium compared with standard warehouses.

Much of future development will be driven by offshore groups, which over the past five years have engineered a takeover of what was once a sector dominated by local, family-owned groups.

The three biggest operators of cold storage facilities in Australia are Lineage Logistics (the biggest operator globally), Americold and Europe-based NewCold, which is building a new facility at Marsden Park in Sydney’s west.

Lineage Logistics entered the Australian market in 2019 when it acquired Emergent Cold and its 30 temperature-controlled warehouses, giving it 3.4 million cubic square metres of capacity (equal to 522,000 storage pallets).

Nationally, Australia’s cold storage sector has grown to 10.2 million cubic square metres from 8.4 million cubic square metres four years ago, according to CBRE.