The cold chain logistics market is in great demand, and the investment in cold storage may continue to rise

Forwarded from Jiuzhou Logistics Network 2022-10-24

"The annual memory is expected to exceed 100 million square meters, which will be a landmark event for China's high-end logistics warehousing market." Recently, Su Zhiyuan, the managing director of Cushman&Wakefield's China Industrial Real Estate Department, told China Business Daily that in the second quarter of this year, the stock of China's high-end logistics storage market reached 94.97 million square meters, an increase of 4.81 million square meters compared with the first quarter, and the overall market performance was stable.

However, as offline catering and supermarket retail operations gradually returned to normal, the demand for food prepared dishes was strong, promoting the growth of market demand for prepared dishes. Under the mode of combination of multi temperature warehouses, central kitchens and food processing, it is necessary to ensure food safety and freshness while meeting food storage needs, which also makes China's cold chain logistics industry enter a stage of rapid development.

According to the report "China's Logistics Cold Storage - Cold Space Welcomes a Development Boom" (hereinafter referred to as the "Report") released by Cushman&Wakefield, in the next few years, China's cold storage market is expected to usher in more storage space supply, which can not only meet the storage and distribution needs of fresh goods, but also meet the storage demands of perishable medicines. "In the foreseeable future, in view of the growing market demand and increasingly improved infrastructure, China's cold storage investment will continue to rise."

East China leads the high-end warehousing market

According to the statistics of Cushman&Wakefield, as the largest high-end logistics storage market in China, East China accounts for about 36% of the national stock, reaching about 34 million square meters. Next are about 27 million square meters in North China, 13 million square meters in South China, 12 million square meters in Southwest China, and 9 million square meters in Central China.

From the perspective of rent, the average rent of high-end logistics and storage market in China is 33.1 yuan/square meter · month. Among them, the highest rent is in South China, which reaches 38.4 yuan/square meter · month, followed by East China, which is about 37.9 yuan/square meter · month. The rent in North China, Central China and Southwest China is about 30.4 yuan/square meter · month, 26.4 yuan/square meter · month and 26.1 yuan/square meter · month, respectively.

From the perspective of vacancy rate, the average vacancy rate of the high-end logistics warehousing market in China is 15.9%, while the vacancy rate in East China is low, only 12.4%.

In Su Zhiyuan's view, the high-end logistics and warehousing market in East China, which has large supply, high rent and low vacancy rate, is still the focus of investors' attention. Zhejiang, where supply and demand are booming, is also more active in trading.

In addition, Shanghai has always been the core of high-end logistics warehousing market in East China. According to Cushman&Wakefield statistics, in the third quarter of this year, the average rent of the high standard warehouse market in Shanghai fell slightly by 0.65% month on month to 47.8 yuan/square meter · month; The market vacancy rate rose 4.98 percentage points month on month to 10.6%.

However, with the resumption of production of manufacturing enterprises in the areas around Shanghai, the demand for manufacturing industry has increased steadily. The supply in Shanghai and Kunshan is tight and the rent is high. In order to reduce costs, the tenants have moved to Jiaxing, Zhejiang Province, Taicang, Changshu and other county-level areas under the jurisdiction of Suzhou, Jiangsu Province.

According to the statistics of Cushman&Wakefield, the average rent of high standard warehouse market in Jiangsu Province rose 0.18% month on month to 34.1 yuan/square meter · month; The market vacancy rate rose 2.17 percentage points month on month to 12.00%. The average rent of high standard warehouse market in Zhejiang Province decreased by 0.59% month on month to 35.7 yuan/square meter; The market vacancy rate rose 1.04 percentage points month on month to 14.70%. "In the future, the market supply of high-grade warehouses in East China will be 17.74 million square meters, and the supply of Zhejiang Province and Jiangsu Province will be 7.08 million and 5.81 million square meters respectively."

It is worth mentioning that with the continuous improvement of the income level of Chinese residents, consumers' diversified consumption demand for food types, quality, nutrition and taste has also increased significantly. Fresh food needs to be transported, processed, stored and distributed through refrigeration or freezing. Driven by strong consumer demand, China's cold chain logistics industry is entering a stage of rapid development.

In this regard, Su Zhiyuan believes that, affected by the e-commerce promotion peak season in the fourth quarter of this year, it is expected that the overall logistics market demand for high-grade warehouses in East China will increase in the short term, and the vacancy rate is expected to decrease. The demand for cold storage transformation is strong, and the overall demand for cold chain will continue to grow.

Investment in cold chain logistics continues to rise

Looking at China's high-end warehousing market, cold storage transformation and cold chain demand are one of the most promising segments.

The statistics jointly released by the Cold Chain Logistics Professional Committee of China Federation of Logistics and Procurement and Smart Research Consulting show that China's cold chain logistics industry has achieved double-digit growth. In 2020, the market scale will reach 415 billion yuan, with a year-on-year growth of 22.38%. "Considering the future development potential, the market size of China's cold chain logistics industry is expected to further increase to 897 billion yuan by 2025."

In addition, according to the statistics of IoT Cloud Warehouse, among the seven domestic cities that are focused on, including Beijing, Shanghai, Shenzhen, Guangzhou, Wuhan, Chengdu and Chongqing, Shanghai has the largest cold storage capacity of 902300 square meters, followed by Guangzhou and Beijing.

"In view of the continuing demand for such space, we expect the shortage of available space to lead to an increase in rents in some markets." According to the analysis of the Report, there are many factors that promote the development of China's cold chain logistics industry, mainly including the improvement of consumers' purchasing power, the improvement of food safety awareness, the continuous attention to food security, the increase of demand for value-added services, and the growing demand for drug transportation, storage and distribution.

The Report shows that the vacancy rate of cold storage in Shanghai is 5.5%, which is the lowest among the seven cities mentioned above. Looking forward to 2023, seven cities are expected to have nearly 800000 square meters of high-quality cold chain logistics storage space. "In view of the continuous demand for such space, we expect that most of the supply will be reduced, and due to the limited available rental space, the rent of high-quality cold chain logistics storage space will also increase."

The reporter noted that in order to reduce the energy consumption and carbon emissions of cold storage facilities, it is essential to take further measures and achieve "carbon neutrality".

"Cold storage is a very energy consuming project. 60%~70% of the electricity in the cold storage equipment is used for refrigeration." The Report points out that while expanding the scale of the cold chain, the most effective energy technologies and refrigerants with low global warming potential must be used to minimize the impact on the climate.

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