Report
Japan Report - Japan Cold Storage Apr 2022
April 18, 2022
Looking for a PDF of this content?
- Cold storage facilities provide different temperature settings for different types of cargo and are often attached directly to factories or processing plants, making them extremely specialised facilities with little flexibility. As the up-front investment required to establish refrigeration or freezing facilities is expensive, cold storage facilities tend to be incorporated into the construction and design of the building housing them, meaning there is little necessity to separate them as real estate assets. This means that the majority of cold storage facilities in Japan are owned and operated by major cold chain corporations, with only a small number available for lease.
- While the household consumption of frozen and chilled foodstuffs in Japan increased during 2020, it fell dramatically in the wholesale sector due to the impact of the pandemic, resulting in a slight net decline in consumption. Although frozen and chilled foodstuffs comprise only a small proportion of total logistics demand, there is scope for expansion in the sector through e-commerce purchases, with the sector projected to achieve yearly growth of 1 to 2%.
- CBRE expects to see a general trend of reconfiguration of cold storage facilities to take place over the next few years. Advances in the use of e-commerce to sell frozen and chilled goods will serve to accelerate cold storage development in areas with latent need. As older facilities become obsolete and with the hydrochlorofluorocarbon (HCFC) restrictions, some assets will need to be redeveloped over the mid-to-long term. While cold storage facilities have traditionally tended to be constructed in the vicinity of seaports, locations closer to consumers are likely to be increasingly favored for new developments. Additionally, while cold storage is currently dominated by cold chain companies, the rapid growth of e-commerce may act as a catalyst for new developments for lease.
- In terms of investment channels, the paucity of potential tenants and the high degree of specificity required of cold storage assets mean that the lowest-risk approach is the build-to-suit or joint venture developments. CBRE also expects the partial renovation within standard LMT (large multi-tenant) logistics facilities to also become more common.