Demand for cold storage facilities has increased dramatically over the past year, driven mainly by 4% year on year growth of the UK’s frozen food industry.
COVID-19 and the associated lockdown, panic buying and stockpiling has also had a more recent impact on demand too, with supermarket sales of frozen food leaping by £194.8m, up 16.1%, in the 12 weeks to 18 April, and unit sales increasing by 12.4% - meaning an extra 82.2 million packs of frozen peas, fish fingers, chicken nuggets and the like - going through the tills, according to The Grocer.
Plus, with a no-deal Brexit stoking fears of longer supply chains due to extra border controls and additional paperwork, and additional consumer fears around future lockdowns driving another bout of stockpiling, demand is rapidly overwhelming the ability to supply, due to the lack of UK cold storage facilities.
This increase in demand and the limited availability of storage is creating new demand for cold storage development, and Real Estate investors are starting to take note.
Although development costs are typically much higher than those of regular logistics buildings, the returns are much higher too.
And some companies are starting to take advantage. This month the Dutch cold storage logistics firm NewCold has started development on the largest (637,589 sq ft) temperature-controlled facility in Europe in Corby, Northamptonshire (Project ID: 19274919). The £59 million project starts on site this month and is due for completion in October 2021.
Jon Miles, country director, NewCold, said: “The decision to build a second facility has been driven by an increasing wide-scale demand for storage and handling, while the number of deep-frozen storage facilities has reduced. This has seen coldstores at capacity during certain times over the last two years and the trend appears to be continuing, so we feel this is the right time to invest.”
Expanding existing facilities
Although new facilities are being developed up and down the country, many existing facilities are being expanded too.
Lineage Logistics are significantly expanding their cold storage warehouse capacity with an expansion to its current site in Peterborough (Project ID: 20228034). The £13 million phased expansion is “in response to growing customer demand from both online and conventional grocery sales – a trend which was accelerated as a result of the COVID-19 pandemic”, according to Lineage.
And it’s not just cold-storage firms that are seeing demand increase, road haulage companies are getting in on the act too. Haulage company Turners of Soham are expanding their existing cold storage facility in Newmarket, Suffolk. The £10.4 million project which is at the pre-tender stage will add 8,982 square metres of frozen goods warehousing to their existing storage, and is due to start in January next year.
It's not just food that’s driving demand however, there’s growing demand from the pharmaceutical industry for additional cold storage too, and with the Association of the British Pharmaceutical Industry asking the government to build more cold chain storage for vaccines, biologics etc., so in the current climate, we’d expect to see a further increase in cold chain storage investment relatively soon.
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Rick Stephens (Content Marketing Lead)
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