Urban logistics, cold storage gain momentum in the APAC industrial market

The most preferred urban facility size is 1,000 to 5,000 square metres.

The industrial property market has been resilient even amidst the pandemic that crippled the other sectors. In 2022, analysts predict that demand will continue to remain strong, and that investors will still be on the lookout for lucrative industrial investment opportunities.

JLL outlines two subsectors that are worth a closer look this year: urban logistics and cold storage.

Here’s more from JLL:

Urban logistics

Urbanisation, the growth of e-commerce, the importance of last-mile logistics, challenges around sustainability and air quality, and the strong competition for limited land in densely developed geographies are driving the need for urban logistics solutions. 

This trend towards urban logistics will continue into 2022. Ultimately, this will translate to greater requirements for smaller facilities within urban locations. According to JLL’s Future of Global Logistics Real Estate Survey, the most preferred urban facility size is between 1,000 sqm and 5,000 sqm. 

This will support last-mile delivery functions, particularly as consumers move towards same-day and even two-hour delivery expectations. To meet this demand, brownfield sites will be the most preferred solution for logistics developers and operators.

Cold storage

Cold storage has come to the attention of an increasing number of investors as they look for yield in alternative asset classes as a means of diversification and to boost risk-adjusted returns across their portfolios. 

Generally speaking, the cold storage market is highly fragmented. We may see more consolidation in 2022 as more investors look to enter the subsector. Supporting further consolidation is the movement towards a leasing model. While assets have traditionally been owner-occupied, 64% of respondents in our recent Future of Global Logistics Real Estate Survey expect an increase in renting vs owner occupation. 

This will lead to more speculatively built cold storage space. While the returns in cold storage are attractive, investors will need to consider these evolving trends in the context of a rising market and more institutional capital entering the market in 2022.