Resilient Demand for Cold Storage Warehouses
What are Cold Storage Warehouses?
Cold storage warehouses are distribution warehouses with multi-temperature control environment and include freezers, chillers and/ or air-conditioned storage for frozen, fresh goods and perishables. Foodstuffs are most likely to be found in such facilities, but they also are used to store pharmaceuticals, electrical and electronics and wine. Tenants include third-party logistics companies, cold storage logistics specialists or supermarket chains.
A multi-temperature warehouse can accommodate four temperature zones within one facility that is (1) ambient room temperature, the (2) air-conditioned environment of 16’c to 25’c, (3) chilled storage of 4’c to 8’c while the (4) frozen section is kept at -18’c to -25’c.
Key Drivers of Cold Storage Warehouses
The Malaysian population growing more affluent, placing greater awareness on health and wellness and prevention of food wastages have translated to higher demand for cold storage warehouses. Proximity to densely populated towns, population growth, changing consumer
preferences and consumers spending patterns can be observed as the key drivers of cold storage warehouses.
Cold storage warehouses are expensive to build. The plant and equipment for the refrigeration system (a choice of either Freon or Ammonia refrigerant) as well as the insulation panels to create the “giant refrigerator and freezer” within a warehouses complex, is highly capital intensive. Cold storage warehouses offer stickier tenants requiring long term tenancies of up to 10 years to recoup the investment they have made in the facility. Given the specialized nature of the improvements made, the probability of renewing tenancies is much higher amongst cold storage tenants than general standard ambient temperature logistics facilities.
Energy-efficient design of cold chain warehouses is crucial as their consumption of high voltage electricity and high demand of water supply to run the condensers. Back-up energy systems as well as additional water storage tank are normal features in cold storage warehouses. The use of renewable energy such as solar power as well as rainwater harvesting and its filtration is essential to keep the operating costs of cold chain warehouses low.
The growth of online grocery platforms and increased adoption rate of package food and beverage products to increase their shelf life are driving demands for better quality food delivered in perfect condition. This in turn suggest resilient demand for cold storage especially during Covid 19 pandemic.
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