Food logistics – a market with great potential

Temperature-controlled food logistics is one of the largest logistic market segments. This fact should really ensure that logistics properties set up for this purpose will play a measurably large role for investors as well. However, this has only been the case to a limited degree so far. There have been investor concerns because of the fact that the building’s special fixtures (insulation, refrigeration) can entail commercial tax liability on the part of the company letting the property unless they are installed by the tenant himself.

ADVANTAGES COME TO THE FORE

This scepticism on the part of investors is gradually fading since there are now solutions to many of the particularities that were perceived as problematic in the past, but above all, the advantages of these investments are now being examined. Typically, tenants in refrigeration centres for food logistics hardly ever change: either a retailer leases the space himself or one of a few large contract logistics service providers that runs the facilities. These tenants always have extremely good, usually technically well-founded skills that are necessary to run the facilities. This is advantageous for maintenance and repairs, which work well above average. These facilities are characterised by long lease contracts and very attractive, usable areas. This is because of the fact that refrigeration logistics halls often represent a significant commitment for the tenant because of the extensive installations. In addition: Fewer sites are approved because of the increased noise levels of the refrigeration units, which narrows the range of supply compared to normal logistics.

THE FOOD INDUSTRY IS CHANGING

Online-driven business models are still gaining momentum, but they will probably continue to grow at an accelerating pace. This will increase the need for temperature-controlled distribution areas, especially in metropolitan Areas.

DEVELOPMENT CLOSE TO THE MARKET

Garbe Industrial Real Estate already has experience in this field and will continue to be involved with it. A property with more than 20,000 m2 of logistics space for the storage, picking and distribution of food in all temperature ranges is currently being built in Schweitenkirchen near Munich for the Nagel Group, a leading food and beverage retailer in Europe and number one in Germany. That is more than double the space of the refrigeration logistics property in the nearby Allershausen, which will continue to operate until the completion of the new facilities in the fourth quarter of 2016. The 20-year lease also serves to demonstrate the confidence in the reliable development of food logistics.