Hot demand for cool storage

5:00 AM Saturday March 11, 2017 True Commercial

The cool store at Gilberd Street, in Whanganui. Photo / Supplied

Two cold storage facilities situated in logistic ‘sweet-spots’, and offering more than 20,000sq m of warehousing space combined, have been placed on the market for sale.

The properties at 23 Dunlop Rd, Waharoa, and 1 Gilberd St, Whanganui, offer potential buyers the chance to invest in an in-demand asset class, says Bayleys sales agent Ben Bayley who is marketing the land and buildings for both properties via private treaty, closing on April 20.

Bayley says both facilities have prime tenants in place, including Australasia’s largest integrated poultry producer.

The Waharoa property has a rateable value of $14,490,000 — comprising $12m for improvements and $2,490,000 for the land, which is currently zoned Rural but is earmarked to be changed to Industrial. The property at 1 Gilberd St has a rateable value of $3,860,000 — comprising $3,190,000 for improvements and $670,000 for the land, which is zoned Industrial.

Bayley says 23 Dunlop Rd sits on 4.21ha in the heart of New Zealand’s dairy country, and generates a net rental income of $1,639,000 a year.

The purpose-built cold storage facility has 14,924sq m of floor space and is split between two tenants, Icepak NZ, an established logistics and cold storage firm, and Inghams, a US-owned chicken and turkey producer.

Icepak NZ occupies 35,740 cubic metres, including a 2877-cubic metre cool store, and has an eight-year lease expiring in September 2025 with one five-year right of renewal while Inghams occupies 21,863 cubic metres and has a five-year lease expiring in February 2022 with one five-year right of renewal.

The purpose-built storage facilities at 23 Dunlop Rd have capacity for 21,000 pallets, and the property has benefited from recent upgrades, including the installation of a rail siding, Bayley says. It is well located, close to the major dairy companies’ production plants, and its proximity to Auckland, Hamilton and the Port of Tauranga gives it a solid advantage.

Chris Bayley, sales agent for 1 Gilberd St, says the cool store there is in a similar sweet spot. The 6000sq m building, on 1.7ha in Whanganui’s industrial precinct of Castlecliff is leased to Wanganui Cold Storage.

The property generates a net annual rental income of $457,000. Wanganui Cold Storage has a 15-year lease expiring in April 2023 with two 15-year rights of renewal.

Chris Bayley says the site has benefited from much investment in the past two years to upgrade and improve operations, including:

  • The installation of a CO2 plate freezing system;
  • The refit of the main processing room; and
  • A plate freezer and line set up that has resulted in increased throughput and efficiency.

It also is well situated to take advantage of the local authority’s proposed multimillion-dollar revamp of Castlecliff Port.

Chris Bayley says: “As overseas and domestic demand for New Zealand food increases, so too does the need for cold storage depots in regional centres and near major ports.

“Cold storage depots are a core sub-sector of the market, and investors are increasingly seeing them as a way to efficiently deploy more capital and grow the scale of their portfolios.”

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The cool store in Dunlop Rd, Waharoa. Photo / Supplied

Because of the large volumes of food produce that require controlled temperature storage, New Zealand has a high reliance on refrigeration and cold storage.

“The demand for cold storage facilities has increased as the major players in the industry seek to increase their space by buying out the smaller cold stores,” Ben Bayley says.

Icepak is a market leader in blast freezing and chilled and frozen storage. The company operates from eight sites across the country, including two sites in Waharoa, and has total capacity of approximately 102,700 temperature-controlled pallet spaces.

Its 23 Dunlop Rd operation specialises in dairy, meat, seafood and pet food.

Inghams has been operating in New Zealand for almost 30 years and has 59 facilities located across the country. Last year it was named New Zealand’s supplier of the year.

The huge demand for fresh food from the big supermarket chains, including Countdown, New World and Pak’n Save, and home delivery services such as Food Bag will add to the attractiveness of refrigerated logistics and distribution investments, as should the positive market forecasts for New Zealand’s primary industries.

Chris Bayley says producers and retailers need to store more produce and have it ready for distribution.

“This will only add to the attractiveness of refrigerated logistics and distribution investments, and should help bring new entrants to the sector.”