PHL demand for cold storage facilities heating up

DEMAND for cold storage facilities in the Philippines is expected to continue growing this year, as companies need space to store coronavirus disease 2019 (COVID-19) vaccines and food imports.

KMC Savills Senior Director for Industrial & Logistics and Transactions & Advisory Services Karen Golez said cold chain facilities, along with data centers, will be “game changers.”

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“This [poses] a challenge for developers to build better quality specs of warehouses that will cater to sustain the appetite from these industries,” Ms. Golez said in an e-mail on Jan. 19.

JLL Philippines said more investments are needed in the sector, noting that the Philippines is lagging behind other Southeast Asian countries.

“Due to the limited cubic meter of space, [the] cost to rent these facilities are high. Restriction of ammonia versus refrigerant also affect [the] cost,” JLL Philippines Head of Capital Markets P. Ryan Isip told BusinessWorld in a separate e-mail on Jan. 12.

Building large cold storage facilities would help improve efficiency, and lower electricity costs, Mr. Isip said.

Most of the existing facilities are owned by companies that they use for their own products. There are a limited number of third-party cold storage facility providers, he added.

KMC Savills’ Ms. Golez said the country’s cold storage market remains fragmented, with only a handful of small players.

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“However, it may [become a consolidated industry] as more international players participate and merge with the local ones to fulfill the sophisticated demand requirements, especially the need for advanced technologies and larger facilities,” Ms. Golez said.

Meanwhile, Colliers Philippines is expecting the industry to further expand within the next 12 to 36 months, thanks to demand from the booming e-commerce companies and the need to store COVID-19 vaccines.

“This is one sub-segment of the industrial sector we see expanding in the near to medium term. More investments are also needed to bridge [the] supply gap especially in areas outside Metro Manila,” Colliers Philippines Associate Director Joey Roi H. Bondoc said in an e-mail on Jan. 7.

JLL Philippines’ Research Manager Karisse N. Garcia said there may be  a need for more cold storage facilities as the pandemic continues.

“Cold chain’s role in the handling of vaccines and other pharmaceutical items is also evident and more spaces may be needed, especially with the Philippines in full gear in combating the pandemic,” she said.

The long-term growth of the industry is expected to be sustained by the demand from food and beverage companies.

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JLL Philippines’ Ms. Garcia said the establishment of more cold storage facilities can help stabilize food prices and ensure food security.

“However, post-pandemic, there might be a bit of lower, but sustainable, growth to be driven by the growing e-commerce for food and other perishable goods as part of the next normal,” KMC Savills’ Ms. Golez said.

The Cold Chain Association of the Philippines earlier projected an 8-10% annual growth for the industry over the next five years.

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The article was originally published in Business World and written by Keren Concepcion G. Valmonte.

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