Commercial real estate agency, Cushman & Wakefield, has released its Frozen Logistics report, showing the country’s Cold Storage market is struggling to keep up with growing demand from the food and beverage, logistics, and pharmaceutical sectors.
Offering one of the first national assessments of cold storage vacancy in Australia, the report combines a detailed stock map with direct insights from major occupiers about their infrastructure needs.
Current storage vacancy sits at 0.6 per cent, well below the broader logistics and industrial average of 3 per cent. With just 3.1 million square metres of existing stock and an undersupply of around 130,000 square metres, the sector is under increasing pressure, especially as an estimated 15 per cent of existing facilities are no longer fit for purpose.
Increasing demand
With the population expected to grow by approximately 3.8 million people over the next decade, an additional 950,000 square metres of cold storage space will be needed to meet demand, well below the current pipeline of supply. Further compounding the undersupply, the research found advancing tenant requirements could render up to 25 per cent of cold storage space obsolete by the early 2030s.
Cushman & Wakefield head of logistics and industrial research Australia, Luke Crawford, said the strength of demand has shifted development patterns across the market, especially with speculative builds starting to emerge, which was a rarity in the cold storage sector before 2020.
“Cold storage has undergone significant growth over the past decade. Online food delivery, pharmaceuticals and industry consolidation are driving demand, and it’s reshaping how the sector looks at development,” said Crawford.
“We’re seeing speculative projects receive strong interest from occupiers, particularly for freezer space as there is next to no vacancy for this type of product nationally.
“Traditionally, cold storage has been a contract-led sector, with occupiers locking in long-term deals before facilities are even built. But due to demand, developers like Hale and Aliro are more confident in building without a tenant in place and it paying off.”
From an investment standpoint, the total cold storage market is estimated at $12-14 billion, according to the report. Rents have climbed by roughly 70 per cent over the past five years, with strong, consistent growth across every capital city.
While the fundamentals remain attractive, institutional investment is still relatively niche due to the complexities associated with temperature-controlled environments and regulatory compliance. However, appetite is expected to grow over the next five years, with further investment mandates expected to support existing asset acquisitions and build-to-core strategies in the sector.
Food and beverage sector
The food and beverage industry is one of the major demand drivers behind the increasing need for cold storage. Population growth, increasing e-commerce and online grocery sales, and export markets are some of the factors pushing the limits.
“Today, more than 40 per cent of every retail dollar in Australia is spent on food, and roughly the same proportion of supermarket goods require refrigeration. With these fundamentals, and a growing population, demand for cold storage space is only going to increase,” said Crawford.
“Over the long term, food turnover has proven to be highly resilient, particularly in changing and uncertain times as consumers shift spending patterns towards non-discretionary retail items. In the past 40 years, expenditure on food retailing has grown by 6.4 per cent per annum, which outpaced the 5.4 per cent recorded for discretionary retail items over the same period.”
According to Cushman & Wakefield, major retailers like Coles, Woolworths, and Aldi occupy around 30 per cent of Australia’s cold storage footprint, with average facility sizes exceeding 25,000 square metres.
Food and beverage manufacturers, including butchers, alcohol and dairy producers account for another 12 per cent, with facilities averaging close to 10,000 square metres. This distribution highlights the central role cold storage plays across the entire food value chain.
“Australia exports around two-thirds of all food produced (approximately $80 billion in food exports per annum), and with Asia-Pacific’s middle class set to grow by over two billion people in the next decade, the region presents a booming market for premium Australian food products,” said Crawford.
“However, insufficient cold storage infrastructure could become a serious bottleneck, threatening the reliability and growth of Australia’s export market.
“Domestic demand for cold storage is also accelerating with Australians now spending nearly $16 billion annually on online food purchases – a sector that has grown at over 20 per cent per year since 2015, driven by the rise of online groceries and delivery services such as Uber Eats and HelloFresh,” he said.
Solving the undersupply challenge
Obsolescence is a growing concern across the industrial sector, but it’s even more pronounced in cold storage. As tenant needs shift toward greater automation, sustainability, and operational flexibility, older facilities are aging out faster. Location, however, continues to be the most important factor, according to occupiers.
Cushman & Wakefield national director and head of brokerage ANZ, David Hall, said retrofitting existing sites, particularly those in central locations, offers a critical pathway to easing the shortage.
“We know approvals and lead times for new, build-to-suit facilities are too long for many occupiers. That’s where retrofitting existing ambient warehouse stock to cold storage can provide a solution to better meet occupier needs,” said Hall.
“It’s not straightforward given the structural, mechanical and operational considerations, but for well-located sites, the potential upside is significant. We’re already seeing a few early movers test this approach, and we expect it to pick up pace over the next five years.
“Every retrofit is different and there is no one-size-fits-all solution, but in the right context it can help owners and occupiers unlock value and a faster path to market.”
For more information, the full report is available here.
