looking beyond covid-19: cold storage logistics – a heating market in china
may 6, 2020
shanghai, may 6, 2020 ——according to cushman & wakefield’s recent report - looking beyond covid-19: cold storage logistics – a heating market in china, as incomes have grown in china in the recent past, consumers in the country have been increasingly demanding higher standards regarding the goods, products and services they purchase. with cold storage logistics in mind, these goods and products include fresh produce and medicines.
alongside this trend, china's fresh food ecommerce industry has been developing rapidly. according to euromonitor and qianzhan industry research institute, in 2019, the country’s fresh food ecommerce industry market size was about rmb 288.8 billion, an increase of 19.1% year-on-year (y-o-y) and accounted for more than 5.6% of the total fresh food industry market in china.
industry market size in china – total fresh food market/fresh food ecommerce market
(2015-2019)
source: euromonitor, qianzhan industry research institute, cushman & wakefield research
given the demand-led industry growth that cold chain logistics has enjoyed in recent years, naturally cold storage logistics warehouse supply, in storage space area terms, has also grown in china over the same time period. according to warehouse in cloud (wic) total cold storage logistics warehouse stock in the country exceeded 6.65 million sq m in 2019, accounting for 2.15% of the total logistics warehouse market.
when looking at cold storage logistics warehouse distribution (by storage space area) on a selected-province-level basis in china, according to wic statistics, in 2019, the top five provinces with the most stock were liaoning, henan, sichuan, jiangsu and guangdong. each of these provinces has more than 390,000 sq m of total stock, presently, of which, liaoning’s total cold storage warehouse stock area is more than 1.06 million sq m.
when examining cold storage logistics warehouse vacancy at a selected city level in china, in 2019, nanjing recorded the highest average vacancy at 15.5%, while chengdu, zhengzhou and guangzhou all enjoyed vacancy rates that were below the 4% mark.
cold storage logistics warehouse average vacancy by selected cities in china (2019)
source: wic, cushman & wakefield research
rents on a city-level basis in china, however, vary greatly. rents are generally higher in china’s coastal regions but generally lower in the country’s inland regions. when analysing the market from a selected city perspective, according to wic, the markets which experienced some of the highest rental rates for cold storage logistics warehouses in the country in 2019 were beijing, shanghai, guangzhou and dalian – all of which enjoyed rents which were higher than rmb 100 per sq m per month.
cold storage logistics warehouse average rentals by selected cities in china (2019)
source: wic, cushman & wakefield research
the covid-19 outbreak had a significant impact on china’s cold chain logistics industry, and cold storage logistics warehousing in the country, in particular. the resulting home confinement period, through social distancing necessity, spurred an explosion in online shopping during the period in china as people under the lockdown increasingly shopped online from their homes for fresh food items and home-delivered meals.
moreover, many people in the country, who had never fully embraced online shopping before, such as the older generation, had to quickly adapt to and adopt this mode of purchasing. the resulting greater utilisation of online shopping, especially for daily necessities, further boosted online shopping purchasing volume of fresh food and medicinal goods and products during the lockdown period in china.
even before the covid-19 outbreak, the cold chain market was predicted to experience healthy growth. the ‘china cold chain logistics industry report, 2019-2025’ (cited in a 21 october 2019 pr newswire article) declared the cold chain logistics industry in china is set to be worth rmb 522 billion by 2025 and set to enjoy an expected compound annual growth rate (cagr) of 8.5% between 2018 and 2025. however, given covid-19’s impact, even these figures might need to be revised upwards.
what’s more, given the covid-19 outbreak, in the future, there will be even greater emphasis placed by various industry-related parties in china on food safety and food security. with cold storage logistics warehouse facilities being in a favourable position to assist in these two endeavours, it is likely that cold storage warehousing will see a surge in premium facility construction.
shaun brodie, head of occupier research, greater china, cushman & wakefield, said: “ahead, this new premium cold storage warehouse facility supply will then be in a position to store the greater amount of fresh food and medicine inventory demanded in china and do it in such a way that storage health and safety levels of perishable goods and products are maintained to the highest standards at any given time.”
tony su, managing director, head of industrial & logistics property services, china, cushman & wakefield, said:” with the overall cold storage logistics warehouse market in china expected to enjoy greater demand for storage space in the years to come, we expect many more investors, developers and operators to pay close attention to this sector as the overall cold chain logistics market continues to heat up.”
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mandy qian
director, marketing & communications, greater china
tel: 86 10 8519 8040
mandy.qian@cushwake.com
