Logistics & Industrial Capital Markets 2024 Outlook Report

Growing appetite for defensive assets Due to the current economic climate, a shift to defensive assets is expected to occur in 2024, as was evident in 2020. Ultimately, this will mean tenant covenant strength will come back into the spotlight, and owners will become more proactive in the tenancy mix within their portfolio with a focus on non-discretionary occupiers. Notably, this includes food and beverage based occupiers such as the major supermarkets and pharmaceutical and healthcare businesses. Cold storage to remain a focus In response to solid fundamentals and a shortage of cold storage warehouse space, there has been a continued influx of capital seeking opportunities in the sector.

In 2023, over $300 million of cold storage assets traded, underpinned by 115 Jedda Road, Prestons, which Centennial purchased for $79 million from Charter Hall. In a global context, Australia remains heavily undersupplied. On a per capita basis, Australia has just 0.38 cubic metres of cold storage warehousing space, well under the global average of 0.47 cubic metres per capita (Global Cold Chain Alliance). To reach the global average, Australia would need to build another 1.9 million cubic metres of cold storage - equivalent to 23% of current stock levels.

Figure 27. Australian Cold Storage Transaction Volumes ($m)

$1,000

$900

$800

$700

$600

$500

$400

$300

$200

$100

$0

2019

2020

2021

2022

2023

Source: Cushman & Wakefield

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