Japan’s cold storage to heat up as inventory shrinks – JAPAN PROPERTY CENTRAL K.K.

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Cold storage warehousing is expected to face dire market conditions in the coming years with demand to outstrip limited supply.

There is not enough new construction in the pipeline to replace the older facilities as they become obsolete. As of June 2022, 33.8% of cold storage warehouses were over 30 years old and only 14.1% were less than 10 years old. On a storage capacity base, 46% of the capacity in Tokyo is in buildings over 40 years old.

In a decade from now, the majority of regions across Japan will be facing a shortage in operable warehousing, leading to potential bottleneck issues with the transport and storage of both domestic and imported perishables.

Large-scale industry players are taking action to boost new supply, but it’s the small-to-mid sized warehouse owners that are slow to rebuild, if at all. Yokohama Reito (Yokorei), a major owner and operator, aims to increase its storage capacity by 25% to 1.3 million tonnes by 2030. Smaller operators, however, are limited by the investment outlay and rising operational costs, especially with rising electricity prices, making redevelopment an expensive venture. Even continuing to operate an older warehouse requires additional outlays for repairs, servicing equipment and upgrading to meet current environmental standards. There is a concern that these small operators may leave the industry altogether if profitability cannot be sustained.

There are options, including joint-venture redevelopments with other operators in the industry to share costs, as well as creating multi-tenant storage facilities.

Source: Nikkei Shimbun, December 5, 2023.

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