Within the UK our analysis has identified 678 warehouse units over 50,000 sq ft that make up the UK cold storage sector. This equates to 134m sq ft of warehouse space, accounting for 12% of the total modern warehouse space in the UK over 50,000 sq ft. Within these facilities, we have identified 49m sq ft of space that is dedicated to frozen or chilled storage. The dedicated frozen and chilled storage is dominated by the retailers and 3PL companies, who between them account for 74% of the 49m sq ft identified.

At a regional level it is interesting to note that the cold storage market does not follow the same pattern as the traditional logistics market where the Midlands dominates the total stock figures. Instead, Yorkshire and the North West are the dominant markets accounting for 29% of the total cold storage space in the UK, reflecting 38.5m sq ft of space.

The Midlands region accounts for 22% of the cold storage stock in the UK, whereas in the traditional big box market 36% of the stock is located in the Midlands. In the most part, this will be driven by the nuances of the UK cold chain, in terms of where food is imported in to and where production takes place.

On a per capita basis, it is interesting to note that there is 5 sq ft of cold storage in the UK for each household, however, regions such as the South West and the East of England outperform this metric and account for 6 sq ft and 7 sq ft respectively, again driven by the prevalence of units associated with processing and manufacturing in these regions.

Who occupies the space and where?

For analysis purposes we have assigned each occupier of cold storage space a classification in order to identify regional trends. Our classifications are:

Third-party storage

‘Public’ cold stores operated by independent third party logistics providers. These warehouses serve a range of chilled and frozen customers from farmers to retailers.

Retail and food service

‘Private’ cold stores operated by major retailers and food service providers, eg. Regional Distribution Centres and other delivery hubs

Processing and manufacturing

‘Private’ facilities associated with the manufacturer or processing of temperature controlled products. Eg. meat and fish processing, or convenience food manufacture

Farming and producers

‘Private’ facilities on farms associated with the storage of fresh produce after picking. Eg. fruit and vegetables

Other

Vacant facilities or specialist warehouses.

Of the 678 identified units the dominant classification is processing and manufacturing which accounts for 42% of the cold storage units in the UK, representing 45m sq ft of warehouse space. However, by floor space the dominant occupier of cold storage is the retail and food service segment which occupies 40% (54.5m sq ft) of the 134m sq ft of space.

This can be explained by the fact that many food retailers will occupy larger warehouses for their fulfilment operations where as manufacturing facilities will tend to be smaller and solely focussed on a limited range of products or foodstuffs.

3PL operators make up 27% (181 units) of the units occupied and account for 23% (31.5m sq ft) of the floor space occupied which broadly reflects the wider UK warehouse property market where 3PL companies have accounted for 21% of all transactions over the last 10 years.

Analysing the occupier classifications highlights some interesting trends for the UK cold chain. Of the retail and food service companies included in our sample, 30% of the units occupied are in the South East and London, driven by the higher population densities and service to the many restaurants and produce suppliers located there.

Indeed, undertaking the same analysis by floor space shows that in London and the South East 60% of all of the cold storage space is accounted for by the retail and food service sector.

In terms of farming and producers, 50% of the units identified are in the East of England region which traditionally has been a centre for food production industries, whereas 29% of the 3PL operations identified are located in the North West or Yorkshire.

What size profile is the UK cold chain?

Perhaps the most interesting trends, particularly from a real estate perspective, come when analysing the UK cold chain by the size of unit occupied. Here some clear trends emerge as to who the likely occupier of the space is going to be.

At the smaller end for units under 100,000 sq ft 76% of units are occupied by either 3PLs or processing and manufacturing companies with just 11% of facilities occupied by retailers.

Splitting the unit size into 100,000 sq ft size bands shows that the retail and food service sector increases the amount of space occupied with each size band increase, culminating in the fact that of the floorspace over 500,000 sq ft 78% (21m sq ft) is occupied by companies in that sector.

Pipeline

Analysing transaction volumes for the last 18 months shows a strong pipeline of additional units with a cold storage element which will be added to the total stock when complete. Our analysis has identified 22 units which total 16.7m sq ft which are either currently under construction or being fitted out by occupiers. Of these pipeline units 75% will be occupied by retailers and a further 23% by 3PLs with the balance being occupied by producers.

The 3PL sector in focus

Of the 678 units identified in the UK, 181 are occupied by companies in the 3PL sector, accounting for 31.5m sq ft, with Yorkshire being the region with the most units (34) and also the highest floorspace (6.7m sq ft).

Other regions with a high concentration of 3PL occupied units are the West Midlands with 27 units (15% of the total), the South East with 23 units (13% of the total) and the East Midlands with 19 units (10% of the total).

As with the larger traditional logistics property market 3PLs have tended not to occupy space away from major population centres and also within London where property prices are more expensive. Indeed, London, Scotland, Wales and Northern Ireland account for just 13% of the unit occupied by 3PLs.

The majority of space occupied by 3PLs is in the smaller size ranges with 74% of the space occupied being under 200,000 sq ft. Just 7% of the units occupied by 3PLs are over 400,000 sq ft but this reflects 20% (6.2m sq ft) of the entire floorspace occupied by 3PLs.

_{Read the articles within Spotlight: UK Cold Storage Sector below.}