Low-Temperature Logistics Centers Have Three Times More Vacancies Than Room Temperature
Mixed and Room Temperature Design and Usage Changes Before and After Completion
"Overall Vacancy in Logistics Centers to Decrease Within 2-3 Years"
Cold storage logistics centers struggling with the cold wave in Gyeonggi Province are raising their temperatures. As vacancy rates increased, they have changed their usage to mixed (cold + ambient) or ambient temperature to attract new tenants. This trend is expected to continue for the next 2 to 3 years.
According to Zenstamate on the 10th, in the third quarter of this year, the 'Bucheon IC Naedong Logistics Center' in Bucheon-si, Gyeonggi, the 'Yangbyeon-ri Logistics Center' in Anseong-si (tenant Shinseong Tongsang), and the 'MQ Icheon Baeksa Logistics Center' in Icheon-si decided to switch from existing cold or mixed types to ambient temperature. All of these logistics centers were completed 1 to 2 years ago.
Two other centers, the 'Anyang Logistics Center' in Anyang-si and the 'Cheongna Logistics Center' in Incheon, leased by Coupang, also switched from cold to ambient temperature (some floors). They were completed in the fourth quarter of last year and the fourth quarter of 2022, respectively. The 'Yatap-dong Logistics Center' in Seongnam-si, purchased by Aegis Asset Management through a public auction, changed its usage from cold to mixed. Coupang, which participated as an investor in this logistics center, plans to use all floors together with its subsidiary once the usage change is completed.
There are also many cases where the design was changed from cold to mixed or mixed to ambient temperature during the development stage. These logistics centers include 'Logispoint Hobup A' and 'Ihwang-ri Logistics Center' in Icheon-si, Gyeonggi, 'Sasadong Logistics Center' in Ansan-si, and 'Pivotlogis Hwaseong Center' in Hwaseong-si. Among them, the Pivotlogis Hwaseong Center, completed in the fourth quarter of last year, changed its design from mixed to ambient temperature and welcomed Samsung Electronics Logistech as a tenant.
This is a desperate measure to reduce vacancy rates. Since maintaining temperature is important for cold storage logistics centers, construction costs are about twice as high as those for ambient temperature logistics centers. Nevertheless, with the increase in fresh food delivery linked to COVID-19, many such centers sprang up rapidly. While demand remained steady, supply increased significantly, leading to a situation where usage had to be changed to ambient temperature to find tenants. Although additional costs are incurred, it is considered better than leaving the logistics centers vacant. As of the third quarter of this year, the vacancy rate for cold storage logistics centers was 43.0%, whereas for ambient temperature logistics centers it was only 15.2%.
Because vacancy rates are sensitive, sales only occur when usage is changed to mixed or ambient temperature. Among logistics centers traded within the year, there were no cases of ownership transfer while remaining cold storage without usage change. Ambient temperature centers such as 'Daedeok Logistics Center (Buildings A and B)' in Anseong-si and 'Bupilly 188 Logistics Center' in Icheon-si, or mixed centers such as 'Ottogi Namyangju Safety Logistics Center' in Namyangju-si, 'Logiport Osan Logistics Center' in Osan-si, and 'Brick Hwaseong Logistics Center' in Hwaseong-si were traded in the third quarter of this year.
With active usage changes of cold storage logistics centers, it is expected that overall vacancy rates of logistics centers will decrease within the next 2 to 3 years. A Zenstamate official said, "New supply of logistics centers is decreasing both in the metropolitan area and provinces, and there is an increasing movement to absorb tenant demand through usage changes."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
