Cohen & Steers invested approximately $100 million in Lineage Logistics, a temperature-controlled logistics solutions company.
The firm made the investment on behalf of several mutual funds with the belief that the market is in the early stages of a long-term transformation of the food supply chain, which will increase the need for next-generation, efficient, and technology-driven cold storage.
“The need for next-generation, efficient and technology-driven cold storage will create opportunities for companies with superior technological and operational capabilities,” said Thomas Bohjalian, head of U.S. real estate and senior portfolio manager at Cohen & Steers. “Our investment is based on our view that these trends and attributes offer superior long-term growth potential and presents an attractive investment for our investors.”
Lineage, one of the world’s largest providers of temperature-controlled logistics solutions, has made several acquisitions of its own this year.
Back in May, it acquired Maines Paper & Food Service assets, reported Verdict Foodservice. The acquisition of Maines’ foodservice distribution assets is expected to strengthen Lineage Logistics’ end-to-end supply chain capabilities in the quick-serve restaurant and casual dining hospitality markets.
Later in the same month, it also acquired Henningsen Cold Storage Co.—bolstering its presence in the Pacific Northwest with the addition of 14 facilities across Oregon, Washington, Idaho, Pennsylvania, North Dakota, and Oklahoma.
The company has also significantly expanded its cold storage warehouse capacity in the UK.
Lineage recently broke ground on a 92,000-pallet-position, fully automated expansion at its Peterborough location in the UK to form a strategically positioned South Eastern Superhub, which will serve both retail and foodservice customers with unique supply chain requirements.
The new capacity will complement 26,000 existing conventional pallet positions at the property, which combined with the expansion’s automated design will enable maximum flexibility and as highly customized solutions for customers. The investment brings Lineage’s total automated warehouse count in the UK to six, with a total of 330,000 automated pallet positions.
Lineage’s phased expansion approach in Peterborough is in response to growing customer demand from both online and conventional grocery sales – a trend which was accelerated due to the COVID-19 pandemic.
In the UK, online sales now account for 13% of all grocery sales, up from 7.4% in March 2020, and new online customers are predicted to continue shopping online, according to Kantar. Frozen items have also increased in popularity, and the sector is up 22% year over year.
In the U.S., even before the pandemic it was reported that the need for cold storage was growing due to the online grocery delivery market increasing.
In January, nearly half of U.S. consumers were already shopping for packaged food products online—which was expected to rise to 70% by 2022, translating into an estimated $100 billion spent per year on online groceries, as stated by the Food Marketing Institute and Nielsen.
CBRE had estimated cold storage space demand of between 70 million- and 100 million-sq. ft. over the next five years. The firm also predicted an increase in projects without a tenant in place—meaning there will be more entrants into this space, with specialized developers and contractors leading the way.
More high-tech implementation in cold storage facilities can be expected as well, despite the fact that robotics technology has not fully infiltrated these spaces like it has in traditional warehousing. Large retailers already implementing automated systems will be driving this trend.