Consultant Insight: Lineage Logistics adds another acquisition in a market stressed for capacity

Michigan-based Lineage Logistics added another acquisition earlier this month through its purchase of Hanson Logistics, a cold storage organization with seven facilities across Michigan and Indiana. This marks the sixth North American acquisition Lineage has made this year and it highlights a growing need for shippers: warehouse capacity. [caption id="attachment_69752" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo World columnist[/caption] Lineage Logistics is considered the largest temperature-controlled industrial real estate investment trust (REIT) with a global network of over 350 facilities totaling more than 2 billion cubic feet of capacity. Its primary focus is on food and beverage, with numerous facilities located inland and at ports to support imports and exports. According to the latest U.S. Census Bureau data, foods, feeds and beverages imports, in terms of millions of U.S. dollars, increased by 15.8% for the first half of the year compared to the same period in 2020. Among those items requiring temperature management, fish and shellfish increased by 29.4%, wine, beer and related products increased by 20.9%, alcoholic beverages excluding wine increased by 20.5%, and fruits and frozen juices increased by 13.4%. The high demand can be attributed to consumers returning to restaurants, and inventory replenishments from grocery stores to stock physical and virtual shelves in support of their omnichannel solutions. The global cold storage market is expected to reach $291.3 billion by 2028, a 13.5% CAGR between 2021 and 2028, according to market research and consulting firm Grand View Research. Within this market size, the frozen segment is forecasted to grow at a CAGR of 12.5% for the same time period. The growth is attributed to changes in living standards and food consumption behavior of consumers. U.S. warehousing market stressed The U.S. warehousing market overall is growing to the point of being stressed as supply chain disruptions, inventory replenishments and the rise in e-commerce eat up every available bit of capacity. According to global commercial real estate services company Jones Lang LaSalle (JLL), second-quarter rents for industrial space reached record highs, increasing 5.1% year over year while vacancy was one of the lowest on record at 4.8%. Logistics and distribution was the top leasing industry during the second quarter, followed by 3PLs, e-commerce and food and beverage. With the increase in demand, space is tight — particularly at ports. Looking ahead to 2021 and 2022, JLL expects industrial rents will continue to grow by between 4% and 7% as more new industrial space is delivered and quickly snapped up. As leasing activity remains strong, demand from big-box users, specifically those needing more than 500,000 square feet of space, has significantly increased. Commercial real estate services and investment firm CBRE also noted that rents increased up 2.9% year over year during the second quarter. Demand was led by wholesalers and 3PLs to support increased e-commerce demand and the need for safety stock to counter supply chain disruptions. The ongoing supply chain disruptions will likely persist well into 2022, putting pressure on warehousing availability and perhaps calling for creative solutions to satisfy demand.

Consultant Insight: Lineage Logistics adds another acquisition in a market stressed for capacity

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