What’s Driving Cold Storage Demand in the Philippines?
Article
Outlook for the Industrial Industry
Manila’s logistics sector continues to show remarkable performance, ranking 3rd across Asia Pacific in year-on-year rental growth, according to Knight Frank’s latest report. While the sector posted an impressive 9.1% rental growth in 2024, it marks a significant adjustment from the 49.3% growth recorded the previous year, reflecting a maturing market.
Knight Frank’s report highlights a notable shift in market dynamics, with conditions transitioning from being landlord-favorable to more neutral conditions. This shift comes as the logistics sector continues to be driven by strong demand for industrial and cold storage facilities, propelled by the rise of e-commerce, pharmaceuticals, and supply chain modernization.
Cold Storage Demand: Hot or Cold?
The demand for cold storage facilities in the Philippines remains high as industries adapt to evolving consumer needs and global supply chain standards. E-commerce has significantly influenced the need for efficient cold storage, with businesses requiring facilities that can handle perishable goods such as food, pharmaceuticals, and high-value medical products.
The continued expansion of pharmaceutical industries, particularly in vaccine distribution and medical supply chains, further reinforces the need for temperature-controlled storage solutions. As businesses modernize logistics operations, cold storage facilities are becoming essential investments for companies looking to maintain efficiency and compliance with industry standards.
Investors Ask: “Buy or Lease?”
Pros of Leasing:
- Flexibility
- Cost-efficiency (less investment)
- No need to spend for repairs as maintenance is typically included in the lease agreement
- Growth potential (especially if business is doing well, thus the need for space expansion or relocation)
Cons of Leasing:
- Lack of stability (probability of the owner not renewing the lease contract, forcing the business to move)
- Landlord can increase the price of the lease before renewal
- Space limitations and the challenge of making it functional for supply chain operations
While buying a cold storage space requires a significant investment, there are notable advantages. Ownership provides businesses the freedom to design, expand, and optimize their storage operations according to their needs.
Pros of Buying:
- Potential for value appreciation of the property and building equity
- Possibility of leasing the space to other businesses
- Freedom to control all aspects of the space (layout, design, expansion possibilities, etc.)
Cons of Buying:
- High investment cost to build the facility
- Responsible for maintenance and repair costs
- Liability for injuries or claims that occur on the property
Whether leasing or buying, one thing is certain: the demand for cold chain services in the Philippines is on the rise, making it a strategic investment for businesses looking to optimize their supply chain operations.
Invest While It’s Hot
The logistics sector in the Philippines is evolving, with cold storage emerging as a critical component in supply chain modernization. As industries grow and consumer preferences shift, securing the right cold storage solution is crucial for operational efficiency and long-term success. Businesses that invest in high-quality facilities now are poised to capitalize on this increasing demand and the potential for strong returns.
We have a selection of industrial spaces available, including cold storage facilities designed for pharmaceuticals, perishable goods, and other specialized needs. Whether you need a short-term lease or a long-term investment, we can help you find the right solution.
Reach out at inquiry@santos.knightfrank.ph or call us at +63 917 806 6315 to explore available opportunities.
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The world of real estate can be a difficult place to navigate. Whether property is your investment or a tool that drives your business success, you need a partner who can guide you in every step of the way.
Since 1994, Santos Knight Frank has been guiding Fortune 1000 companies, BPOs, private clients, and institutions in all facets of real estate. We advise companies on their best office, retail, and industrial location, oversee commercial fit-out projects, and manage facilities. We have facilitated over 4 million sqm of office transactions on behalf of clients and managed over 40 million sqm of real estate under our property & facilities management arm.
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