Singapore's vaccine hub quest to drive up cold storage rents: Cushman & Wakefield

IN light of Singapore's quest to position itself for the storage, distribution and shipment of vaccines, rents for cold store logistics warehouses are expected to increase from S$2.50-S$3.50 per square foot per month currently as demand outstrips supply.

This is according to Cushman & Wakefield's new report, APAC Cold Storage Logistics, which discusses how demand for cold store logistics will be impacted in light of global developments around vaccines for the Covid-19 pandemic.

Cold chain logistics involves the utilisation of temperature-controlled warehouses for storage and cold-insulated transport vehicles for distribution. About 25 per cent of all healthcare products are temperature-sensitive, and maintaining a specific temperature range throughout the entire shipping process is essential, according to the report.

It further noted an increasing expectation by scientists that the Covid-19 vaccine will require annual shots like the flu vaccine to maintain its effectiveness, instead of being administered as a single shot. This will result in a "sustained demand" for cold storage logistics across the globe, giving rise to rental premiums that could range between 50 per cent and 100 per cent, or even higher, said Cushman & Wakefield.

Christine Li, the firm's head of research for Singapore and South-east Asia, believes such rental premiums will pose a "strong incentive" for developers to construct cold storage projects instead of conventional warehouses, despite the higher cost of developing cold storage facilities due to the installation of insulation and machinery.

"Investors and developers can also consider converting conventional warehouses to cold storage facilities to reap the rental premium," she said.

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Said Brenda Ong, executive director and head of logistics & industrial services at Cushman & Wakefield: "Stockpiling during Phase Two of Singapore's efforts to contain the spread of Covid-19 resulted in a sudden spike in demand for warehouse facilities. Similarly, we expect a flurry of leasing and investor activity in the cold store logistics market as Singapore enhances the infrastructure required for the safe handling of vaccine storage and distribution in the months ahead. This is a sector we will be monitoring very closely."

Last week, biotechnology company Moderna said it has signed a supply deal with Singapore's Ministry of Health for its Covid-19 vaccine candidate mRNA-1273. The government has also inked advanced purchase agreements with Pfizer-BioNTech and Sinovac, and is in discussions with a few other pharmaceutical companies.

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