No COVID Cold Shoulder for Cold Storage

OAKLAND, CA—An added beneficiary of COVID clearly has been the cold storage product type. And, one investor continues to nab those types of facilities in the Bay Area and elsewhere. Provender Partners recently acquired two Oakland facilities totaling more than 160,000  square feet on 8 acres for approximately $26 million. The transaction adds to its acquired portfolio of more than 5 million square feet of refrigerated real estate throughout the United States.

Provender Partners purchased two properties, 860 and 940 on 81st Ave. Both facilities include freezer, cooler and dry storage, and are positioned near the Port of Oakland and Oakland International Airport.

While in escrow, Provender Partners secured a new seven-year lease to United Cold Storage, a San Francisco-based company offering frozen, refrigerated and dry storage space to small businesses.

Art Rasmussen and David Norrie of CBRE handled both sides of the transaction as well as the United Cold Storage lease.

“The fact that Provender Partners was able to lease the building while still in escrow is indicative of the lack of available refrigerated space in the Bay Area and beyond,” said Neil A. Johnson, founder and CEO of Provender Partners and a former Bay Area real estate investor.

In 2020, Provender Partners sold more than $150 million in assets, leased a 267,000-square-foot building to Dollar General and two buildings totaling 162,000 square feet to United Cold Storage, acquired 220,000 square feet of processing facilities in Illinois and has now added another 162,200 square feet of refrigerated real estate in Oakland to its portfolio.

“This is Provender’s fifth Bay Area acquisition since its inception in 2014 and won’t be our last,” Johnson tells GlobeSt.com. “As gentrification in San Francisco’s downtown and Peninsula areas has grown, legacy food users and their workforce have moved to the East Bay area. Compounding this demand, a new generation of food tech tenants has evolved through the area’s venture capitalists. Lastly, the proximity to the Port makes the area a key market for us.”

Measures taken to reduce person-to-person contact to slow the spread of the virus caused operational changes across the cold chain. While these measures were done out of necessity, the changes also provided an opportunity to adjust or try new processes or controls that if effective and efficient, may remain in place after COVID-19 is over.

In a Global Cold Chain Alliance survey, 53% of respondents believe the percentage of employees working remotely will increase. Pre-pandemic work from home rates averaged 4.5% of workforces. That has increased to 19.8% of the workforce during the pandemic and there is an expectation that about 10.6% of the workforce will continue to work remotely. This could lead to an increase of 6.1% of the workforce working remotely moving forward.

About three-quarters of all respondents think that the pandemic will cause an increase in the growth rate of e-commerce/direct-to-consumer delivery of chilled and/or frozen product. Even stronger demand for data and predictive analytics is expected in the future, and respondents are optimistic that the growth rate of the industry as a whole will be even more significant because of the pandemic. Conversely, 73% of respondents believe that global trade opportunities will either decrease or remain the same relative to pre-COVID expectations, says the Global Cold Chain Alliance survey.