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Getting into Cold Storage: Investors, Developers and Operators Share Strategies for Success

Cold storage is a niche asset class with relatively few players compared to traditional industrial space. To share their perspectives on how investment,…

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Cold storage is a niche asset class with relatively few players compared to traditional industrial space. To share their perspectives on how investment, development and operational decisions are made for this specialized asset class, five experts took the stage at NAIOP’s I.CON Cold Storage this week in Atlanta. 

Moderated by Cory Singer, vice president of business development with FCL Builders, panelists included Jeff Manno, co-founder/managing partner, FlexCold; Anthony Rinaldi, founder and managing principal, Saxum Real Estate; Kevin Rivest, managing partner, head of U.S. cold storage, BGO; and Josh Lewis, chief operating officer, RL Cold.

Cold storage facilities aren’t a new product, but the vast majority of current space is outdated and not suitable for modern demand, agreed the panelists. This, said Lewis, is largely due to the well-documented shift in both population centers and consumer demand. “Ports and the overall movement of goods have seen significant changes since the original cold storage was built,” he said. “We have to look at who is using the space now and what services are critical to satisfy it.”

“We are essentially institutionalizing a non-institutional asset class,” said Rinaldi. “There has been immense change in global logistics, and our antiquated infrastructure hasn’t kept up. A lot of the current stock is 25 years old or older, and it can’t meet requirements for modern and energy-efficient spaces.”

“Manufactures and producers are optimizing their networks and improving transportation and shipping strategies to deploy their product,” Lewis said. “We’re seeing a realignment and there’s a lot of opportunity to build highly flexible space that can accommodate various temperatures and balance import and export demand.”

“Speculative development has decreased as construction costs and interest rates have soared,” said Rinaldi. “Carrying costs of speculative space is very difficult. If developing spec, it has to be highly convertible with 50’ clear ceiling heights, the ability to vary temperatures from negative 20 degrees to 40 degrees, and be heavily devisable. A cold storage space is far more complex than any other industrial building.”

Lewis said that the key to success is working with the end user to understand their business model, then devising strategies that make the facility successful for them. “Our focus is on the demand for palette positions and providing the services to support it,” he said. “We want to be as efficient as possible to maximize the density and set up the warehouse to move inventory quickly.”

“A project in New Jersey is going to look a lot different than one in Houston,” said Manno. “From a base model, there’s needed customization based on location, commodity type and available crews, among other factors.”

“From an investor standpoint, the development team is critical,” said Rivest. “What project team has it assembled? What is their experience? We look for partners who have experience and can assemble the right team to identify flaws and create the best plan. The box might look the same in different markets, but the inside will look very different.”

Cold storage spaces are expensive ones to build, agreed the panel, and creating efficiency and densification within the box is important. “It’s not the price per foot that matters,” said Lewis. “The profitability is the price per palette, and tenants are slowing becoming educated about that and how it impacts their total cost of occupancy.”

“The palette drives everything,” Lewis said. “It’s what brings the product in, and the space, design and programming must be able to efficiently handle it. Efficiencies include minimizing product touches, lessening the movement of goods between warehouses or other value-add services, like blast freezing or shipping. Those types of things can add a lot of basis to the investment.”

“Cold storage is unlike other asset classes because it marries operations and development,” said Rinaldi. “You need members of the team with experience in drilling down to the nitty-gritty of the end user, understanding how to fill the palette positions, and where demand will be moving forward. Gray lines are blended more in cold storage than any other product type.”

With demand increasing, the panel agreed that opportunities are immense, but a tipping point may be ahead. Modernizing existing stock is one such opportunity, but costs for construction and capital must be absorbed and users are seeing an uptick in rent as a result. For dry warehouse, around 5% of a user’s operating spaces will go toward rent; for cold storage, it can be more than 30%.

These types of decisions are forcing companies to realign their supply chains and reimagine how they do business, examining every piece of how goods move toward the consumer.  

BGO is a large equity investor in the cold storage space, and Rivest said the company examined microtrends and has a long-term conviction for continued investment. “There’s a bit of a crossover with infrastructure investors that have started to invest heavily in this sector,” he said. “Lenders are becoming more educated and there’s a lot of interest in the environmental and construction sides of these projects.”

“The debt markets are more open than the equity markets,” said Rinaldi, noting that this is the most challenging investing environment since the Great Recession. “On the equity side, there are fewer groups that understand cold storage, and it’s important to be working with dedicated capital that has a deep understanding of the space. It’s a learning process for most of the equity groups.”

“It’s a high barrier to entry for a reason,” said Lewis. “It’s a highly nuanced specialized space, and we have to have all the various components working in unison to make sure we’re delivering and operating a project that’s going to be successful.”

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This post is brought to you by JLL, the social media and conference blog sponsor of NAIOP’s I.CON Cold Storage 2023. Learn more about JLL at www.us.jll.com or www.jll.ca.

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Simple blood test could predict risk of long-term COVID-19 lung problems

UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to…

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March 15, 2024

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UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to suffer “long-haul” lung problems. That finding could help doctors better personalize treatments for individual patients.

Credit: UVA Health

UVA Health researchers have discovered a potential way to predict which patients with severe COVID-19 are likely to recover well and which are likely to suffer “long-haul” lung problems. That finding could help doctors better personalize treatments for individual patients.

UVA’s new research also alleviates concerns that severe COVID-19 could trigger relentless, ongoing lung scarring akin to the chronic lung disease known as idiopathic pulmonary fibrosis, the researchers report. That type of continuing lung damage would mean that patients’ ability to breathe would continue to worsen over time.

“We are excited to find that people with long-haul COVID have an immune system that is totally different from people who have lung scarring that doesn’t stop,” said researcher Catherine A. Bonham, MD, a pulmonary and critical care expert who serves as scientific director of UVA Health’s Interstitial Lung Disease Program. “This offers hope that even patients with the worst COVID do not have progressive scarring of the lung that leads to death.”

Long-Haul COVID-19

Up to 30% of patients hospitalized with severe COVID-19 continue to suffer persistent symptoms months after recovering from the virus. Many of these patients develop lung scarring – some early on in their hospitalization, and others within six months of their initial illness, prior research has found. Bonham and her collaborators wanted to better understand why this scarring occurs, to determine if it is similar to progressive pulmonary fibrosis and to see if there is a way to identify patients at risk.

To do this, the researchers followed 16 UVA Health patients who had survived severe COVID-19. Fourteen had been hospitalized and placed on a ventilator. All continued to have trouble breathing and suffered fatigue and abnormal lung function at their first outpatient checkup.

After six months, the researchers found that the patients could be divided into two groups: One group’s lung health improved, prompting the researchers to label them “early resolvers,” while the other group, dubbed “late resolvers,” continued to suffer lung problems and pulmonary fibrosis. 

Looking at blood samples taken before the patients’ recovery began to diverge, the UVA team found that the late resolvers had significantly fewer immune cells known as monocytes circulating in their blood. These white blood cells play a critical role in our ability to fend off disease, and the cells were abnormally depleted in patients who continued to suffer lung problems compared both to those who recovered and healthy control subjects. 

Further, the decrease in monocytes correlated with the severity of the patients’ ongoing symptoms. That suggests that doctors may be able to use a simple blood test to identify patients likely to become long-haulers — and to improve their care.

“About half of the patients we examined still had lingering, bothersome symptoms and abnormal tests after six months,” Bonham said. “We were able to detect differences in their blood from the first visit, with fewer blood monocytes mapping to lower lung function.”

The researchers also wanted to determine if severe COVID-19 could cause progressive lung scarring as in idiopathic pulmonary fibrosis. They found that the two conditions had very different effects on immune cells, suggesting that even when the symptoms were similar, the underlying causes were very different. This held true even in patients with the most persistent long-haul COVID-19 symptoms. “Idiopathic pulmonary fibrosis is progressive and kills patients within three to five years,” Bonham said. “It was a relief to see that all our COVID patients, even those with long-haul symptoms, were not similar.”

Because of the small numbers of participants in UVA’s study, and because they were mostly male (for easier comparison with IPF, a disease that strikes mostly men), the researchers say larger, multi-center studies are needed to bear out the findings. But they are hopeful that their new discovery will provide doctors a useful tool to identify COVID-19 patients at risk for long-haul lung problems and help guide them to recovery.

“We are only beginning to understand the biology of how the immune system impacts pulmonary fibrosis,” Bonham said. “My team and I were humbled and grateful to work with the outstanding patients who made this study possible.” 

Findings Published

The researchers have published their findings in the scientific journal Frontiers in Immunology. The research team consisted of Grace C. Bingham, Lyndsey M. Muehling, Chaofan Li, Yong Huang, Shwu-Fan Ma, Daniel Abebayehu, Imre Noth, Jie Sun, Judith A. Woodfolk, Thomas H. Barker and Bonham. Noth disclosed that he has received personal fees from Boehringer Ingelheim, Genentech and Confo unrelated to the research project. In addition, he has a patent pending related to idiopathic pulmonary fibrosis. Bonham and all other members of the research team had no financial conflicts to disclose.

The UVA research was supported by the National Institutes of Health, grants R21 AI160334 and U01 AI125056; NIH’s National Heart, Lung and Blood Institute, grants 5K23HL143135-04 and UG3HL145266; UVA’s Engineering in Medicine Seed Fund; the UVA Global Infectious Diseases Institute’s COVID-19 Rapid Response; a UVA Robert R. Wagner Fellowship; and a Sture G. Olsson Fellowship in Engineering.

  

To keep up with the latest medical research news from UVA, subscribe to the Making of Medicine blog at http://makingofmedicine.virginia.edu.

DOI

10.3389/fimmu.2023.1308594

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The hostility Black women face in higher education carries dire consequences

9 Black women who were working on or recently earned their PhDs told a researcher they felt isolated and shut out.

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March 15, 2024

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Isolation can make opportunities elusive. fotostorm via Getty Images

Isolated. Abused. Overworked.

These are the themes that emerged when I invited nine Black women to chronicle their professional experiences and relationships with colleagues as they earned their Ph.D.s at a public university in the Midwest. I featured their writings in the dissertation I wrote to get my Ph.D. in curriculum and instruction.

The women spoke of being silenced.

“It’s not just the beating me down that is hard,” one participant told me about constantly having her intelligence questioned. “It is the fact that it feels like I’m villainized and made out to be the problem for trying to advocate for myself.”

The women told me they did not feel like they belonged. They spoke of routinely being isolated by peers and potential mentors.

One participant told me she felt that peer community, faculty mentorship and cultural affinity spaces were lacking.

Because of the isolation, participants often felt that they were missing out on various opportunities, such as funding and opportunities to get their work published.

Participants also discussed the ways they felt they were duped into taking on more than their fair share of work.

“I realized I had been tricked into handling a two- to four-person job entirely by myself,” one participant said of her paid graduate position. “This happened just about a month before the pandemic occurred so it very quickly got swept under the rug.”

Why it matters

The hostility that Black women face in higher education can be hazardous to their health. The women in my study told me they were struggling with depression, had thought about suicide and felt physically ill when they had to go to campus.

Other studies have found similar outcomes. For instance, a 2020 study of 220 U.S. Black college women ages 18-48 found that even though being seen as a strong Black woman came with its benefits – such as being thought of as resilient, hardworking, independent and nurturing – it also came at a cost to their mental and physical health.

These kinds of experiences can take a toll on women’s bodies and can result in poor maternal health, cancer, shorter life expectancy and other symptoms that impair their ability to be well.

I believe my research takes on greater urgency in light of the recent death of Antoinette “Bonnie” Candia-Bailey, who was vice president of student affairs at Lincoln University. Before she died by suicide, she reportedly wrote that she felt she was suffering abuse and that the university wasn’t taking her mental health concerns seriously.

What other research is being done

Several anthologies examine the negative experiences that Black women experience in academia. They include education scholars Venus Evans-Winters and Bettina Love’s edited volume, “Black Feminism in Education,” which examines how Black women navigate what it means to be a scholar in a “white supremacist patriarchal society.” Gender and sexuality studies scholar Stephanie Evans analyzes the barriers that Black women faced in accessing higher education from 1850 to 1954. In “Black Women, Ivory Tower,” African American studies professor Jasmine Harris recounts her own traumatic experiences in the world of higher education.

What’s next

In addition to publishing the findings of my research study, I plan to continue exploring the depths of Black women’s experiences in academia, expanding my research to include undergraduate students, as well as faculty and staff.

I believe this research will strengthen this field of study and enable people who work in higher education to develop and implement more comprehensive solutions.

The Research Brief is a short take on interesting academic work.

Ebony Aya received funding from the Black Collective Foundation in 2022 to support the work of the Aya Collective.

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US Economic Growth Still Expected To Slow In Q1 GDP Report

A new round of nowcasts continue to estimate that US economic activity will downshift in next month’s release of first-quarter GDP data. Today’s revised…

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March 15, 2024

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A new round of nowcasts continue to estimate that US economic activity will downshift in next month’s release of first-quarter GDP data. Today’s revised estimate is based on the median for a set of nowcasts compiled by CapitalSpectator.com.

Output for the January-through-March period is currently projected to soften to a 2.1% increase (seasonally adjusted annual rate). The estimate reflects a substantially softer rise vs. Q4’s strong 3.2% advance, which in turn marks a downshift from Q3’s red-hot 4.9% increase, according to government data.

Today’s revised Q1 estimate was essentially unchanged from the previous Q1 nowcast (published on Mar. 7). At this late date in the current quarter, the odds are relatively high that the current median estimate is a reasonable guesstimate for the actual GDP data that the Bureau of Economic Analysis will publish in late-April.

GDP rising at roughly a 2% pace marks another slowdown from recent quarters, but if the current nowcast is correct it suggests that recession risk remains low. The question is whether the slowdown persists into Q2 and beyond. Given the expected deceleration in growth on tap for Q1, the economy may be flirting with a tipping point for recession later in the year. It’s premature to make such a forecast with high confidence, but it’s a scenario that’s increasingly plausible, albeit speculatively so for now.

Yesterday’s release of retail sales numbers for February aligns with the possibility that even softer growth is coming. Although spending rebounded last month after January’s steep decline, the bounce was lowr than expected.

“The modest rebound in retail sales in February suggests that consumer spending growth slowed in early 2024,” says Michael Pearce, Oxford Economics deputy chief US economist.

Reviewing retail spending on a year-over-year basis provides a clearer view of the softer-growth profile. The pace edged up to 1.5% last month vs. the year-earlier level, but that’s close to the slowest increase in the post-pandemic recovery.

Despite emerging signs of slowing growth, relief for the economy in the form of interest-rate cuts may be further out in time than recently expected, due to the latest round of sticky inflation news this week.

“When the Fed is contemplating a series of rate cuts and is confronted by suddenly slower economic growth and suddenly brisker inflation, they will respond to the new news on the inflation side every time,” says Chris Low, chief economist at FHN Financial. “After all, this is not the first time in the past couple of years consumers have paused spending for a couple of months to catch their breath.”

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