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.