Looking at transactions in 2026 alone showcases a different picture again. Cross-border buyers, who were instrumental in driving last year's yield compression and volume growth, have been almost entirely absent from recorded acquisitions so far this year. In their place, listed groups and private capital have accounted for the entirety of buying activity, a composition shift that speaks to a market taking a pause on offshore appetite even as the broader annual figures still look robust. This divergence in results suggests the offshore capital story that dominated cold storage narratives through 2025 was real, but concentrated in a specific window, rather than a permanent structural feature of the market. Part of the pause likely comes down to a gap between what owners think their assets are worth and what buyers are prepared to pay, a dynamic playing out in cold storage markets well beyond our shores as pricing expectations built during the boom years take time to reset. Whether offshore capital returns in the second half of 2026 remains to be seen, but the early-year composition points to a market currently being carried by domestic institutional and private buyers rather than international pension funds and sovereign capital.
Perhaps the more striking shift is geographic. Melbourne, long the dominant market for cold storage transaction activity given its combination of land availability and infrastructure capacity, has recorded a sharp pullback in 2026 relative to last year. Sydney, by contrast, has moved into the leading position, continuing a trend that began building through 2025. This rotation likely reflects a combination of factors rather than a single cause: the depletion of readily available Melbourne stock following a run of large transactions, tightening industrial land availability closer to Sydney's population centres, and the natural cycle of asset availability as owners who transacted in the earlier boom period become less active sellers.
It's also where most of the development action is happening right now. Western Sydney International Airport opens its doors to passengers next month, with freight operations already underway since July, and it's shaping up as a genuine game changer for the city's logistics map. A curfew-free, 24-hour airport handling international freight on Sydney's western fringe is exactly the kind of infrastructure that pulls cold storage demand toward it, and it's no coincidence that so much of the current development pipeline is clustering around that corridor as operators position themselves close to the new export gateway. We're seeing a similar story play out on a smaller scale in Hobart, where the airport has been building out its freight and cold storage capability to give Tasmanian producers a direct line to international markets rather than trucking seafood, berries and premium produce across Bass Strait first. It's a reminder that airport-adjacent cold storage is becoming its own little subcategory of the market, wherever there's a genuine export story attached to it. Not all of this new supply is coming out of the ground either. With well-located land increasingly hard to come by, coupled with the rapidly escalation in construction costs, many operators are looking at converting existing dry warehouse space into refrigerated facilities, a faster and often cheaper route to market than a ground-up build, even if it comes with its own engineering difficulties around floor loads, clearances and retrofitting insulation into a building that was never designed for it.
Capitalisation rates tell an interesting story of their own. Yields on the larger portfolio transactions last year were recorded at a sub-6 per cent range, reflecting the scale and institutional appetite behind those deals, while smaller single-asset trades are pricing closer to 7 per cent as buyers apply a more cautious lens. Averages across the market this year show, cap rates have held steady in the low 6 per cent range, masking that underlying spread between deal types. A combination of interest rate uncertainty and buyers applying closer scrutiny to asset quality and operational specification, is show a genuine split in the market between well-specified, efficiently powered facilities built in the last few years and an ageing tier of stock that hasn't kept pace, the latter increasingly needing real capital spent on it before it can compete for the same tenants.
Taken together, the data points to a cold storage sector in a period of recalibration rather than retreat. The extraordinary offshore-led volume growth of 2025 has given way to a more measured, domestically-anchored market in 2026, with activity concentrating in Sydney rather than Melbourne and new development following the export infrastructure story. None of this suggests the sector's underlying investment thesis, tied to population growth, changing food consumption patterns and structural demand from pharmaceutical and health science users, has weakened. Rather, it suggests investors are becoming more selective about the assets they are prepared to pay for (like most segments of commercial property a the moment) and more patient about when offshore capital re-enters at scale.
