The Related Company is one of the most well-known commercial real estate brands. The largest landlord in New York City, Related, has become famous for its massive Hudson Yards development and for its bombastic founder, Steven Ross, who also owns the Miami Dolphins. Related has built its brand on high-end, high-touch, and high-tech properties.
But now, the company is expanding its portfolio to include a very different property type. Related just announced a $1 billion new venture called RealCold that plans on creating a network of cold storage distribution facilities. The reason cited for the new venture by the company is the potential growth in fulfilling our growing grocery delivery. “You can’t store food on the internet,” Michael Winston, managing director of Related Fund Management, told the Wall Street Journal.
There is another reason that Related is pushing into cold storage: it has much better fundamentals than office or luxury multifamily. Related is seeing the pullback by occupiers and is struggling to sell many of its multimillion-dollar condos in Hudson Yards. When you look at the potential growth of cold storage compared to a possible contraction in office and residential, it certainly seems like a better business venture. Cold storage is also a very capital-intensive asset type, something that Related, with its cash reserves and long-standing relationship with lenders, could use as a competitive moat.
Related will bring its same innovative approach to other property types to cold storage. Who knows what kind of tech they will pioneer to help their warehouses save on energy costs and better integrate with customers like Amazon. Cold storage has always been a bit of a fringe class of real estate, but now, with a well-known company like Related jumping in, it won’t go overlooked by other property investors for long.