When will there be a vaccine to finally put an end to the coronavirus pandemic? It's the question on many real estate investors' minds as retailers file for bankruptcy by the dozens and the hotel industry continues to get hammered.
Recently, we saw some encouraging news on the vaccine front. Pfizer (NYSE: PFE) announced that based on preliminary data from its Phase 3 coronavirus vaccine trials, its mRNA formula is more than 90% effective in preventing coronavirus infection.
Of course, that data has not yet been peer-reviewed, and the company has not yet applied for FDA emergency use authorization, so it's a little early to celebrate. But if Pfizer's vaccine is deemed both safe and effective, the company could seek to start distributing it to the public as early as December; otherwise, in the beginning of 2021.
It's the distribution, however, that presents a challenge. Pfizer's vaccine will need to be stored at about minus 75 degrees Celsius -- approximately 50 degrees colder than any vaccine currently used in the United States. And that's why there could soon be a huge surge in demand for cold storage.
Why it pays to invest in cold storage
There's a perpetual need for cold storage outside of a potential vaccine. Cold storage facilities are crucial for the safe distribution of food products that fill grocery store shelves regularly. But with news of a potentially viable coronavirus vaccine on the horizon, cold storage is apt to heat up, especially given that Pfizer is the first player in the coronavirus vaccine race to announce such encouraging results.
Furthermore, Pfizer's vaccine isn't the only candidate that will require cold storage. Moderna (NASDAQ: MRNA), which is also in the process of testing out a vaccine using mRNA, will have similar storage needs.
In fact, some medications that have been around a long time require cold storage. But given the way coronavirus vaccine production is expected to ramp up once it's FDA-approved, it's clear a cold storage boom is coming. And that gives real estate investors a key opportunity to load up on cold storage real estate investment trusts (REITs).
Of course, like any investment, cold storage isn't without risk. There's a high cost to developing and maintaining cold storage facilities, especially those capable of securely housing precious cargo like doses of a coronavirus vaccine. Also, these facilities will most likely be subject to added scrutiny and regulation, and it's unclear exactly who will bear that cost. Labor may also be more expensive for specialty cold storage facilities, and higher wages will no doubt eat into these facilities' profits.
But real estate investors are, frankly, running out of options in light of the pandemic. Mall REITs are questionable with the number of stores expected to close near term. Hospitality REITs are downright dangerous, given the way hotels have struggled with vacancies this year. Cold storage offers a key opportunity to buy into an industry that just may prove crucial in putting an end to the pandemic once and for all.