Lineage Logistics, which is already the world's largest cold storage company by space, has inked a deal to acquire another specialist in the sector, Emergent Cold, for $900M. The seller is hedge fund Elliott Management Corp.

The deal marks a further expansion by Lineage into the Asia-Pacific region, and raises its total cold storage capacity worldwide by about 8%, to more than 1.7 billion cubic feet.

The sale also represents the latest consolidation of cold storage space, a specialized industrial real estate sector that is relatively capital intensive compared to other industrial properties. The largest players in the still-fragmented sector are itching to expand, mainly by acquisitions, both in the United States and overseas.

The growth of online grocery sales has the U.S. market for cold-storage warehouses poised for strong growth, according to a CBRE report in June.

Lineage, which is controlled by Bay Grove Capital, has been a driver in that consolidation. In 2017, for example, it expanded outside of the U.S. with the acquisition of cold-storage Partner Logistics, which operates in Europe. Earlier this year, Lineage bought Preferred Freezer Services, a U.S. competitor.

The second-largest company in the cold-storage space, Americold Realty Trust, has likewise been an active buyer of other companies. This year it acquired Chiller Holdco for $1.24B.

Investors have also taken note of the sector lately, putting more money into a market where the high costs of warehouse development have long deterred investment, The Wall Street Journal reports.

Emergent itself is the result of recent investor interest. The company was founded in 2017 by Elliott Management and Emergent CEO Neal Rider, and has since racked up ownership of 46 facilities in six countries, mainly through acquisitions of smaller companies but also development.

According to Lineage, its latest acquisition positions the company to profit from the growing demand for cold storage space in the countries where Emergent is active, namely Australia, New Zealand, Vietnam and Sri Lanka. The new space will allow Lineage to handle higher volumes of dairy, seafood, raw and cooked meat, poultry, frozen vegetables and other frozen or chilled foods in that part of the world.

Demand for cold storage has been rising in recent years, spurred in part by consumer demand for fresher food. People are more conscious of what they put in their bodies and demanding companies supply organic food and fresher ingredients — and they want it right away, Matthew Mugar, co-founder of Boa Logistics, told Bisnow.