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November 18, 2020

Progress on COVID-19 vaccine could spur cold storage real estate investment, kickstart economy

Real Estate Vaccine

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Vaccine Boom Real Estate

The race for a safe and effective COVID-19 vaccine took another important step forward on Monday, when Moderna announced the preliminary results of its phase three clinical trials.

The pharmaceutical company reported that the vaccine was 94.5% effective in preventing infection by triggering an immune response using messenger RNA.

Moderna is now the second company, after Pfizer, to publish promising results on a COVID-19 vaccine. They could both become widely available over the next four to six months. Pfizer boasted a 90% effectiveness rate for its vaccine.

Each of these vaccines carries noteworthy implications for real estate investors keen on the sudden demand for cold storage.

Pfizer’s vaccine must be kept at minus 75 degrees Celcius, a temperature that medical offices and pharmacies don’t generally have the capacity to store. Moreover, once transported and ready for distribution, the Pfizer vaccine can only stay in a refrigerator for five days.

That means there will need to be a significant investment in cold storage facilities around the world.

By comparison, Moderna’s vaccine can be stored at minus 20 degrees Celcius, a temperature that’s also a standard for existing vaccines, such as Varicella for chickenpox. Notably, the vaccines can last in a refrigerator for 30 days.

In each case, medical offices and pharmacies are going to need more cold storage in the months to come.

As Maurie Backman wrote for the Motley Fool, this demand could set in motion a larger cascade in the public health and economic recover:

"Moderna’s news could impact real estate investors in a number of ways. For one thing, despite less-stringent storage requirements than Pfizer’s cocktail, Moderna’s vaccine will still result in an uptick in cold storage demand, so those real estate investment trusts (REITs) could be worth buying into immediately.

Secondly, if Moderna’s vaccine is rolled out quickly, society may be able to get back to normal faster than previously expected. That could, in turn, prevent more retail closures — closures that are putting shopping center and mall REITs in jeopardy — and also help revive the hotel industry, which has been sluggish since the pandemic began."

-Maurie Backman, The Motley Fool

Both of these vaccines still must clear the hurdle of an emergency use authorization from the U.S. Food & Drug Administration, but the uptick in activity on this front should get the attention of investors who are bracing for the effects of a crippling second wave of COVID-19 this winter.