Cold Storage Facilities Will Remain “Hot” for 2021 and Beyond
Factors to consider when planning new cold storage construction.
April 6, 2021 | Scott Skala and Jyot Parmar | Wealth Management
Multiple factors are driving demand for cold storage warehouse space: online ordering, even for perishable items, is on the rise; panic-buying during the pandemic accelerated e-commerce; and health-conscious consumers are exhibiting an interest in frozen foods not seen since the mid-1900s. An unprecedented surge in demand for warehouse and distribution space was recently noted by World Property Journal, which reported “a net 99.2 million square feet of industrial space absorbed in fourth quarter—the strongest quarter on record—and 203.7 million square feet absorbed for the year, a 27 percent increase over 2019’s net growth.” An article by Bisnow, “The Cold Storage Market is Maturing Beyond a Niche Industry,” stated, “The outbreak of the coronavirus has accelerated America’s growing dependence on industrial real estate, and cold storage is among the fastest-growing parts of the sector.”
Considering that warehouses and cold storage facilities can be run more efficiently and cheaply than supermarkets, many retailers are eager to embrace the converging trends. However, cold storage facilities are costly to build (and take longer to construct, compared to a dry warehouse), discouraging speculative development. Nevertheless, it is time for the market to accelerate its response and ramp up construction in order to meet the new demands.
