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Demand for Cold Storage Warehouses Surges, New Supply Challenged
The growth of online grocery sales has stoked demand for additional cold-storage warehousing space in the U.S., but the cost and complexity of constructing cold-storage facilities might make meeting that demand challenging, according to a new report from CBRE. The resulting shortage stands to make cold storage an even more coveted real estate asset for users and investors alike.
CBRE’s Matthew Walaszek says, “There are a lot of complexities inherent in developing cold storage facilities, but the most critical component driving more construction is well established at this point: strong user demand. As online grocery sales grow, grocers and other users will migrate more of their cold storage operations from stores into industrial cold storage facilities to better facilitate delivery.”
In-progress and newly-completed construction of cold storage space in the U.S. amounts to just 4.5 million square feet, or 1.5% of overall industrial real estate construction at the end of Q2. Cold storage construction costs on average two to three times as much as building a traditional, “dry” warehouse. Construction of cold storage warehouses often can take four to five months longer than for dry warehouses.
To meet the demand and challenges, shifts required include developers will need to construct more facilities on spec, small markets likely will see more cold storage construction, and automation will make more headway into cold storage facilities.
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