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Demand for Cold-Storage Heats Up as Online Grocery Sales Grow
By Dennis Kaiser
The growth of online grocery sales could result in demand for up to 35 million square feet of U.S. cold-storage space shifting from retail stores to warehouses and distribution centers within the next seven years, according to a new report from CBRE. Researchers at the company estimate that the U.S. market for food-commodity cold storage space spans roughly 180 million square feet of industrial space – primarily refrigerated warehouses – and about 300 million square feet of space in grocery stores and other retail venues.
CBRE industrial and logistics industry researcher David Egan says, “The U.S. market for warehouses and distribution centers has been on a multiyear run, but there still are segments in the relatively early stages of their growth, like cold storage. As e-commerce expands further into the grocery business, the resulting growth of the food supply chain and demand for new, climate-controlled warehouse space could very well be the new opportunity that investors and developers have been seeking.”
According to FMI/Nielsen, one of the expected shifts in the coming years is the ratio between industrial and retail cold-storage space, as online grocery sales will grow from 3% of all grocery sales in 2017 to 13% by 2024. Based on that projection, CBRE calculates that demand could translate into as much as 35 million square feet of cold-storage space shifting from retail properties to industrial facilities.
CBRE’s analysis found that larger concentrations of food-grade, cold-storage facilities occur in states with substantial agricultural production, large populations or both. CBRE estimates California has the most industrial cold-storage space (nearly 400 million cubic feet), followed by Washington state (271 million), Florida (260 million), Texas (231 million) and Wisconsin (228 million).
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