Report: Texas Tops Cold Storage Demand as Occupiers Target Newer Facilities

The performance of the cold storage category in the industrial real estate sector appears mixed. On the one hand, cold storage has been impacted by “all-time high deliveries amid a slowdown in food inventories and softer consumer spending,” according to Newmark’s just-released “Cold Storage Demand Drivers” report.

On the other hand, absorption stood at 3.5 million square feet in 2025. “What stands out most is not that the sector softened, but that underlying demand remained positive, even through a difficult backdrop,” Newmark’s Senior Research Analyst, National Industrial, Jamil Harkness, explained to Connect CRE.

Additionally, though vacancy was close to a two-decade high, “demand became heavily concentrated on modern product, while older facilities experienced record move-outs and consolidation.”

Cold Storage Versus Everything Else

Cold storage facilities offer temperature-controlled interiors for products that require refrigeration, chilling, or freezing. While food is typically associated with cold storage, the buildings are also designed to store pharmaceuticals and biologics.

Because of its specialized requirements, cold storage real estate is more operationally intensive than other industrial types.

“They require robust insulation, refrigeration systems, tighter thermal envelopes, greater power reliability, specialized flooring and sprinkler systems,” Harkness explained. “Their design is focused on cubic capacity, throughput, and product integrity rather than just square footage.”

It’s impossible to rate cold storage performance using the usual industrial standards. Said Harkness: “Cold storage is a highly nuanced, diversified sector that sits at the intersection of grocery modernization, pharmaceutical logistics, food manufacturing, and supply-chain resiliency.”

Vintage Facilities Versus Newer Structures

Similar to other real estate sectors, cold storage demand is bifurcated: “modern facilities captured a record year of absorption in 2025,” while “older facilities faced equally record-setting move-outs,” the report said.

Harkness said that such a trend is to be expected, due to functional obsolescence. “Occupiers need buildings that can move products faster, support labor-saving systems, and operate at lower long-term cost,” he said.

Not so much with older facilities.

“These often fall short on clear height, dock configuration, refrigeration systems, roof load, flooring, and overall layout, which makes them less competitive even if they are well located,” Harkness observed.

Because of the stark differences between old and new, Newmark’s data shows that the more modern facilities report positive absorption, while their older counterparts’ absorption is in negative territory.”

Texas versus the United States

Another interesting factor reported was that space and inventory grew in the Lone Star State, “expanding by 35% since 2015 and far outpacing the national average.” Meanwhile, cold-storage employment increased by 70% during the same period.

There were two reasons for the growth.

First, “The state is benefiting from strong population growth, major food production scale, expanding refrigerated trade flows, and large, strategically important distribution nodes such as Dallas-Fort Worth, Houston, and Laredo,” Harkness said.

The second reason is the logistics backdrop. Harkness noted that the Port of Houston reported a 13% year-over-year increase in refrigerated container traffic in 2025. Laredo supports cross-border refrigeration and food trade. Texas also ranks first in the nation in terms of the number of farms and ranches.

“Texas is not growing because of one isolated factor; it is growing because population, production, ports, and trade are all reinforcing one another,” Harkness observed.

Uncertainty Clouds the Outlook

The cold storage sector continues to face multiple changes and challenges. Harkness explained that the 12- to 18-month outlook will include elevated vacancies and supply outpacing absorption, even with a shrinking pipeline.

Population growth, food production, e-grocery, pharmaceutical cold chain, and network resiliency will continue to improve cold-storage fundamentals, though unevenly. Modern assets will continue to outperform, while older facilities could be challenged.

Still, “the next 12 to 18 months will look more like a market reset than a downturn in the long term,” Harkness said.