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, Los Angeles.
“The U.S. market for warehouses and distribution centers has been on a multi-year run, but there still are segments in the relatively early stages of their growth, like cold storage,” says David Egan, global head of industrial and logistics research. “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.”
CBRE estimates the U.S. market for food commodity cold storage space spans roughly 180 million square feet of industrial space – namely refrigerated warehouses – and about 300 million square feet of space in grocery stores and other retail venues.
Between industrial and retail cold storage space, that ratio will shift in the coming years, as online grocery sales will grow from 3% of all grocery sales in 2017 to 13% by 2024, according to a study produced by Food Marketing Institute (FMI), Arlington, Va., and Nielsen, Chicago. Based on that projection, CBRE calculates that demand for as much as 35 million square feet of cold storage space will shift from retail properties to industrial.
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 to have 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).