Analysis: Demand surging for cold storage warehouses, but construction requirements pose challenges
The growth of online grocery sales has stoked demand for additional cold storage warehousing space in the United States.
The growth of online grocery sales has stoked demand for additional cold storage warehousing space in the United States, but the cost and complexity of constructing cold storage facilities might make meeting that demand challenging, according to a new report from CBRE, Los Angeles.
In a report earlier this year, CBRE forecasted that the U.S. industrial cold storage industry, currently spanning 2-3% of overall U.S. office real estate, will need to add up to 100 million square feet of additional capacity to keep up with anticipated growth of online grocery sales through 2022.
“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,” says Matthew Walaszek, associate director of industrial and logistics research. “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.”
The cold storage renaissance is in its early days. In-progress and newly completed construction of cold storage space in the United States amounts to just 4.5 million square feet, or 1.5% of overall industrial real estate construction at the end of the second quarter.