Industrial development as a whole might be cooling slightly, but developers are still keen to build cold-storage properties, betting that at least some of the changes in grocery shopping spurred by the pandemic will be permanent, CBRE reports.

As of the second quarter of 2022, 3.3M SF of speculative cold storage development was underway nationwide, according to the company. In 2019, that number was only 300K SF.

E-commerce's share of total U.S. grocery sales is forecast to rise to 21.5% by 2025, up from only 13% in 2021, according to Mercatus/Incisiv. That increase will be a major demand driver for cold storage, the report says.

"There’s so much demand, and this is something that’s critical,” RL Cold principal Thomas Eldridge told The Wall Street Journal. “It’s vital for our economy. Everyone has to eat. We have not experienced any slowdown at all."

RL Cold currently has 300K SF of cold storage underway in three developments in the Carolinas and Texas, and it plans to close on three more sites in the near future.

CBRE also notes that ownership in the niche is highly consolidated, with two companies — Lineage Logistics and Americold Realty Trust — owning 71% of total cold-storage space in North America, up from 61% before the pandemic. United States Cold Storage is a distant third, controlling 10%.

In 2019, Americold acquired Chiller Holdco, which was also known as Cloverleaf Cold Storage, for $1.24B.

"Indeed, there are few key players in this highly specialized and competitive industry," the CBRE report says. "As technological systems become more sophisticated, the benefits of economies of scale far outweigh the operational challenges brought on by increased size."