Cold Storage Vacancy At 20-Year High As Food Spending Tightens

Operators of temperature-controlled warehouses might be left out in the cold following a record year for deliveries that has pushed vacancy to its highest point in two decades.

Nearly 7% of cold storage warehouses were vacant at the end of 2025, according to Newmark, the highest point in at least 20 years and more than double the vacancy rate in the niche sector five years ago.

The vacancy rate is expected to rise again in 2026 after roughly 10M SF of new product was delivered last year, according to Newmark. The outlook for the sector has dimmed in part because consumer food purchases have dialed back amid persistent inflation.

In light of the industry's struggles, new operators in the cold storage space could be in a vulnerable position. In 2020, there were roughly 1,500 cold storage companies, according to Newmark. By the end of last year, there were closer to 1,800.

“A lot of these new operators are going to start going away,” New Jersey-based FreezPak Logistics co-founder and CEO David Saoud told The Wall Street Journal.

Vacancy rates in the last quarter of 2025 were highest in facilities built between 2020 and 2025, reaching 10.1%. Legacy facilities had a 7.6% vacancy rate, and modern facilities, built between 2006 and 2019, were more than 97% occupied.

Vacancy rates are being driven by the gap between supply and demand, which has also reached an all-time peak, according to the report.

Deliveries for 2025 surpassed 10M SF, but net absorption was roughly 3.5M SF — a decrease from roughly 4.2M SF in 2024 and the pandemic-era boom of about 4.8M SF in 2021, according to the report.

While the gap is expected to decrease through 2026 as construction in the sector slows to its lowest levels since 2020, with 5.9M SF left in the pipeline, supply is still expected to outpace absorption, according to the report.

Adding to concerns for developers is the fact that a growing number of cold storage users are building or buying their own facilities, rather than looking to lease or start build-to-suit projects. A record 31% of cold storage sales were to end users in 2025, triple their market share in 2024.

“There’s no doubt that there’s some vacancy in the market today to be absorbed,” RL Cold Chief Operating Officer Zach Romano said at Bisnow’s Atlanta Industrial Conference on Thursday.

“What you’re seeing is more focus on the build-to-suit side,” he added.

Speculative construction of cold storage spaces boomed during and after the pandemic as consumers shifted toward online grocery shopping. But inflation and food prices grew, causing consumer behavior to change. 

Grocery prices hover around 30% above 2019 levels, while grocery spending is up just 1% since then, when adjusted for inflation, according to Newmark.

“Relatively static real spending has led to leaner and more precisely managed inventories across the supply chain, contributing to today’s softer demand landscape for cold storage,” according to the report, written by Newmark’s Amy Binstein, Lisa DeNight, Jamil Harkness and David Bitner.

Rising rents are also hitting demand for cold storage tenants, which are grappling with rates that have roughly doubled from about $14 per SF in 2019 to an annual average of $28 per SF, according to the report.

Even as tenants shell out more for space, what they want out of a space and what developers are building are misaligned.

The average lease signed in temperature-controlled spaces over the last five years is about 120K SF — significantly smaller than most new developments, which are averaging 230K SF. This has led to slower lease-up times for some cold storage developments.

But as the sector moves away from speculative development and toward build-to-suit construction of new facilities in recalibration, the sentiment for the upcoming year is turning more positive.

“We feel absorption is taking place in the newer Class A cold storage facilities due to a flight to quality driven by build-to-suit demand and a desire to comply with modern food safety policies,” Newmark Executive Managing Director David Aschenbrand said in a statement. 

“Despite the long road ahead of us to get us back to ‘normalcy’ we are sensing some very positive momentum in the cold storage commercial real estate vertical with plenty of bright spots amid the overall sector recalibration.”