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Demand For Cold Storage To Grow By 100M SF In 5 Years, But Small Users May Be Frozen Out

Once a niche play in the industrial sector, cold-storage warehouse space is on a growth track. The habits of U.S. consumers, who will order more food online in the coming years, is spurring the growth.


A recent report by CBRE estimates there will be demand for as much as 100M SF of new cold-storage space over the next five years. That is a nearly 50% increase over its current market size of about 214M SF, since much of the food ordered online needs refrigeration at some point in the delivery cycle. 

As the sector grows, that might mean less cold storage space available for smaller food companies, Bloomberg reports. That is because ownership in the sector is consolidating, and the economics of cold-storage space, which is expensive to build and operate compared to standard warehouse space, favors larger users.

Two companies, Americold Realty Trust and Lineage Logistics, have acquired about 60% of the sector in North America, expanding through recent acquisitions. 

Earlier this year, for instance, Americold bought Chiller Holdco, also known as Cloverleaf Cold Storage, for $1.24B. Americold was already the No. 1 owner of cold-storage space when that deal happened, and now owns about 887M SF. Lineage owns about 778M SF.

While Americold works with many smaller companies, its top 25 customers account for 59% of revenue, CEO Fred Boehler told Bloomberg.

Another factor squeezing smaller users of cold-storage space is that despite demand, new supply can be developed only so fast, and most of those developments are build-to-suit for major users.

Due to the high cost of development, spec cold storage buildings aren't being built, NKF Senior Managing Director Corey Chase said. So there will be a persistent shortage of cold-storage space.

Even so, the Food Marketing Institute and Nielsen predict that groceries ordered online will account for 13% of total grocery sales by 2022, up from 3% in 2018, or an additional $100B in annual grocery sales online. 

“Few sectors of commercial real estate will undergo as much transformation in the coming years as the cold-storage industry, due to e-commerce’s impact on this previously underpenetrated market,” CBRE Associate Director of Industrial & Logistics Research, Americas Matthew Walaszek said in a statement. 

“We will see robust demand, further innovation in delivery and automation, and possibly more consolidation among major players,” Walaszek said.

Much of the cold-storage sector’s growth is likely to occur in gateway markets like Los Angeles and the New York area, as well as leading food-production states, such as California, Washington state, Florida, Texas and Wisconsin, CBRE reports.