The coronavirus pandemic has the potential to reshape the cold storage warehouse submarket, driving demand up, spurring development of cold storage infill space and inspiring further consolidation in the sector, according to a new report by CBRE.

As the pandemic took hold, consumers started buying more frozen food, CBRE reports, citing IRI and RBC Capital Markets data. All together, frozen food sales increased 4.6% during the four weeks ending March 8, with some kinds of food up much higher. The sale of frozen meat, for example, spiked 15.5% year over year over the same period.

Also, until recently, consumers didn't order many perishables online, a circumstance that will probably change in a post-COVID-19 environment, the report notes. That in turn will drive a need for more cold-storage space, and more space closer to consumers, as local grocery stores strive to fulfill the increased volume of orders.

Another factor driving new cold-storage space development will be a drive to modernize the sector. The average age of cold-storage facilities is 34 years, according to CBRE.

In mid-March, Novi, Michigan-based Lineage Logistics started to see the impact of the pandemic in the form of increased demand for its space.

"We're seeing a huge increase in the volumes, an unprecedented rise," Lineage CEO Greg Lehmkuhl told Crain's Detroit Business, adding that the company is looking to hire 2,000 more workers over the next two months.

Even before the pandemic, the growth of online grocery sales was driving demand for cold-storage warehouses, according to a mid-2019 CBRE report.

The increased demand for organic food and fresher ingredients has been a significant driver of the trend over the last few years.

"People are now investing in quality — organic milk, organic eggs, organic everything and in order for a company to meet their customers' demands, you're going to need cold chain," Boa Logistics co-founder Matthew Mugar told Bisnow late last year.

As an industry, cold storage has been going through a period of consolidation. Lineage Logistics, which is the world's largest cold storage company by space (1.7 billion cubic feet), acquired Emergent Cold for $900M in November. Earlier in the year, Lineage acquired Preferred Freezer Services for over $1B.

Lineage isn't alone in its strategy. The largest players in the still-fragmented sector are expanding mainly by acquisitions, both in the United States and overseas.

Investors other than the major owners are also showing interest in cold storage. At the end of March, for instance, Ivy Realty acquired a 234K SF facility in Miami-Dade County, Florida, for $30.5M. Southeast Frozen Foods and SuperValu occupy the property, The Real Deal reports.