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What’s So Hot About Cold Storage?

By: John Salustri

Kim Ford, SIOR, isn’t only a cold storage service provider. She’s also a client. “I always hated going to the grocery store,” the CEO at Rise Pittsburgh reveals. “It was a waste of my time. During the pandemic, the grocery store companies pivoted and adapted to serve the community. I can now click a button, go on to an app, and have my groceries delivered to my front porch. And I’ll never go to a grocery store again.” (Full disclosure, Ford handles both industrial and office properties.)

Sid Bhatt, SIOR, doesn't see online shopping going away any time soon.  “People are more accustomed now to getting food delivered,” says the senior advisor at SVN | Commercial Advisory Group in Tampa, Fla. “Even if COVID-19 is diminished, you still have developed the habit.”

Ford believes it's here to stay because of its convenience. "It’s about people figuring out how to live the best life they can. What’s your time worth? Would I prefer to see my child play volleyball or go to the grocery store? And think of the elderly.”

That need for convenience has sparked a major explosion in so-called ghost kitchens, which will nearly double in market size by 2027—to $71.4 billion, according to Hospitality Technology.

Whatever the driving force, there’s no surprise that digital shopping has exploded over the past few years. In fact, 2020, COVID-19’s inaugural year, saw a 42.6% hike in online grocery buyers. While the lifting of quarantine restrictions has tempered that growth, an upward trajectory remains, predicted by Insider Intelligence at 4.1% through the rest of the year. (Even with slowdowns, the home grocery market is expected to hit $243 billion by 2025.)

And this growth is reflected in that of the cold storage sector, which accounts not only for the freshness of your avocados but also, much more critically, for the delivery assurances needed by the pharmaceuticals industry. Much like the broader industrial marketplace, cold storage was already hot before the pandemic hit. Post-2020, the numbers simply soared. Valued at $112 billion in 2021, the global cold storage market is set to top $330 billion by 2030, according to Precedence Research.


Given the potential, based as it is in such a rock-solid market demand, workers and investors are flocking to the sector, right? Well, yes and no.

According to CBRE’s 2022 U.S. Investor Intentions Survey, 39% of respondents reported going after cold storage assets. This represents a jump from 2021’s 22%, and (not surprisingly) just 7% the year before COVID-19. “This momentum is expected to continue as the online grocery segment grows, particularly in demographically strong markets,” says the report.

But such enthusiasm isn’t so fervent among workers. If industrial and the rest of the commercial real estate market is finding talent hard to come by these days, try getting them to work in sub-40-degree environments.

“Very few people want to work in cold storage,” says Bhatt. “I can offer $24 an hour and attract 50 applicants. Then, when I tell them what they have to do, I’ll have 25. By the time they start working, I have five or maybe 10. Working in the cold is very intense, no matter the protection you have.”

How cold is cold? Bhatt says it depends on the product, “whether it’s ice cream or vaccines. For groceries it can be anywhere below ambient temperatures down to minus 10°F. Pharma can be even lower.”


While automation is on the rise in all industrial markets, the need is more critical in cold storage. This is true for two reasons: the challenge of staffing as well as the nature of the product, which demands maximum throughput efficiency. And that, in turn, imposes facility designs that are rather different from typical warehousing.

“Automation is more important in the cold segment because of perishability,” says Ford. “The more efficient the facility is, the safer the goods are. It simply doesn’t matter as much in dry goods.”

With more automation comes the ability to stack higher—when municipal restrictions allow. “Cold storage facilities are typically designed much higher, to 50- or 75-foot clear heights,” says Charleston, S.C.-based Brooks Courtney, an SIOR member associate and senior associate and principal at Bridge Corporate Solutions. (In fact, Ford reports of working on facilities approaching 100 feet.)

Bhatt adds that, for this reason, newbies to the sector need “to use different terminology. They need to think in cubic feet rather than square feet.” That height also allows for “skinnier” facilities than a typical ambient structure, for faster processing, he says.

Ford describes the configuration as more of a “terminal style. On one side is shipping and directly opposite is receiving. Traditional warehouses have more depth to them.”

Building dimensions aren’t the only point of distinction between cold storage and its dry goods counterparts. “It’s less like leasing a building and more like operating a machine,” says Courtney. “In an ambient building, you have a developer and a tenant. In cold storage you also need an operator to ‘drive’ it.” (Firms like Tyson Foods typically bring their own inhouse operators.)

"[Cold storage is] less like leasing a building and more like operating a machine."

That complexity extends, obviously, to the increased need for power control. “You need redundant power and areas with low incidents of outages,” he says. With issues ranging from automation to power control, it’s no surprise that cold storage construction can run three times that of dry goods, he says. “Rents are in line with that differential.”

The cold chain raises yet another issue that marks a difference in asset types: “Cold storage trucks are heavier due to the onboard refrigerant systems,” says Courtney. As a result, sites need access to heavy-weight corridors, preferably close to rail, again due to the timeliness of deliveries.

Which brings us back to the need for automation, and not just robotics. The Internet of Things (IoT) “is critical for climate control, both in the building and on the trucks,” says Bhatt.

All Things Supply Chain, an industry blog, agrees: “Smart temperature sensors are one of the most valuable IoT solutions for the cold chain. These devices continuously track and report temperature inside shipping containers. The information recorded by these sensors can be made available to supply chain stakeholders, including warehouse managers, customers, manufacturers, and even truck drivers.” Sensors can alert all stakeholders when temperatures wander beyond safe levels, enabling “the fastest possible response to an error or failing cold chain equipment.”


It’s not just the Tysons of the world that are clamoring for cold storage spaces. Ford explains that, much as in the dry-goods industrial market, in addition to owner/operators, there are third-party owners who rent their spaces to a variety of tenants. And much like dry-goods facilities, there are third-party logistics (3PL) firms that will handle the warehousing and shipping, an especially critical service to smaller firms that “can’t otherwise afford the cost and long-term commitment they have to make. From a broker’s perspective, the costs are enormous.”

Which may be why cold storage facilities are traditionally harder to come by. “Finding locations is an absolute nightmare,” says Ford. “You can’t retrofit an existing building effectively because they’re too deep,” and the system requirements are too costly.

“We did a market study in 2019,” says Courtney, “and we found that in this region, there were only three cold storage facilities, and all were blast freezers.”

That’s changing, not only in South Carolina, but nationally. “Charleston just delivered the first new container port terminal in the U.S. in a decade,” he reports, adding that the move was fueled by the overall growth of the industrial market—cold storage and dry goods alike. And while the terminal was planned two decades ago, Courtney states that, given today’s needs, it “created a great opportunity for our region to offer a much-needed terminal at this time.”

The same is true nationally. NAIOP, referencing a CommercialEdge report, noted in February that there is currently almost “seven million square feet of new cold storage space under construction across the country and an additional 10 million square feet being planned.”

As COVID-19 (slowly and in fits and starts) becomes more manageable, certain trends will remain, and all bode well for the industrial sector, and cold storage in particular. “Consumers learned and adopted a new mindset about how they live and work,” says Ford. “We’re seeing this industry grow on an annual basis of 9-10%.”

Given those new methods of living and working, there’s no end in sight to the growth of the cold storage market.


Sid Bhatt, SIOR

Brooks Courtney

Kim Ford, SIOR


Media Contact
Alexis Fermanis SIOR Director of Communications
John Salustri
John Salustri
Salustri Content Solutions

John Salustri is a freelance writer and editor-in-chief of Salustri Content Solutions. Contact him at jsal.scs@gmail.com.