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In the Fall 2020 edition of Commercial Real Estate Development Magazine, a NAIOP publication, Kate Lyle, Studio Manager, Industrial Cold and Food, with Ware Malcomb is quoted. According to Ms. Lyle, the demand for cold storage had been rising even before the COVID-19 pandemic. This trend will likely continue, according to a CBRE Report that suggested that an additional 75 million to 100,000 million square feet of industrial freezer/cooler space will be needed to meet the demand generated by online grocery sales in the next five years. This 75-100 million square footage number can be deceiving. Most cold storage space is now calculated in cubic footage. In 2014 the average height for cold storage facilities was 30’-32’ clear span. By 2019, the new facilities had increased to a range of 40’-60’. New construction techniques and advanced warehouse racking systems have fueled this expansion in facility construction.
While the demand for online grocery sales is expected to increase, the additional demand for space will be required for everything from airplane parts to bio-pharmaceuticals.
Currently, the 20 largest cold storage companies comprise over 1.7 billion cubic feet of space. Additionally, industry consolidation is increasing at a rapid pace. Equity funds and REIT’s have been increasingly investing in the sector.
Market openings in urban centers offer investors a niche for new facilities. These urban facilities will supply local grocery and online delivery with less transportation costs. Also, import and export markets will increasingly rely on port facilities to ship and receive chilled and frozen products.
A cold storage facility in Mobile, Alabama, is going online in early 2021. MTC Logistics developed the $61 million dollar facility. It offers 40,000 racked positions in a 12 million cubic foot warehouse. According to Jimmy Lyons, director and CEO for the Alabama Port Authority, “This needed facility is poised to serve the pent-up-demand of both our import and export refrigerated cargo shippers.”
This new facility is an addition to the currently available 2.3 million cubic foot Americold port warehouse and a Seaonus dock facility with 2 million cubic feet.
With the coming expansion of the Port of New Orleans, there may be opportunities for growth in our refrigerated import and export market. Expanded container facilities will, hopefully, benefit this market for producers and buyers in the Louisiana and Mississippi markets.
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