The future of cold storage in the food industry
Increasing online grocery sales have led to more demand for cold-storage warehousing space in the US, but food producers are struggling to meet the demands due to the cost and complexity of constructing cold storage facilities. A report published by CBRE forecasted that the US industrial cold storage industry, currently spanning 2 to 3% of overall US industrial real estate, will need to add up to 9.3 million square metres of additional capacity to keep up with the anticipated growth of online grocery sales.
“Many developers and investors wrestle with the specific use and costs versus the impending needs. As home delivery for groceries, prepared meals, pharmaceuticals/medical products grow, we see the risk of a shortage of temperature-controlled space. This will create opportunities for developers willing to addressing the looming necessity,” said William Wolf, CBRE Executive Vice President.
Completed construction of cold storage space in the US currently amounts to 1.5% of overall real estate construction at the end of the second quarter. CBRE collaborated with Bridge Development Partners to identify the main differences between cold storage facilities and traditional warehouses that developers would use to build more facilities.
“Markets adapt to demand, which we anticipate will happen in a big way in cold storage. Existing cold storage warehouses and those newly constructed will attract significant attention from grocers, food producers and investors as grocery delivery gains momentum,” said Adam Mullen, CBRE Americas Leader of Industrial & Logistics.
Constructing cold storage facilities is more expensive than building traditional, ‘dry’ warehouses, due to their need for insulated metal panelling, mechanical equipment, refrigeration equipment, rooftop equipment, premium concrete slab and subfloor heating, alongside designs for multiple temperature zones with their own loading docks. Constructing cold storage warehouses can often take four to five months longer than constructing dry warehouses.
Cold storage warehouses also require taller ceiling heights, between 15 and 20 metres, as opposed to traditional warehouses that require heights of 10 metres. The extra height facilitates greater efficiency, as it can accommodate more pallet positions per cubic metre. Cold storage facilities also need to maintain temperatures between -25 and +55°C, thereby requiring more equipment.
CBRE predicts that three major shifts will affect the development and construction of cold storage in the future. Developers will need to construct facilities on spec, a rarity in cold storage that could require additional developers and specialised contractors to enter the market. This could also lead to construction commencing without tenants signed up.
Cold storage construction will also affect small markets, with rising land and construction costs pushing developers and users to smaller markets. Automation will also impact cold storage facilities, allowing big retailers and other users to streamline processes and improve productivity.
As collaborative robots become more prevalent in the manufacturing industry, many factors need to...
The cold chain in Australia is not just about food safety; Scott Varker of Pollen Asset Advisory...
Delivering ice-cream in tropical Queensland is not without its challenges.