Investors feel the chill: The cold truth about what’s hot in niche real estate
- July 1, 2023: Vol. 10, Number 7

Investors feel the chill: The cold truth about what’s hot in niche real estate

by Mike Consol

The operative phrase here is this: cold storage.

It’s hot among investors. The metrics tell the tale: National cold storage development hit an all-time high of 9.8 million square feet by the end of 2022, driven by a proliferation of users and operators as the sector grows and evolves. The number of cold storage establishments grew 8.6 percent from 2020 to 2021, and an additional 7.5 percent from 2021 to the first half of 2022, eclipsing the annual average of 2.2 percent observed from 2013 to 2020.

That is part of the research assembled and analyzed by Newmark, the commercial real estate products and services firm, in its March 2023 report titled Sold on Cold: Temperature-Controlled Development Pipeline Reaches New Record. Driving the chill are a few factors, according to Newmark. To wit: aging inventory, industry consolidation, acceleration of food and grocery ecommerce and supportive last-mile operations, particularly in fast-growing Sun Belt metros.

Let’s take those in reverse order.

The average age of cold storage facilities in the top U.S. markets is 37 years, presenting challenges due to inefficient systems that generate higher operating costs and increased risk for product spoilage. Demand for modern functional space has driven the need for new development in support of supply-chain optimization, adoption of warehouse automation and energy cost reduction.

Meanwhile, to support their top clients’ demand for cold storage space, Lineage Logistics, Americold and other big players have been playing the consolidation game, increasing their share of the U.S. cold storage market through mergers, acquisitions and development. Lineage Logistics and Americold accounted for 71.0 percent of the storage capacity of the top 25 markets in 2022, compared with 61.0 percent in 2019. Interestingly, Newmark points out that consolidation is conversely driving competition, as new and smaller users unable to attain space in the top cold storage firms’ facilities are presenting opportunities for new cold storage operator formation and development of the next generation of cold storage space, appealing to occupiers with a variety of specific focuses and needs. Third-party logistics companies are increasingly entering this segment, providing additive and complementary fulfillment and logistics services.

On the food, grocery, ecommerce front, Newmark observes that many consumers pivoted to online grocery shopping and meal services during the initial phases of the pandemic and are now accustomed to the convenience. Ecommerce grocery sales are expected to grow at a 6.5 percent compound annual growth rate (CAGR) over the next five years, excluding inflation, outpacing the 2.0 percent expected for in-store sales.

Newmark has considerably more to say on the subject. Download the report here.


Mike Consol ( is senior editor of Real Assets Adviser. Follow him on Twitter (@mikeconsol) and LinkedIn ( to read his latest postings.


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