The growing popularity of online grocery shopping could result in demand for up to 35 million square feet (3.25 million sq m) of U.S. cold-storage space shifting from retail stores to warehouses and distribution centers within the next seven years, according to a report from CBRE.
“The U.S. market for warehouses and distribution centers has been on a multiyear run, but there still are segments in the relatively early stages of their growth, like cold storage,” says David Egan, CBRE global head of industrial and logistics research. “As e-commerce expands further into the grocery business, the resulting growth of the food supply chain and demand for new, climate-controlled warehouse space could very well be the new opportunity that investors and developers have been seeking.”
CBRE estimates that the U.S. market for food-commodity cold-storage space spans roughly 180 million square feet (16.7 million sq m) of industrial space—namely, refrigerated warehouses—and about 300 million square feet (27.9 million sq m) of space in grocery stores and other retail venues.
That ratio between industrial and retail cold-storage space will shift in the coming years as, according to FMI/Nielsen, online grocery sales will grow from 3 percent of all grocery sales in 2017 to 13 percent by 2024. Based on that projection, CBRE calculates that demand for as much as 35 million square feet (3.25 million sq m) of cold-storage space will shift from retail properties to industrial.
CBRE’s analysis found that larger concentrations of food-grade, cold-storage facilities occur in states with substantial agricultural production, large populations, or both. CBRE estimates California to have the most industrial cold-storage space (nearly 400 million cubic feet [11.3 million cu m]), followed by Washington state (271 million cubic feet [7.7 million cu m]), Florida (260 million cubic feet [7.4 million cu m]), Texas (231 million cubic feet [6.5 million cu m]), and Wisconsin (228 million cubic feet [6.4 million cu m]).