Thursday, July 18th, 2019 July18th2019

Sell for More News: Cold storage is a hot new investment play

Published on July 18th, 2019

Sell for More News is a weekly blog series with interesting information from the world of commercial real estate.

 

Cold storage warehouses and distribution centers are suddenly in high demand, thanks to new food delivery services such as Peapod by Giant, Amazon Fresh and Blue Apron.

Currently only 3% of all groceries are bought online but the category is projected to explode to 13% over the next five years as the offerings improve.

Cold storage currently accounts for 3.6 billion cubic feet of space which is a tiny slice of the U.S. industrial and logistics real estate supply overall.  (Note:  Cold storage warehouses are often measured in cubic feet rather than square feet)

And it’s not just the delivery services driving demand, but farm-to-table and organic trends. Fewer preservatives in food require more cold storage.

Consumers want to eat more fruits and vegetables and less processed food, so when you have fruits and vegetables that need to be flash frozen and then transported across the country to the user, that creates an uptick in demand for this space.

While mainstream warehouse construction is growing, there is still a very limited supply of cold storage real estate, which makes it that much more valuable. The supply is also on the older side, about 34 years old on average. So the properties could really benefit from technology and modern construction practices.

Americold is the only publicly traded temperature-controlled warehouse owner in the U.S. today. Since it went public last year, its stock is on fire. That’s a sign that institutional money wants exposure to the space.

Cold storage is a great segment of the market to consider.

 


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About Beau Beach, CCIM

Beau is a tenacious Commercial Real Estate Broker, author and adoring father of four. His clients appreciate his no-nonsense demeanor and his legendary work ethic.

Beau leads Beachwood which is a commercial real estate broker for sellers in the Nashville, Milwaukee, South Florida and Chicago markets.

He’s the author of the books The 3 Reasons: Why Most Commercial Properties Don’t Sell and True Wealth: What Every Seller Should Know About 1031 Exchanges.

Beau can be reached at 800-721-3287, click to schedule a call or Beau@ProwessIRES.com