It's booming! Cold storage and cold facility construction demand is surpassing supply and it doesn't look like it will be slowing down anytime soon. The leading factor driving the current industrial real estate market, as it pertains to cold storage sites, are the changes happening in the supply chain due to the acceleration of e-commerce since the pandemic. These changes have created a need for more cold storage making the asset class much more competitive. Thus, the exploration of related markets like cold storage is on the rise. In addition, antiquated facilities are becoming less economically viable so the need for new cold storage to replace them is becoming increasingly crucial. Are you interested in striking while the iron is hot and investing or building a cold facility? Here are some strategy tips to consider when choosing a location.
Identifying potential cold facility sites before building, like most construction, requires strategy, and greenfield sites are what's in high demand. A typical greenfield development site includes agricultural fields, forest land, or unused land parcels. According to Refrigerated & Frozen Foods EMagazine when assessing a greenfield site consider if the location can have good circulation, ample truck courts, and staging. However, what is most important is the location relative to the supply chain, if it is not in an advantageous position, then it is almost impossible to overcome. It should also be a population-centric location with proximity to north and south interstate infrastructure. Once that is established, owners need to identify the local food-oriented drivers and what elements in the market create demand for cold storage or food processing. Then, target the most likely users and tailor it to them. One size does not fit all, so don’t take a broad approach. In fact, the biggest real estate pitfall for owners after committing to property investment is that many assume that there is a one-size-fits-all for cold storage users. In truth, it is very nuanced and there are many sub-sectors of the food industry that all require different sizes, temperatures, configurations, and locations. The individual use of a certain type of occupier varies greatly. It is important to know exactly what type of user you are targeting so you don’t build the wrong facility. We are also seeing challenges with material costs and long lead times, which add to the already escalated cost of building cold storage.
Now that you're equipped with more information in your tool belt, perhaps it's time to "make hay while the sun shines!" And when you need to save big on refrigeration and food processing equipment, go to the best tool in your belt, Genemco!
Information credit: Michael Costa with RFF
