Why Cold Storage is Heating Up the Real Estate Industry



by Caroline Kirby

As the world continues to face restrictions and changes due to the coronavirus pandemic, we’ve seen some surprising trends take the lead in the last few months. For example, high demand for cold storage has recently taken center stage and represents a nearly $100 billion market globally.

So, how does that relate to real estate? As more and more places are staying home or facing similar restrictions, we’ve seen an uptick in the popularity of e-commerce for groceries. Add in the need for pharmaceutical capacity across the U.S., and you have the perfect recipe for warehousing and specialized storage.

If you’re an investor seeking a way to get into the industrial market, this may be your opportunity. In uncertain times like much of 2020 has been, it’s easy to recognize how stable the industrial market is compared to many other sectors.

Industry experts have spoken on the “unprecedented growth due to consumer preferences towards fresh products and online grocery deliveries,” but here are some other reasons why this is the area you’ll want to keep your eye on.

Why is Cold Storage in High Demand Right Now?

It’s no secret that online shopping is convenient, and before the pandemic, it was commonplace for most consumers. Now that many of us are following stay-at-home orders or cannot go out, having groceries or medication delivered is a must.

While some are going back to their normal routines, plenty of others are settling into their post-COVID reality. Online grocery shopping is one of those new trends that experts are projecting to become a staple of everyday life. If this investment opportunity is starting to pique your interest, here are a few things you’ll want to consider before making any moves.

1. Cold storage is extremely energy-intensive, and the energy costs will be great as these facilities must continuously run.

2. Spend time on the layout of the space. When it comes to storage, space efficiency is key, but when it comes to cold storage, having an efficiently run space could make or break the entire facility.

3. Cold storage requires longevity. Because these operations are more expensive and intensive, most investors have to find worthwhile leases that will last years. However, if you buy your own land and property, you won’t have to worry.

4. Many state and local legislatures are working on tax credits to entice investors and developers. Find out what your local government has in place.

5. Combat high energy costs with sustainable energy sources. Do your research and learn what sustainable energy options are common in your area.

Many leaders in the supply chain industry see the value of cold storage and predict it’s importance will just continue to grow in the years to come. Ready to take the plunge and invest in cold storage? Don’t forget that there are plenty of other items spanning various industries that need cold storage, for example:

• Artwork
• Biological samples (like blood)
• Electronics
• Flowers and plants
• Specialty pharmaceuticals and supplements

Depending on the region where you invest in real estate and the needs of the surrounding areas, you could potentially get involved in a few different industries.
Get a jumpstart on planning your cold storage investment — browse through LandHub.com’s current listings to see what’s out there!

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