By Joshua Burd
With the growth of online grocery sales projected to continue, a new report says New Jersey is well-positioned to capture the continued need for cold storage space.
The report by CBRE found that food-related e-commerce could create up to 100 million square feet of cold storage demand over the next five years. The firm tracks 136.7 million square feet of such inventory in New Jersey, placing it among the top 10 cold storage states in the nation and making it an ideal location for major food producers looking for space in a strong port-centric market.
“Given the ongoing trend of increased demand for frozen and refrigerated food space in well-located gateway markets serving millions of online and brick-and-mortar grocery consumers, New Jersey continues to see strength in the sector,” said David Gheriani, a vice president based in CBRE’s East Brunswick office. “Consumers’ increasing use of online ordering and grocers’ investment in new delivery strategies and warehouse technologies will continue to drive this trend.”
The real estate services firm cited a recent report from the Food Marketing Institute and Nielsen, which projects that groceries ordered online will account for 13 percent of total grocery sales by 2022, up from 3 percent in 2018. Such growth would amount to an additional $100 billion in annual grocery sales conducted online, the report said, paving the way for major changes for the industrial cold storage industry.
At 3.6 billion cubic feet — or an estimated 214 million square feet — cold storage currently accounts for a tiny portion of U.S. industrial and logistics real estate overall, CBRE said. But the firm believes New York and New Jersey and other gateway markets such as Los Angeles, along with leading food-production states such as California, Washington, Florida, Texas and Wisconsin could reap the benefits.
But CBRE also highlighted the challenges that come with creating new cold storage space.
“Several factors have combined to fuel expansion of the cold-storage space, from consumers’ increasing use of online ordering for groceries to grocers’ investment in new delivery strategies and warehouse technologies,” said Adam Mullen, CBRE’s industrial and logistics leader in the Americas. “Still, the sector’s growth will be somewhat measured because these are specialized facilities requiring significant capital, power and government approvals.”
