By Joshua Burd
The coronavirus pandemic figures to accelerate what had already been a growing trend — the need for additional cold storage space to meet the demand for online grocery sales.
That’s according to a new report by CBRE, which noted that online grocery shopping has increased dramatically as consumers shelter in place. Prior to the COVID-19 crisis, the firm projected that e-commerce would fuel demand for an additional 75 to 100 million square feet of industrial freezer and cooler space in the next five years, but that is now likely to grow.
CBRE outlined five ways in which the pandemic would impact cold storage:
- E-commerce grocery will become more widely adopted as consumer comfort grows with the practice. This will trigger heightened demand for cold storage capacity.
- Public refrigerated warehouse companies will likely consolidate to gain more control of the cold storage footprint.
- Since e-commerce is typically fulfilled by local grocery stores, retail footprints will include more storage and fulfillment space, including a greater need for infill temperature-controlled facilities in proximity to consumers.
- Restaurants may see a significant shift in dining formats with fewer dine-in options and more delivery or take-out that would require cold storage capacity. Food service companies that supply restaurants may look to second-generation cold storage space as a cost advantage in a limited dining environment.
- Automation will increase, prompting higher-density, greater-height and smaller-footprint build-outs that will be required for around-the-clock operations.
“Until recently, consumers were not ordering a lot of perishables online, but that will likely change in a post-COVID-19 environment,” said Matthew Walaszek, associate director of industrial and logistics research for CBRE. “Now, we are seeing consumers trend toward buying foods online such as frozen meats and poultry. To meet this new demand, we will need more temperature-controlled space.”
New Jersey has long been at the center of this trend, with its population density and its vast transportation network. Last spring, CBRE tracked 136.7 million square feet of cold storage space in the Garden State, placing it among the top 10 states in terms of inventory and making it an ideal location for major food producers looking to store their goods.
But experts have also pointed out the challenges that come with creating new cold storage space. Such facilities are highly specialized and more expensive to build than traditional industrial buildings, while development sites in New Jersey and other major markets have become increasingly scarce.
Freezer, cooler space in high demand in New Jersey, as users face a lack of supply