Industrial cold storage demand to increase as result of COVID-19 pandemic

The COVID-19 pandemic has increased the demand for cold storage logistics facilities that service the food industry, according to a new CBRE report.

As many Americans are under strict stay at home or shelter in place orders, online grocery sales have gone up dramatically, massively disrupting the food industry.

CBRE said it explored the relationship between the growth of e-commerce grocery and the capacity of cold storage warehouse in its study: Food on Demand Series: Cold Storage Logistics Unpacked.

In the series, CBRE suggested that over the next five years, an additional 75 to 100 million square feet of industrial freezer or cooler space will be needed to meet the increased demand generated by online grocery sales as a result of the coronavirus pandemic.

The Global Cold Chain Alliance estimated that owners and operators of U.S. temperature-controlled warehouses will register a compound annual growth rate of 4% from 2018 to 2022.

The outbreak is most likely to accelerate the need for space, creating five long-term impacts for the cold storage sector. They are as follows:

  1. E-commerce grocery: Will become more widely adopted, however, the volume of perishable orders will need to grow in order to have a significant impact on cold storage real estate;
  2. Consolidation: Public refrigerated warehouse companies will likely combine to gain more control of the industry’s footprint;
  3. Added facilities: Retail footprints will include more storage and fulfillment spaces, there will be a blending of retail and industrial spaces, as well as a greater need for temperature controlled spaces;
  4. Restaurants: Less dine-in options and more delivery or take-out will require more cold storage capacity;
  5. Automation: Will increase to efficiently fulfill orders and make up for worker shortages.

“Until recently, consumers were not ordering a lot of perishables online, but that will likely change in a post-COVID-19 environment,” Matthew Walaszek, associate director of Industrial and Logistics research for CBRE, said. “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.”

To download the full study, click here.

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