The growth of online grocery sales could result in demand for up to 35 million square feet of U.S. cold-storage space shifting from retail stores to warehouses and distribution centers within the next seven years, according to a new report from CBRE.
“The U.S. market for warehouses and distribution centers has been on a multiyear run, but there still are segments in the relatively early stages of their growth, like cold storage,” said David Egan, CBRE Global Head of Industrial & Logistics Research. “As e-commerce expands further into the grocery business, the resulting growth of the food supply chain and demand for new, climate-controlled warehouse space could very well be the new opportunity that investors and developers have been seeking.”
CBRE estimates that the U.S. market for food-commodity cold storage space spans roughly 180 million sq. ft. of industrial space – namely refrigerated warehouses – and about 300 million sq. ft. of space in grocery stores and other retail venues.
That ratio between industrial and retail cold-storage space will shift in the coming years as, according to FMI/Nielsen, online grocery sales will grow from 3 percent of all grocery sales in 2017 to 13 percent by 2024. Based on that projection, CBRE calculates that demand for as much as 35 million sq. ft. of cold-storage space will shift from retail properties to industrial.
CBRE’s analysis found that larger concentrations of food-grade, cold-storage facilities occur in states with substantial agricultural production, large populations or both. CBRE estimates California to have the most industrial cold-storage space (nearly 400 million cubic feet), followed by Washington state (271 million), Florida (260 million), Texas (231 million) and Wisconsin (228 million).
To read the report, click here.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Los Angeles, is the world’s largest commercial real estate services and investment firm (based on 2018 revenue). The company has more than 90,000 employees (excluding affiliates), and serves real estate investors and occupiers through approximately 480 offices (excluding affiliates) worldwide. CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.
