September 15, 2020
John Basile, SVP with NAI Hiffman’s industrial services group, has been fielding a good number of calls lately from property owners who like the combination of high values and high yields represented by cold storage, and want to repurpose challenged assets to this use. However, making the switch is harder than it looks.
“They’ll call us up and say, ‘can we convert this to freezer or cooler?’ “ Basile said on the “Connect Cold Storage: The Hot New Asset Class” webinar held recently and being released for replays on Tuesday. “The short answer is typically ‘no.’ ”
Brian Niven, chief investment and development officer at Karis Cold Storage, said for those who are looking to enter the cold storage space, “It looks easy from the outside, but the devil is in the details.”
Partly that’s because the specialized nature of cold storage product means specialized construction requirements. “Everybody wants to take a dry asset and turn it cold,” said Carmen Dodaro, EVP and CEO of FCL Builders.
What they don’t understand, he continued, is that the key elements to a cold storage building are the floors—insulated with heat underneath—as well as the capacity to carry heavy equipment. Retrofitting an existing property to meet those requirements can be nearly as costly as building from scratch.
This surge of interest in the cold storage space has been fueled by the growth in e-commerce and online ordering of food—a trend accelerated by the COVID-19 pandemic, panelists said. There’s also another spur to demand that will be emerging within the next several months: the eventual development of one or more COVID vaccines and the large-scale need to keep the vaccines refrigerated. Panelists weighed the question of how this storage requirement will impact construction material needs.
During the 30-minute conversation, moderated by Connect Media CEO Daniel Ceniceros, the Chicago-area cold storage experts also discussed how to make projects pencil out, especially in comparison to conventional industrial. For replays of the webinar, click on the link below.
For comments, questions or concerns, please contact Paul Bubny