Cold Storage Warehouse

July 30, 2019 Comments Off on Cold Storage: No Signs of Cooling Off Views: 3049 National News

Cold Storage: No Signs of Cooling Off

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Although there is much press these days about Amazon and its incredible growth trajectory, the supply chain necessary to move products within a network that does not have strict lot or temperature requirements, or specialized vehicles for transport seems exponentially easier (and less costly) than that of having to move cold or frozen food items to consumers in a limited amount of time. But, that is the environment evolving around cold supply chains.

No longer just for ambient temperature products anymore, consumers are demanding their foods—both fresh and prepared—are delivered to them within ever-shrinking timeframes, requiring a vastly more robust model for cold chain storage and distribution.

Chris Cummings

“It’s really all being driven by consumer demand,” noted Chris Cummings, who heads Colliers’ dedicated National Food Advisory team. “We are seeing this business as a real bright spot in industrial real estate, as the demand for food home delivery increases.”

Gregory Healy, who is the head of Colliers’ Supply Chain and Logistics Consulting, agreed. “The omnichannel model of ordering from any platform and then having it delivered to any myriad of places has definitely been the catalyst for growth in cold storage facilities across the country.”

In the past, many of these facilities were mom-and-pop organizations with a regional footprint. As an industry with more than $6 billion in annual sales, there has been some consolidation over the past 10 years. Larger players, such as Americold and Lineage, have absorbed many of these facilities, and now dominate the national landscape. However, investment in newer, more efficient facilities is not slowing down either.

“We see continued interest in new cold storage and tri-temp storage facilities. So much of the current infrastructure is outdated, inefficient and not in the right location,” said Cummings. “The new institutional investor is looking at this from a strategic lens, and is putting in a considerable amount of research prior to determining where they need to locate.”

Gregory Healy

Healy’s team works alongside Colliers brokers, like Cummings, in helping to pinpoint those locations based on specific criteria. Healy added, “Similar to consumer products, there is an evolving trend of having both hubs and spokes in the cold storage distribution model. Bulk hubs to serve regions, and smaller facilities for food preparation and to serve that B2C niche that is truly driving this change.”

With concepts such as “dark kitchens,” where the food preparation site is getting closer to the consumer, food delivery services increasing, and e-commerce, the future of cold storage seems quite hot.

“It’s going to take at least five years for this market to really mature,” said Cummings. “Many things are still in flux, as this segment goes through a metamorphosis. I’m interested to see how it will all turn out.”

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