Online grocery shopping, shifting trade boost US cold storage demand

Changing consumption habits, cargo shifts from the West Coast, and rapid population growth are driving the buildout of refrigerated warehousing space in the US, particularly in the Southeast and Sun Belt, according to developers, warehouse operators, and ports.

Overall US containerized refrigerated (reefer) volumes tumbled 21.8 percent in the first five months of 2022, according to PIERS, a sister product of within S&P Global, largely due to export weakness and supply chain challenges. Still, real estate developer CBRE expects the share of e-commerce grocery sales in the US to rise to 21.5 percent by 2025, up from 13 percent in 2021, driving more demand for cold storage, particularly in the grocery distribution segment.

As of the end of June, there were 3.3 million square feet of cold storage under construction in the United States, up from 300,000 square feet in pre-pandemic 2019, according to CBRE.

“Not only do you have movement of goods in and out of the country via the ports, but you also have larger populations to get food to, whether it be parts of the Southeast, Houston, or other Sunbelt regions,” Jeff Manno, CEO of FlexCold, a cold storage warehousing and food logistics business, told

The national average cold warehouse vacancy fell to 3.4 percent in July, down from 4 percent in January, CBRE said in a second-quarter market outlook. National rents have risen 27 percent to about $10 per square foot during the same period.

Despite the growth in occupancy and rents, however, gross refrigerated storage capacity has only increased 2.2 percent since 2020, according to CBRE.

Matthew Walaszek, director of research at CBRE, said the current demand for cold storage will endure regardless of the economic cycles that may influence consumer spending and, in turn, total import volumes.

“Although economic conditions tend to dictate how frequently people eat out, they don’t dramatically impact the demand for cold storage space either way,” Walaszek told “Food products still need to go through warehouses, whether their destination is to a restaurant, grocery store, or directly to the consumer.”

Cold storage demand is growing the fastest near reefer-focused ports. Port Hueneme in Southern California — where fresh food and other perishables account for half its annual throughput — has seven cold storage warehouses connected directly with port business, all run by private companies, with an eighth facility due to open any day, according to Dona Toteva Lacayo, the port’s CEO.

“You’re seeing off-port capacity not just needing a cold storage facility, but also reefer plugs,” Lacayo explained. “The extension of [cargo handling] off-port, and the growth of containers translates directly into needing more real estate space in that particular category.”

Performance Team, a Maersk company, just opened a 283,000-square-foot cold storage warehouse in Houston and is developing another 300,000-square-foot storage facility near the Port of Charleston, with completion in early 2023. Developers are also in the process of building two more cold storage facilities near Port Everglades.

Consumer-driven investment

From 2017 to 2020, CBRE saw internal leasing and sales for cold storage increase 43 percent as investors flocked to the sector for higher yields. In a recent CBRE study, 39 percent of respondents said they were now looking for cold storage assets, up from 22 percent last year and 7 percent in 2019. CBRE itself has 12 refrigerated warehouse projects already in the works this year.

“They’re attracted to growth prospects, as well as the stability of the cold storage industry now,” Walaszek explained. “People will always need to eat, and shifting consumer behaviors bode well for perishables.”

When the COVID-19 pandemic forced consumers to stay home in early 2020, growth in direct-to-consumer distribution accelerated rapidly. US imports of perishable food products increased 27 percent in 2021, according to PIERS data. At the same time, online purchasing of refrigerated and frozen goods rose 58 percent year over year, CBRE said in a June 2022 report. Back in 2019, prior to the COVID-19 pandemic, Food Marketing Institute, a national trade association for the food industry, predicted volume would rise only 13 percent by 2022.

Buying groceries online, whether through local stores, sites such as, or even meal-kit makers such as Hello Fresh, has put pressure on inventories and emptied warehouses, Manno told

“Grocers are now looking at their inventory and how to have a longer window available,” Manno said. “What historically was 24, 48, or 72 hours of inventory, you’re looking at needing to hold even more.”

Trade, populations shifting

Import and export patterns have also created a growing need for cold storage on the East Coast. Shippers have been sending a larger share of import cargo through the Gulf and East coasts since the expansion of the Panama Canal in 2016 enabled larger ships to call East Coast ports from Asia, a trend that has accelerated in 2022 amid congestion and longshore labor negotiations on the West Coast.

“That’s putting pressure on the infrastructure to move through the supply chain, so the need for space, for modern space, really needs to meet the demand,” Manno said, noting that the majority of existing facilities are nearly 20 years old and in need of updates.

Population shifts are further boosting reefer warehousing demand. Charleston’s population has increased nearly 2 percent since 2021, according to the US Census Bureau, while populations in Houston and Florida have grown 1.7 percent and 1.6 percent, respectively, in the same time frame.

“Even during the pandemic, when other’s numbers went down, our [reefer] volumes were increasing because more and more people were moving to Florida every day,” said Robert Barcelo, senior manager of business development at Port Everglades. Total reefer volumes through Port Everglades grew 4.4 percent for the full year in 2021, but have fallen more than 40 percent year over year in the first five months of 2022, according to PIERS.

Ricardo Schiappacasse, director of specialty cargo sales for Port of Jacksonville, told the amount of interest in building new cold storage sites in Florida is “unbelievable,” with one facility opening nearby in early August and a new FlexCold facility coming online in a few weeks. A site commitment was just confirmed for a third new warehouse near Jacksonville, and conversations are ongoing with an interested party about a fourth, he added.

“I think we’ll see more growth in the sector, but only time will tell if it’ll be really explosive,” Schiappacasse said.

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Contact Teri Errico Griffis at