How Cold Storage Demand is Changing the Commercial Real Estate Market
The commercial real estate market is undergoing a significant change, driven in part by the skyrocketing demand for cold storage warehouses. With changing consumer behaviors, advancing technologies, and the growing focus on supply chain resilience, cold storage is becoming one of the hottest assets on the market. Developers like Dov Hertz are driving this evolution, transforming the way that cold storage warehouses are being created and located.
The Increasing Demand for Cold Storage
Cold storage has been fueled by the growth in e-commerce, particularly grocery and pharmaceuticals. Online grocery shopping, given an enormous boost through the COVID-19 pandemic, continues to grow as consumers opt for home delivery convenience. Similarly, the pharmaceutical industry requires specialized units to store vaccines, drugs, and other temperature-sensitive products.
“Cold storage is no longer niche,” declares Dov Hertz, a leading industrial and logistics real estate developer. “It’s a backbone of contemporary supply chains, and the commercial real estate market is responding to this need.”
Conventional warehouses typically do not have the particular temperature and regulatory requirements of cold storage. As such, developers are investing in bespoke facilities or converting old buildings to cater to this emerging market.
Strategic Location is Key
It has now become imperative to keep cold storage warehouses within a convenient distance from the cities. This allows companies to reduce delivery time and preserve perishable products to ensure freshness, which is key to fulfilling consumer needs.
“In densely populated urban areas, such as New York City, the challenge is fitting these very specialized facilities into the space,” Hertz says. “Developers must be creative, whether that involves renovating older structures or incorporating cold storage into multi-story logistics buildings.”
Most prized are urban cold storage warehouses as they allow for last-mile delivery of perishable products. However, their construction and upkeep are fraught with unique challenges such as higher energy costs, stringent zoning regulations, and demands for advanced cooling equipment.
Technological and Sustainable Innovations
Cold storage facilities of today are embracing technology in order to maximize efficiency and sustainability. Automated storage and retrieval, real-time temperature management, and energy-efficient coolants are just some of the innovations that are revolutionizing the sector.
Hertz also highlights the need for sustainability in this fast-growing industry. “The industry is shifting towards cleaner technology, from solar-powered cooling to new methods of insulation. Environmental sustainability must be balanced against operational efficiency if the future of cold storage is to be guaranteed.”
Not only does this decrease the environmental footprint, but it also makes cold storage warehouses more appealing to investors seeking sustainable investments.
A Booming Market with Long-Term Potential
The shift toward cold storage has created new opportunities for commercial real estate developers and investors. With limited supply and growing demand, cold storage facilities often command premium rents and provide strong returns on investment.
“The demand for cold storage is only going to grow as consumer habits continue to evolve,” Dov Hertz concludes. “We’re just scratching the surface of what this market can become.”
As the commercial real estate industry adapts to these changes, cold storage is emerging as a key element of the logistics landscape of today. With new construction or innovative retrofitting, this property type will be among the drivers of the real estate of the future.
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