Demand for cold storage space to continue to rise, report says

A new report from CBRE Inc. said the growth of online grocery sales could create demand in the U.S. for up to 100 million square feet of cold storage space over the next

five years.

With 213.5 million square feet of inventory, Pennsylvania ranks sixth in the U.S. for amount of cold-storage space.

Some of it is in the Lehigh Valley. Cold-storage companies with sites in the region include U.S. Cold Storage in Milford Township, Americold Logistics in Upper Macungie Township and Lineage Logistics, which has a few locations.

However, land is in short supply for more.

“Land is scarce in the Lehigh Valley for building any type of warehouses,” said William Wolf, executive vice president of CBRE, based in Upper Macungie Township. “This fits

that same category. It’s a growing industry and I think it’s going to keep growing.”

That is because consumers are expected to order more and more groceries online.

A recent report from the Food Marketing Institute and Neilsen projects that groceries ordered online will account for 13 percent of total grocery sales by 2022, up from 3 percent in 2018. That would translate into an additional $100 billion per year.

For now, grocers such as Wegmans and Weis are making home deliveries out of grocery stores and supermarkets, Wolf said. But as the home-delivery segment grows, existing brick-and-mortar stores may not be able to support the increased volume.

“They will have to come up with other means to distribute the volume of goods,” Wolf said.

The construction costs for dedicated cold-storage facilities, however, are much higher than they are for traditional warehouses. Among other features, they require a variety of temperature control systems in order to function.

“There are a lot more costs and also the buildings rent for a much higher lease rate than a normal warehouse would,” Wolf said.

 

 

 

 

Brian Pedersen
Reporter Brian Pedersen covers construction, development, warehousing and real estate and keeps you up to date on the changing landscape of our community. He can be reached at brianp@lvb.com or 610-807-9619, ext. 4108. Follow him on Twitter @BrianLehigh.

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