Online grocery sales is boosting the need for cold storage, and the increasing popularity of groceries delivered directly to the home is expected to generate even greater demand for specialized refrigerated and frozen storage facilities across North America, according to real estate services firm CBRE. Big food production states and gateway markets are hot zones for this anticipated spike in demand.
Between the U.S. and Canada, cold storage capacity is expected to grow nearly 50 percent during the next five years to accommodate the need for more space. Current capacity sits at 214 million square feet of space with the largest market for cold storage being California, followed closely behind by Washington state and then Florida. Major food-producing states such as Wisconsin tend to also require large footprints of cold storage space prior to distribution.
Online Grocery Sales to Quadruple
CBRE estimates that online grocery sales will quadruple in North America by 2022 according to market research, growing from 3 percent in 2018 to nearly 13 percent of all grocery sales. This 10 percent increase should amount to a cool $100 billion in annual online sales. Inventory management and distribution patterns are expected to make huge changes to keep up with the activity. The industry has not changed much in decades, as it has become one of the last markets to experience significant e-commerce disruption. Investments in cold storage should accelerate significantly as online orders increase and cold chain logistics and new delivery techniques evolve.
There are still challenges the market will have to face with this new growth because cold storage is not as simple as dry good storage, and facilities require significant investment to build and operate, let alone staff. Inhospitable environments and strenuous work require higher rates of pay, and facilities must follow stringent standards set by the U.S. Food and Drug Administration (FDA) for handling perishable goods.
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