Cold storage is becoming a critical need in the supply chain due to rising storage requirements across all industries. It safely stores temperature-sensitive or perishable products.

While the trends are significant when looking at cold storage, there are some hidden costs and opportunities that developers and investors should be aware of.

Customers Demand Fresh Groceries

Distribution warehousing's fastest-growing sector is cold storage. This is not only fueled by the food and beverages sector but also the pharmaceutical industry.

E-commerce has made it easier than ever to get goods from final distribution centers to consumers.

A recent survey revealed that 40% of respondents cited grocery delivery to be a "must-have" service. Nearly all respondents receive groceries delivered to their homes at a minimum once per week.

As examples, you can think of Hello Fresh, Sun Basket, and Green Chef. These grocery delivery companies must be close to customers and rely on cold storage facilities in areas that matter.

Retrofitting existing warehousing to cold stock is becoming more popular because there isn't enough supply. New construction is expensive, especially in the last mile of population centers like New York, Boston and Chicago. However, these highly populated areas are also in short supply of land, so retrofitting is becoming a popular trend.

Pharma Continues To Drive's Needs

Although cold delivery is a topic that is often discussed in relation to food and beverages, it is equally important for the pharmaceutical industry. One major reason is that constant temperature-regulated cold storage is a continuous need.

Certain temperatures are required for products such as insulin, blood plasma products, and vaccines.

Here, location is also important. Groceries require cold storage. These are usually located in densely populated areas. The opportunity for cold storage in pharmacy can be found closer to major pharmaceutical companies and research centers.

There are two places to be on the lookout for: Indianapolis, where Eli Lilly is a huge drugmaker, and North Carolina's Raleigh–Durham Research Triangle. These are the two areas where DHL announced $150 Million in investments to improve their supply chain for pharmaceuticals and medical devices.

Energy Costs Matter

Energy costs are another important factor in cold storage. Because cold storage facilities must be run continuously, they are highly energy-intensive.

One of the most overlooked stories in cold storage warehousing is energy costs. Companies, developers, and clients who build these cold storage warehouses all look at utility prices. However, these vary significantly across North America.

Cold storage is a popular option for investors and developers who are looking to reduce their energy costs.

Warehouse location is one area that should be emphasized. Central Washington State is a potential area of opportunity. It is close to significant food production centers and boasts some of the lowest energy prices in the country due to green-friendly hydroelectricity.

This trend also includes sustainable energy. The Columbia River in Washington State is an example of a source of energy. In addition, developers are partnering with local utilities to make solar and wind energy more popular in other areas.

There are other options, such as repurposing. It's possible to turn abandoned areas into mixed-use space, including cold storage, by using millions of square feet of empty retail storefronts across the country.

To encourage developers, many state and local legislatures have also introduced tax credits. These tax credits can be used to encourage developers to invest in renewable energy or make it easier for them to repurpose vacant spaces.

Cold storage warehousing can be a lucrative investment for investors and developers. There are many opportunities in the country, with a shrinking supply and rising demand across multiple industries.