The growth of e-commerce has increased demand for warehouse space, but one real estate sector is really heating up. Cold storage distribution centers are in high demand thanks to new food delivery services. The sector is still small now, but growing rapidly.
“It is very niche. About 2% or 3% of all goods on groceries are bought online, and we expect the space could explode to 13% over the next 5 years because of the penetration of the internet,” said Spencer Levy, senior economic advisor for CBRE research to CNBC.
It’s not just the delivery services driving demand, but also farm-to-table and organic trends. Organic food requires more cold storage. “Consumers want to eat more fruits and vegetables and less processed food, so when you have fruits and vegetables that need to be flash frozen and then transported across the country to the user, that is definitely taking an uptick in demand for this space,” said Michael Carroll, an analyst with RBC Capital Markets to CNBC. While mainstream warehouse construction is growing, there is still a very limited supply of cold storage real estate. The supply is also on the older side, about 34 years old on average.
Source: CNBC