Why Cold Storage Is Becoming a Hot Investment

In the era of one-touch, same-day delivery, warehouses are evolving from stagnant places where goods are stored to centers that retailers can optimize for efficient fulfillment and greater profitability. This is an opportunity for technology to provide infrastructure and systems to support the evolving needs of business owners as a result of new consumer trends. Join us as we explore the booming demand for cutting-edge technology in the field of cold storage and the industrial property sector.

Shifting Consumer Expectations

Investors are discovering opportunities as changing consumer demographics and habits create new demands for storage facilities. There has been an increase in dining out and the expectation that food be fresh, which has created a greater need for cold storage in urban environments. Beyond that, grocers are seeing their businesses online change. There is now greater demand for prepared foods and a more frequent use of online services. More pharmaceutical firms need cold storage for medications for the aging population as well. These new demands are creating a shrinking supply of cold storage.

That has caused cold storage to become a niche investment for those who are familiar with the ins and outs of the business as well as the complicating factors of physical and mechanical requirements that go into cold storage. For example, generally third-party logistics companies lease cold storage facilities to smaller scale users. These properties also benefit because the type of food and medicine they store is more consistent than those in other types of facilities. Regardless of the economy, demand remains constant, which is an attractive feature to investors.

Analyzing Tech Impact, and Assessing Risk

Organic economic growth is contributing to the recent high value of industrial properties in addition to their role in e-commerce. Infill sites are in high demand, but so are regional distribution centers which are benefiting from bettering conditions overseas, which relate to more U.S. exports and a consistent GDP growth in 50 states.

Outlook remains optimistic about industrial investment for the tech sector, but savvy investors are eying risks like pipeline construction, economic slowdown, geopolitical instability, and new technology.

Tech innovations that make the outlook unclear can make asset selection more complex. For example, automated warehousing could replace warehouse teams, which would mean parking ratios, mezzanine spaces, and other concerns would no longer apply.

The evolution of commercial and industrial real estate is creating risks and opportunities. To understand this space, it is important to be aware of developments in distribution. What does seem clear is that businesses are thinking about the last leg of a product’s journey before it reaches a consumer now more than ever, which means more changes should be coming soon.