Cold storage

Cold Storage: Complex and Costly

A recent CBRE report suggested that an additional 75 million to 100 million square feet of industrial freezer/cooler space will be needed to meet the demand generated by online grocery sales in the next five years. At I.CON Virtual 2020, Cory Singer, vice president of business development, FCL Builders, led a panel of leaders in the cold- and temperature-controlled industry who discussed that trend, shifts in the U.S. cold chain, build-to-suits and the complexity of cold storage projects.

Singer was joined by speakers Carmen Dodaro, executive vice president and CEO, FCL Builders; Kate Lyle, senior project architect, Ware Malcomb; Scott Pertel, president and CEO, Cold Summit Development; and David Sours, senior vice president, CBRE.

When they hear the term cold storage, many people think of a large freezer building. Singer said that while those are certainly among the most uniform and quantifiable spaces among cold storage users, the universe of cold storage goes far beyond that. “It’s a broad spectrum, and there is a lot of nuance within the different segments,” said Sours.

“‘Cold’ doesn’t necessarily mean food,” Lyle agreed, naming other utilizations of cold and freezer space, including airline parts storage, raw materials, import/export, and biopharmaceuticals; she pointed to biopharmaceuticals as a major area of growth.

Lyle added that there had been increasing demand for cold storage even before the COVID-19 pandemic, largely due to the changing way that we eat. High-pressure pasteurization has allowed for more organic foods, meal kits like Blue Apron and Hello Fresh have gained popularity, and companies like Impossible Meats have made headlines.

“It’s an ongoing change in the way we eat, and I think the next wave of that will come with the changes in the agricultural supply chain,” said Lyle. “We’d seen a lot more international products come in, however we may see some more onshoring for foods that were previously imported now moving to domestic production.”

“Over the last 5 years we’ve definitely seen a pickup, but I don’t think it’s an exponential type of growth,” said Sours.

All panelists were unanimous about how capital-intensive cold storage facilities can be. While supply chain drivers such as automation, picked storage, etc. have helped bring down costs, the outlay is still significant. 

“We spend a lot of time educating capital and others” about the costs behind cold and freezer facilities, said Pertel, which include not only looking at refrigeration systems but fire suppression systems as well. Pertel talked about a few facilities he’s seen built with 140’ clear heights –“and that’s a pretty remarkable asset.”

Buildings that high can require very cutting-edge, specialized sprinkler systems. “The fire code just hasn’t caught up to that type of technology,” Lyle said.

And while converting an existing dry building to a cold storage building might seem like an appealing option, Pertel warned that because of the complexity involved, it can be no more cost-effective to convert a building than to start new. There are many considerations and renovations required, including flooring changes, additional power requirements, and structural steel support. “It’s not a cost-savings situation, it’s a speed-to-market solution,” he pointed out.

Having an early conversation with a design team and bringing in the right people to do due diligence can really make the difference in a successful cold storage project. “If I’m coming in late, there have already been some missed opportunities and there will be some surprises with utilities and design changes,” said Lyle.

Getting it right takes a huge amount of research and study, Dodaro agreed. “Speed to market is very important, however refrigeration equipment is not off-the-shelf, and can take 6-12 months to come in,” he pointed out. He also added that these facilities are often major power users and can require significant water treatment and sanitation capabilities.

But these buildings can last. Dodaro has seen buildings that are 40-50 years old with systems in them that have been upgraded and made serviceable. “I think you’ll see an increase in value for second-generation cold space,” said Sours. 

“The number I’ve heard tossed around is that a cold storage building is three times the cost of a dry building. I like to say that’s your starting point,” said Lyle.

“It’s not for the faint of heart,” concluded Dodaro.

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This post is brought to you by JLL, the Social Media and Conference Blog sponsor of NAIOP’s I.CON Virtual 2020. Learn more about JLL at or

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