Cold Storage Activity Starts to Takeoff

The frenzy for cold-storage product has already begun. With Amazon’s purchase of Whole Foods last year and the growth of online grocery shopping, many are expecting the need for cold-storage space—especially in infill markets—to grow over the next three years. Dedeaux Properties, along with its joint venture partner Barings Real Estate, experienced the heightened investor interest in cold-storage with the recent sale of the Los Angeles Food Center, a 267,000, 10.6-acre cold storage site in Vernon. The property traded hands following a multi-million renovation, and investors lined up to make an offer.

“Savvy investors are aware of the growth in consumers purchasing perishable products online,” Matt Evans, chief investment officer at Dedeaux Properties, tells GlobeSt.com. “As such, there’s more investor interest in this asset type.  We had strong interest from buyers and many well-known investment groups made offers to purchase creating a competitive bid process. As we had expected, there is now more institutional buyer interest for cold-storage buildings, which helped to drive strong pricing.”

This is just the beginning for cold-storage investment activity. A recent report from CBRE forecasted the need for 35 million square feet of cold storage facilities nationwide. “We feel there will be continued growth in this segment as our region is at under-capacity in terms of volume in comparison to other parts of the country,” says Evans. “Plus, forecasts show continued consumer demand for perishable products resulting in need for more last mile  facilities to be built or converted.”