DALLAS—There are many firsts to come out of the COVID crisis, but cold storage isn't one of them. In reality, the industrial sector is far from being new to the party.
In response to demand related to and beyond the pandemic, Cold Summit Development recently launched its first project, a 343,000-square-foot multi-tenant cold storage facility. The $60 million project is located at 2800 Cedardale Rd. on a 29-acre site within the South Dallas industrial submarket.
Cold Summit Dallas will be only the 12th cold storage facility built in the DFW MSA in the last 20 years. Other recent developments by FedEx and KeHe Distributors in South Dallas highlight the industrial growth of the submarket.
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"DFW is a key logistics hub with 40% of the US population within 24 hours, and more than 90% within 48 hours," says Alex Langerman, co-founder and COO of Cold Summit Development. "Our location is prime for both businesses serving DFW directly, being 12 miles from downtown Dallas, and for those focused on the broader regional/national market coming to Dallas for the business-friendly environment and access to transportation and logistics infrastructure."
To be sure, cold storage has taken center stage this year with food supply chains stretched to the limit during the COVID-19 pandemic, says Scott Pertel, president and CEO of Cold Summit Development.
"The food supply chain has always been a critical system of infrastructure, but the pandemic has brought it to the forefront," he says.
But even in non-COVID environments, this supply chain continues to be increasingly relevant, especially in the growth region of DFW.
"Traditional infrastructure assets rarely come to market. Cold storage is a great way for investors to access the infrastructure thesis, underwriting the idea that populations grow and people need to eat, pandemic or not," adds Langerman.
Key Findings from the Global Cold Chain Alliance's 2020 COVID-19 Cold Chain Business Impact Survey:
Business Challenges: The most frequently selected challenge was supply chain disruptions, i.e., keeping up with demand surge, slowdowns in food service, production/manufacturing challenges.
Industry Trends: About three quarters of all respondents think the pandemic will cause an increase in the growth rate of e-commerce/direct-to-consumer delivery of chilled and/or frozen product. Even stronger demand for data and predictive analytics is expected in the future, and respondents are optimistic that the growth rate of the industry as a whole will be even more significant because of the pandemic.
"Future demand will be augmented by three key trends emerging from the pandemic: increasing inventory levels, shifting global food flows and automation," says Langerman in proprietary insights. "These trends, reinforcing previously existing growth drivers, are serving as a catalyst for the cold storage sector as it advances from a niche investment subsector to a core infrastructure asset class."
Pertel points to the added impact that cold storage is having on the transport of the new COVID-19 vaccine. The vaccine made by Pfizer needs to be kept at minus 70 degrees Celsius, while Moderna says its vaccine must be frozen too, but only at minus 20 Celsius or similar to a regular freezer.
"The COVID vaccine is a great example of a novel event underpinning the need for new infrastructure systems," Pertel says. "There is no greater focus right now than ensuring that our population will have access to a vaccine that will remove the societal and economic restrictions of the pandemic. Cold storage will play a key role in fulfilling that need."
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Lisa Brown
Lisa Brown is an editor for the south and west regions of GlobeSt.com. She has 25-plus years of real estate experience, with a regional PR role at Grubb & Ellis and a national communications position at MMI. Brown also spent 10 years as executive director at NAIOP San Francisco Bay Area chapter, where she led the organization to achieving its first national award honors and recognition on Capitol Hill. She has written extensively on commercial real estate topics and edited numerous pieces on the subject.
