U.S. cold storage vacancy rates have climbed to their highest level in more than 20 years, driven by a sharp imbalance between supply and demand that is expected to peak in 2025. According to Newmark’s H1 2025 U.S. Cold Storage Market Overview, the gap will reach the widest point on record this year before easing slightly in 2026. Even then, supply will continue to outpace demand as projects from the sector’s historically large pipeline reach completion.
The report cites several factors contributing to the downturn: depressed food inventory levels, elevated grocery inflation, policy uncertainty and record volume of new facilities coming online. Heightened merger and acquisition activity is spurring both user sales and new development, while tightening food safety standards and elevated rents add further strain. Growth in e-commerce is also weighing on fundamentals, with expanding urban populations increasing the pressure on distribution networks.
Older facilities are facing the greatest challenges. Much of the vacant inventory now on the market is roughly 42 years old, as companies either invest in their own modern facilities or grapple with costly upgrades to existing assets. Newmark notes that once cyclical inventory rebuilding resumes and demand realigns with supply, the cold storage sector’s fundamentals should stabilize.
The market’s current weakness follows a period of accelerated growth. Between 2021 and 2023, the formation of new cold storage companies grew at an average annual rate of 6.3%, nearly double the 3.3% average seen from 2017 to 2019. Rental rates have surged more than 100% since 2020. While the pipeline has begun to moderate from its record highs, it remains historically elevated at 7.4 million square feet, with about 10% of existing inventory developed in the past five years. Newmark expects the number of firms to contract modestly this year as projects slow.
Cold storage accounts for less than 2% of the U.S. industrial market, but the sector’s trends are increasingly influenced by consumer habits. According to data from Brick Meets Click and Mercatus, e-grocery sales for the second quarter of 2025 rose 28% year-over-year. Ship-to-home continues to dominate as the preferred fulfillment method, though customers are increasingly blending multiple shopping channels. Retailers, Newmark reports, are relying on third-party logistics providers or strategically locating fulfillment centers to offer consumers greater flexibility while maximizing their existing real estate footprint.
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