With the increase in Food Delivery services like Blue Apron and Amazon Fresh, cold storage is a booming market!
The growth of e-commerce has caused a growth in the distribution center market, with cold storage representing a small segment of that market. “It is very niche. About 2% or 3% of all goods on groceries are bought online, and we expect the space could explode to 13% over the next 5 years because of the penetration of the internet,” said Spencer Levy, senior economic advisor for CBRE research.
The states that represent most of the food production will experience most of the growth of this market. States like California, Texas & Florida as well as cities like New York City will experience the most in the opportunities for this niche sector. With growing demand as well for fresh & organic fruits & vegetables, this provides another incentive to make an investment in the sector.
This sector does provide ample opportunity, with the right strategy in place and primarily in the core, gateway markets where fluctuations in the economy won’t hurt as much as in the smaller markets. As we know, warehouse & distribution centers need space and access to major highways, which don’t help the consistent headaches of this nation, which are affordable housing & traffic congestion.
Do you have many little facilities where you utilize more delivery trucks on the road? Or do you have one huge facility outside of the city and distribute down to smaller ones within dense metros like LA or NYC?
With the increase of e-commerce and rapid delivery options this sector will only add to our traffic woes along with housing affordability because of the scarcity of land in the gateway cities. I’m curious to see how local & state lawmakers will address this specific sector.
