Cold storage warehouses, as opposed to traditional
warehouses, are suddenly high in demand because of the steady rise in
ecommerce. Online grocery shopping is one of the major reasons why food
producers and retailers need cold storages.
In order to meet the growing demand for cold storage
warehouses, existing logistics companies need to increase their outdated
facilities and expand their space by 100 million square feet or more. This is
because according to the Food Marketing Institute and Nielsen, online grocery
sales will account to up to 22% of the total grocery sales in the US.
The spurring demand for cold storage warehouses in the US
brings real challenges for the real estate industry. The following are the
challenges and future prospects for cold storages.
Challenges of Cold Storage Real Estate
The need for new cold storages is eminent. Currently, about
2-3% of the total real estate industry in the US is made up of cold storage
facilities. While this number is expected to rise, the following are the
factors that hinder this growth.
Finding Space
Finding space for cold storage facilities in the US is very
difficult. Most densely populated cities in the US have the highest demand for
online grocery shopping. This makes it difficult for builders to find a space
in the metro that can be closer to the residential areas. Cold storage
facilities that are away from the city are not suitable for perishable goods.
High Costs
Another challenge is the high cost associated with building
cold storage warehouses. The average cost to build such a facility is reported
to be 40% higher than a traditional, dry warehouse. The costs include insulated
metal paneling, cooling equipment, rooftop equipment, subfloor heating, safety
and security measures, and other mechanical equipment that is constructed
within the warehouses.
Outsourcing
Since 79% of cold storage logistics are outsourced and only
21% are built in-house, logistics’ companies find it hard to meet the growing demand.
Construction Timeline
Cold storage warehouses require technical and mechanical
expertise, which is why its construction takes extra money and cost as compared
to a traditional warehouse. Normally, construction of a cold warehouse will
take four to five months or more.
Difficult to Maintain
The maintenance of cold storage warehouses is extremely
challenging. According to the different types of goods stored, the temperatures
need to be adjusted and monitored constantly. Generally, the temperature in
these facilities should be between -25 degrees and +55 degrees. Maintaining and
controlling temperatures require additional equipment and technicians.
Future Prospects
Because of these challenges, the US cold storage industry
makes only 2% of US office real estate. While at the same time, real estate
market experts suggest that given the multi-billion dollar online grocery
shopping industry, there will be a significant rise in the real estate space
for cold storage facilities. Builders will have to come up with creative
solutions to manage the required storage space. Plus, research has shown that
large cold storage warehouses will be constructed in big cities such as New
York and Los Angeles.
The growing consumer
trends and buying attitudes are encouraging builders to invest in new warehouse
technology and construction strategies.
We offer cold storage track and trace solutions to meet the demands of today's logistical challenges. Talk to one of our Printer & Barcode Technology Specialists now
(800) 643-2664
.
