The Cold Chain Sector Recalibration

U.S. cold storage is a specialized sector representing less than 2% of the overall industrial market, yet it is mission-critical infrastructure for U.S. consumption. Today, the property type is in a period of generational change. Average rents have grown over 100% since 2020, yet vacancy has climbed to a two-decade high. This unusual pairing of surging rents alongside elevated vacancy reflects a market digesting a record level of new supply with a growing bifurcation between the modern space demanded by occupiers and an aging legacy base.

Today’s two-decade vacancy high contrasts sharply to the sector’s all-time low vacancy rate, recorded just four years ago.  The headwinds in this study of extremes include depressed food inventory levels, elevated grocery inflation, U.S. policy-related uncertainty, and most significantly, record volumes of new supply delivering to the market. The new supply comes after an unprecedented run-up in the pipeline over the past five years. Although the development pipeline has receded from record highs, it remains historically elevated at 7.4 million square feet.

The near-term supply swell is colliding with evolving operational strategies. The higher rents, tighter food-safety standards, heightened merger and acquisition activity, and some observed mismatch between the location and size of some new product offerings and occupier needs, are all accelerating user acquisitions, and in turn, user-driven new development. Many occupiers are exploring buildings and/or owning their own facilities. This shift has increased pressure on older, less efficient space as companies migrate out of third-party space and into their own facilities.

Most vacant cold storage space on the market today is older, and amid this trend of user-driven activity, vacant space will continue aging. With an average age of 42 years, the U.S. cold storage inventory requires continued modernization, a directive a new crop of operators and developers are meeting.

Lineage and Americold are the two largest North American operators, with nearly 4 billion cubic feet of combined capacity built through mergers, acquisitions and development. This scale has spurred competition and opportunity alike by encouraging new operator formation. Between 2021 and 2023, the growth of cold storage firms accelerated, averaging 6.3% compound annual growth, compared with 3.3% between 2017 and 2019.

Many smaller, newer entrants such as Agile Cold Storage, founded in 2020, are growing capacity at a faster clip.

Not all cold storage users have the capital or the business model to take their cold chain “in house,” but they present opportunities for newer cold storage operators. Average cold storage leases are significantly longer than a typical dry warehouse lease, so a typical lease rolling now could have been signed 15 – 20 years ago in a market where a cold storage facility is not today’s technologically enhanced, automation-friendly, energy-efficient facility. This reset period will continue to speed the separation of high-quality, modern assets from obsolete inventory.

Despite near-term challenges, several structural drivers support long-term demand. Rising investment in domestic food production, population growth, shifting freight pathologies and the continued expansion of e-grocery sales are durable tailwinds for the cold storage sector. These forces should underpin the absorption of modern facilities and help normalize vacancies as the sector transitions from the current reset period.

What to Watch in 2026

• Pipeline Moderation: As development slows, modern facilities will outperform older properties.
  • GLP1 Impact: The impact of GLP1s – appetite-suppressing medications – has yet to be determined. Individuals on the drugs consume less food. However, their preference is for more produce and protein, which both require cold storage. In addition, GLP1 drugs themselves require specialized cold storage solutions. If usage continues to increase, it is yet unclear what the net impact will be on cold storage occupancy.  
  • Inventory Rebuilding: A cyclical restock of food inventories would support absorption and help recalibrate vacancy.
  • Policy and Compliance: Tighter food-safety standards continue to raise the bar for facility design and operations.
  • Rent Trajectory: After taking rents more than doubled since 2020, expect greater differentiation by asset quality and location.
  • Consolidation vs. New Entrants: Large platforms maintain scale advantages, while nimble newcomers target specialized or mid-market opportunities.

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Originally published on Area Development, The Cold Chain Sector Recalibration