As we continue to navigate the pandemic crisis, several emerging trends that were here before COVID-19 showed up are becoming a permanent cultural main-stay. Most notably, consumers of all ages are turning to online grocery shopping and prepared meal deliveries for myriad of reasons. And why wouldn’t they want to avoid crowded shopping markets while keeping a tidy track of their food preferences and expenditures? A key to keeping up with the demand is keeping food fresh from the time it’s harvested until it reaches the kitchen fridge. 

The way people shop is creating demand for the cold storage industry to keep up the pace. Someone has to ensure the flurry of online food orders are met, which means more refrigerated warehouses are needed to keep it all cold. According to real estate brokerage CBRE, the United States alone will need 100 million square feet of new cold-storage warehouse space over the next five years. The ports of Los Angeles and Long Beach, the nation’s biggest container-port complex, have more than doubled their refrigerated-container capacity in recent years to address increasing import and export demand for fresh- and frozen-food products including meat, pork, poultry and animal feed, CBRE said. 

Demand for cold storage is also elevated by consumers’ aversion to chemical food preservatives. The best way to keep heat-sensitive food fresh, including fresh fruits and vegetables, is to keep them cold as soon as they’re harvested and then immediately transported to cold storage warehouses. Refrigeration is the best way to keep food fresh without the need for chemicals. This consumer demand for chemical-free fresh food has also created a shift in cold chain logistics in recent years. For example: some farmers are using portable cold storage pods on their farms to instantly keep harvested crops and meats cool. The pods are then loaded onto a tractor trailer truck, which transports it to a port to be loaded on a ship that ferries it to a cold storage warehouse. It’s the same refrigerated pod from harvest to cold storage – and at every point the pod can be plugged in and maintained at a safe, consistent temperature. This shift is precisely why the North Carolina Ports Authority in Wilmington recently remodeled to include a $14 million refrigerated container yard on its port to meet the demand.

While it’s true that the vast majority of people who are creating this demand and grocery shopping online today are millennials – a demographic who learned at a young age that clicking meant delivery within a few hours – baby boomers and older adults are rapidly catching on thanks to social distancing, mobility issues and health concerns. All that online grocery shopping is creating a cold storage shortage and a boom in the warehousing business. 

Online grocery shopping has traditionally been at the bottom of the food chain for what consumers shop for online, but it’s poised to heat up quickly. In 2017, for example, online grocery sales represented only 3% ($19 billion) of total grocery sales but that is expected to increase to 13% ($100 billion) by 2024, according to FMI/Nielsen. 

What does all this mean for cold storage warehouse real estate? Up to 35 million square feet of cold storage for food distribution will likely be shifted from retail to industrial properties within the next four years.