For Investors, the Cold Storage Industry Is Hot, Hot, Hot

Investors have taken notice of the cold storage industry, and many believe the time to invest is now. With international tariff issues keeping more stock on hand and direct-to-consumer food deliveries increasing, facilities are testing their limits on storage. Cold storage spaces have become an integral part of the supply chain for perishable...
melting money and ice

Investors have taken notice of the cold storage industry, and many believe the time to invest is now. With international tariff issues keeping more stock on hand and direct-to-consumer food deliveries increasing, facilities are testing their limits on storage. Cold storage spaces have become an integral part of the supply chain for perishable goods, and the need is not going anywhere anytime soon.

As we discussed a few months ago, international political tensions have caused other countries to increase tariffs on U.S. goods, which has slowed the amount of product being shipped out of country, leaving a incredible 2.5 billion pounds poultry, beef and pork with nowhere to go and creating a need for temporary storage so these products could be rerouted to other destinations. The overflow of meat might be short-lived, but the growing demand for more cold storage space is attracting investors across the United States. Prior to the change in political relations, a variety of factors on the current market were already stretching available space.

To save time in their busy lives, more people are looking to order food online to be delivered to their homes, which is a great opportunity for e-commerce, grocery and subscription meal companies looking to expand and meet the demand of fast, fresh food. Subscriptions to these types of deliveries are on the rise, and with that comes a higher demand for space to store cold or frozen products before they get shipped.

A third factor boosting the demand for cold storage space that might not be as obvious is the increasing need for climate-controlled medications. Young and old alike need medical products such as insulin, which must be refrigerated.

All of this means that the market for investing in cold storage is heating up. Lineage Logistics LLC, which runs $4 billion in real estate worldwide, just made a $700 million stake in the company available to investors. And shares with the warehousing firm Americold Realty Trust have increased by one-third since going live in January, according to The Investor by JLL Capital Markets.

As exciting as these opportunities are, the cold storage industry requires careful planning and navigation for optimal profit. Buildings need to meet highly specialized requirements and be conveniently located for multiple types of businesses to use. But the complexity of cold storage is not scaring away investors at this stage, and it will be interesting to see how the industry matures in the coming years.

Photo credit: Steve Johnson

Source: washingtoncoldstorage.com