Meal kits and grocery delivery were a practical shift for many at the start of the pandemic. However, the convenience of these services is proving to be habit-forming. In response, demand for refrigerated storage in strategic locations is climbing across the U.S.
Cold storage attracting big money
Investors sank a cool $2 billion into cold storage properties situated near large population centers in 2021. Meanwhile, 6.7 million square feet of new cold storage was reported to be under construction in January 2022.
That rise in capacity is big, but demand seems poised to easily absorb it. As of February 2022, the national vacancy rate for cold storage facilities has dropped nearly 1% year-over-year to just 3.8%.
Not immune to supply chain problems
Wider market conditions mean cold storage construction may struggle to stay on schedule and within budget. One material especially important to refrigeration, magnesium, is set to be a particular headache. Magnesium production was reduced by China recently, and they’re normally responsible for 87% of the global supply. As prices spike, there’s a chance it could have a chilling effect on the construction boom.