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Are you a commercial real estate (CRE) property owner who's considering selling a low-performing storage property? While this may be a simple, profitable solution, consider the potential benefits of converting it to a cold storage facility.
Retrofitting this building can be especially profitable if it's located near interstate highways, delivery docks, airports, or cross-country delivery networks.
While converting an existing building to offer refrigerated storage can be expensive, demand for cold storage facilities continues to grow. These are fueled by national consumer trends such as ready-to-cook meal preparation kits that require refrigerated fruits, vegetables, and meats.
In addition, a 2022 investors survey found that nearly 40% of respondents were pursuing cold storage assets, which was nearly double the percentage from the previous year.
Another factor accelerating the need for cold storage is the cost of shipping perishable goods in refrigerated trucks. This has resulted in additional opportunities for owners of cold storage facilities across the country.
Property owners of a cold storage facility may enjoy increased ROI and considerably fewer vacancy times when renting the property. Currently, cold storage vacancy rates are generally lower than other types of storage facilities, with a national average vacancy rate of 4.0% or lower.
Selling the newly renovated property can also be an attractive option, especially in areas with high demand and little inventory.
By repurposing your property for storing refrigerated or frozen goods, it becomes a valuable asset for businesses that require refrigeration and cold storage solutions for their perishable goods.
Interested in learning more? Here are details of this growing CRE niche market.
Initially fueled by the arrival of the COVID-19 pandemic and the growth of e-commerce, the national demand for cold storage facilities continues to be driven by several factors.
By converting a storage property or warehouse to a cold storage facility, you can tap into this steadily growing market while increasing your ROI.
Here is a basic description of how refrigerated and frozen goods require their own type of shipment protocol, and how your facility can become an essential link in the chain.
Cold chain logistics refers to the temperature-controlled supply chain that ensures the quality and safety of perishable goods or “cool cargo” from the point of origin to the final destination.
This process involves refrigerated transportation, warehousing, and distribution facilities to maintain optimal temperatures throughout the supply chain.
For businesses dealing with perishable goods, such as food, pharmaceuticals, and chemicals, a reliable cold chain is essential for:
Like other types of commercial real estate, cold storage facilities need to be in a location that easily incorporates them into the area's logistic process.
When CRE property owners invest in refrigeration and cold storage solutions, these facilities enable wholesale and retail businesses to optimize their supply chain and ensure the quality and on-time delivery of their products.
A cold storage facility operating in a prime location will provide the following to its tenants or new owner:
If you've identified one of your existing properties as a suitable candidate for repurposing to cold storage, your business plan will require certain steps.
To successfully convert an aging, empty, or under-utilized storage or warehouse property to a cold storage facility, consider the following steps:
Develop a marketing strategy to highlight the unique features and benefits of your cold storage facility to potential tenants.
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