The U.S. cold storage market appears to be on the upswing after a period of downturn caused by a surge in new facility construction and slowing consumer spending. Vacancy rates in the market have reached a 20-year high due to pandemic-driven overbuilding and declining food inventory trends. Despite these challenges, there was positive absorption of approximately 3.5 million square feet in 2025, indicating strong underlying demand, according to a report from Newmark.
The commercial real estate services firm highlighted several factors that continue to impact the market’s near-term outlook. High food prices are putting pressure on consumer budgets, leading to slower consumption growth. Additionally, inventory carrying costs remain elevated as rents have doubled since 2020 and interest rates remain high.
Newmark anticipates that the supply-demand gap will narrow in the coming year as the development pipeline moderates. The U.S. cold storage pipeline has decreased to around 5.9 million square feet, the lowest level since 2020. However, supply is expected to outpace absorption in the short term as ongoing construction projects are completed.
A “flight to quality” trend is emerging in the market, creating a divide between new and old assets. Occupants are increasingly seeking build-to-suit projects that prioritize automation, energy efficiency, and high-throughput capabilities. Older facilities facing functional obsolescence accounted for 73% of industry vacancies last year, with legacy locations experiencing a 7.6% vacancy rate compared to modern sites at 2.7% vacant.
Despite these cyclical challenges, Newmark sees several favorable catalysts supporting the sector’s long-term health. Structural drivers such as population growth, expansion of domestic food production and agricultural trade, the rise of online grocery sales, and the evolving needs of pharmaceutical and biologics cold chains are expected to drive growth.
The report highlighted a 32% increase in e-grocery sales year over year in the fourth quarter, necessitating larger footprints to meet customer delivery expectations. Retailers are adapting by leveraging existing stores, partnering with third-party logistics providers, and developing dedicated fulfillment nodes to meet rising demands for speed and flexibility.
Looking ahead, major metro areas like Dallas-Fort Worth and Houston are poised for significant population growth, creating demand for millions of additional square feet of cold storage capacity over the next decade. The rise of GLP-1 drugs and other biologics is also driving the need for specialized temperature-controlled storage space.
While weight-loss drugs may impact caloric demand, the report suggests that this shift is likely a reallocation of demand across food categories rather than a simple contraction. Changes in GLP-1 delivery methods from injectable to oral could present a challenge for the industry.
In conclusion, the U.S. cold storage market is showing signs of recovery after a challenging period. While there are still headwinds to navigate, the sector’s long-term prospects remain strong, driven by fundamental factors and evolving consumer trends.
This rewritten content seamlessly integrates into a WordPress platform and provides a unique perspective on the U.S. cold storage market’s current status and future outlook.
