The U.S. cold storage sector is slowly but surely moving through a cyclical reset as an all-time high in annual deliveries contends with a protracted slowdown in food inventories and softer consumer spending trends, according to the U.S. Cold Storage Market Overview, produced by Newmark.
Despite headwinds and a 20-year-high vacancy rate, underlying demand remains intact with roughly 3.5 million square feet of positive absorption recorded in 2025.
That absorption, however, shows both build-to-suit and user-driven developments and facilities from a newer crop of cold storage operators. Older facilities faced equally record-setting move-outs.
Key takeaways:
· Spurred by recent new development, the national cold storage inventory reached 342 million square feet or approximately 7.5 billion cubic feet at the end of 2025. Contextually, the national cold storage market represents only 1.9% of the overall industrial base.
· Between 2021-2023, formation of new cold storage firms grew at an accelerated clip, averaging 6.3% CAGR vs. 3.3% CAGR in 2017-2019. Development activity grew in tandem, supported by strong demand and favorable financing conditions. In 2025, the number of cold storage firms contracted modestly, and the pipeline, at 5.9 million square feet (128 million cubic feet) is expected to continue moderating in turn.
· By year-end 2025, the supply–demand gap reached an all-time peak. While that gap is expected to narrow in 2026, supply will continue to outpace absorption as the pipeline empties.
· Legacy facilities have seen mounting move‑outs and space consolidations since 2022, resulting in sustained negative absorption. Overall demand remains net positive, but the mix signals a clear flight to quality and rising functional obsolescence risk for older facilities.
· Vacancy has risen across both legacy and modern cold storage since 2022, but the drivers differ. In modern assets, vacancy is largely supply‑driven as new deliveries added availability to the market, pushing vacancy to 6.1% by 4Q25. Legacy vacancy, by contrast, has climbed to 7.6%, driven by sustained negative net absorption and continued space give‑backs.
· The average cold storage lease signed over the past five years is roughly 120,000 square feet, while most new developments exceed 230,000 square feet. This mismatch has led to longer lease-up times for some cold storage developments.
· Texas is home to one of the fastest-growing cold storage inventories in the United States, expanding 35% since 2015, and far outpacing the national average. Cold storage employment has surged 70% over the same period. This growth reflects the state's strong population gains, leading food production status, and robust refrigerated traffic across its maritime and inland ports.
· In 2025, food and beverage M&A deal volume rebounded, driven by a surge in larger transactions even as the total number of deals declined. Heightened M&A activity leads to meaningful real estate activity as acquirers integrate new brands into existing production, warehousing, and distribution networks, while selectively expanding capacity in growth categories. Recent deals highlight a mix of network expansion and strategic restructuring, including added manufacturing scale, broader market coverage, and optimization across co‑packing, distribution centers, and logistics nodes.
· USDA-reported cold storage stock levels have been trending lower since late 2023, with the rolling 4-quarter average down 4.3% YOY in 4Q25.
· Population growth and migration patterns continue to reshape food consumption and distribution needs, reinforcing structural demand for cold storage. These tailwinds are being amplified by the continued expansion of grocery and food e-commerce, along with broader diversification across the refrigerated supply chain—from processors and distributors to last-mile operators. Notably, each of the five fastest-growing U.S. large metros already has cold storage development underway or has recorded recent deliveries.
· Looking ahead, the policy outlook remains fluid, creating both incentives and friction, while rate volatility and tighter capital discipline raise the hurdle for large, multi-year greenfield bets. As a result, incremental investment is likely to skew toward automation, throughput optimization, cold chain resiliency, and retrofit expansions within existing footprints rather than broad-based capacity growth everywhere.
· As order mix continues to shift toward delivery and ship-to-home—both more cold chain-intensive than pickup—retailers are scaling capacity by leveraging existing stores, partnering with 3PLs, and selectively developing dedicated fulfillment nodes to meet rising expectations for speed and flexibility.
· Cold storage investment activity is gaining momentum, with quarterly volumes improving and rolling four-quarter volume rising in 2025. Cold storage cap rates continue to price above top-quartile industrial cap rates, underscoring the sector’s differentiated value proposition and durable long-term demand profile. Overall, capital is returning to the space, with investors showing increasing confidence in modern facilities, strong operators and well-located assets.
