Cold Storage Trough in Sight as Vacancies Hit 20-Year High

Why It Matters

The vacancy spike pressures rents and investor returns, while structural demand from e‑grocery, population growth, and pharma cold‑chains promises long‑term upside for modern assets.

Key Takeaways

• Vacancy rates hit 20‑year high, driven by overbuilding.
• Modern facilities vacancy 2.7%; legacy sites 7.6%.
• Pipeline shrank to 5.9 MSF, lowest since 2020.
• E‑grocery sales up 32% fueling cold‑chain demand.
• Biologics like GLP‑1 drugs boost specialized storage needs.

Pulse Analysis

The cold‑storage market is emerging from a classic construction‑driven downturn. A flood of speculative projects launched during the pandemic left the sector with an unprecedented inventory surplus, pushing vacancy rates to levels not seen since the early 2000s. 5 million sq ft of positive absorption recorded in 2025 signals that end‑users—retailers, food processors, and logistics providers—still require space, especially for high‑throughput, temperature‑controlled operations. \n\nDemand fundamentals are reshaping the landscape.

Online grocery sales surged 32% year‑over‑year in Q4, creating a need for more distributed, climate‑controlled footprints to meet rapid delivery expectations. Simultaneously, metropolitan regions such as Dallas‑Fort Worth and Houston are experiencing robust population growth, translating into projected demand for millions of additional square feet over the next decade. The pharmaceutical sector adds another layer, with biologics and GLP‑1 weight‑loss drugs requiring specialized cold‑chain storage. 9 MSF—a dip to pre‑2020 levels—suggests supply will begin to align with demand, narrowing the current gap.

However, projects already under construction will keep short‑term vacancy pressure alive. 7% vacancy, and consider build‑to‑suit opportunities that incorporate advanced automation and sustainability features. Risks remain, notably elevated interest rates and the potential shift of GLP‑1 drugs from injectable to oral forms, which could dampen specialized storage demand. Overall, the sector appears poised for a trough‑to‑recovery transition, rewarding quality assets and strategic development.