The cold storage real estate market is booming, thanks to online grocery sales

Online grocery ordering exploded last year. Now, companies are building warehouses designed for home delivery.

March 25, 2021

If you’re an online grocer, pandemics are an incredible opportunity.

In 2019, ~5% of groceries were purchased online. That number hit 10% in 2020 and could reach 12% by 2025.

The hunger for online grocery services is feeding demand for new real estate development…

Cold food-storage warehouses are hot

Companies are whipping up plans to build tens of millions of square feet of urban-centered food warehouses designed to efficiently serve home deliveries.

But keeping food cold doesn’t come cheap:

  • Americold invested $461m in cold storage facilities in 2020.
  • Provender will spend billions constructing facilities across the US.
  • Lineage — fresh off a $1.9B funding round — expects 21 new developments this year, up from 10 in 2020.

Altogether, the cold storage construction market could be worth $18.6B by 2027, up from $7B in 2019.

The grocery space is innovating like crazy

UK-based grocery chain robotics company Ocado recently saw sales jump 40%. Ocado builds autonomous food packing warehouses designed for home delivery.

In London, Ocado is rolling out micro-warehouses for delivering groceries within one hour via refrigerated electric and pedal-powered vehicles.

Across the US, Ocado is partnering with Kroger to open 20 automated fulfillment centers as companies like Amazon expand their own grocery offerings.

Ocado CEO Tim Steiner says he views Amazon as “a very small competitor.” We’re still waiting on Bezos’ diss track in response.

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