REAL ESTATE NEWS

Cold storage is entering a split-screen phase: rents and capital flows are consolidating around a relatively small but growing universe of modern, user-driven facilities, even as vacancy rises and legacy assets are quietly pushed to the margins. In Newmark's latest H2 2025 U.S. Cold Storage Market Overview, that divide shows up everywhere—from rent levels and absorption to who is building, buying and selling.

Rents and the push to control real estate

Average cold storage taking rents have climbed more than 100% since 2020, a trajectory mirrored in the Producer Price Index for refrigerated warehousing and storage. Newmark notes that taking rents are volatile but unambiguously higher than five years ago, with major coastal and gateway markets now commonly quoting in the high teens to low $30s per square foot NNN.

In Los Angeles–Inland Empire, for example, median taking rents range from $26 to $32 per square foot, while New York–Philadelphia and South Florida cluster in the low- to mid-$20s.

These rent levels are starting to alter behavior among large users. Higher pricing is "driving some occupiers to explore building and/or owning their own facilities," Newmark writes, as they weigh the long-term cost of third-party space against the economics of modern, automated, build-to-suit product. That calculus is feeding directly into a visible rise in user-driven development and a pronounced shift in who controls the newest, most functional assets in the market.

User-driven development and firm formation

Owner-user share of cold storage construction starts reached 19% on a rolling four-quarter basis in Q4 2025, the highest level of the year and a clear step-up from earlier periods. Newmark attributes this to users of scale deciding that purpose-built, highly automated facilities—designed around their specific throughput, power and energy requirements—offer better strategic value than leasing generic space.

The sector's generational rent reset is part of that equation; so is the obsolescence of older owned facilities that can no longer support current operating models.

The ownership shift is unfolding against a backdrop of rapid, if uneven, cold storage firm formation. Between 2017 and 2019, the annual growth rate in new cold storage firms averaged 3.3%; from 2021 to 2023, it accelerated to 6.3% as new operators moved to capture growth and capitalize on development pipelines.

By 2025, the number of firms had begun to contract modestly, and the pipeline had moderated to roughly 5.9 million square feet (about 128 million cubic feet), suggesting a transition from broad-based expansion to more selective, capital-disciplined growth.

This churn has not dislodged the sector's giants. Lineage and Americold together control nearly 4 billion cubic feet of capacity in North America, retaining the top two spots on the Global Cold Chain Alliance's ranking.

But newer entrants such as Agile Cold Storage are expanding faster on a percentage basis, pointing to a competitive landscape where scale, technology and location—not mere incumbency—are defining winners.

Users take both sides of the transaction market

The same forces driving users into development are also reshaping sales activity. In 2025, users tripled their acquisition share year over year to a record 31% of cold storage buying, the highest level in more than a decade. At the same time, they more than doubled their presence on the sell side as they monetized aging assets and recycled capital into modern facilities.

Newmark characterizes the result as rapid portfolio rotation: users are simultaneously disposing of legacy properties and acquiring next-generation assets that better match their operational needs. Overall, cold storage investment volume is recovering, with rolling four-quarter sales rising in 2025 and cap rates for cold storage remaining above the top quartile of industrial cap rates.

Capital is increasingly targeting modern facilities, strong operators and infill or strategically located nodes tied to population growth, domestic production and e-grocery logistics.

Vacancy and absorption: one market, two stories

Behind the headline that cold storage vacancy is at a 20-year high and expected to climb further in 2026 lies a sharply segmented story by vintage. Newmark reports that the newest delivery cohort—buildings completed between 2020 and 2025—posted a 10.1% vacancy rate at the end of 2025, reflecting lease-up pressure from a wave of large-format deliveries.

Legacy facilities built prior to 2006 ended 4Q25 with vacancy at 7.6%, up materially since 2022 amid sustained negative absorption and ongoing space give-backs. By contrast, modern facilities delivered between 2006 and 2019 remained comparatively tight at 2.7% vacancy.

Absorption data underscores the same split. Modern cold storage has posted positive net absorption for 15 consecutive years, with demand accelerating in recent years and reaching a record level in 2025.

Nearly all of that 2025 absorption came from build-to-suit, owner-built and operator space that delivered during the year, directly aligning new supply with committed users. Legacy cold storage, in turn, has seen mounting move-outs and consolidations since 2022, resulting in sustained negative absorption.

Overall, the market still recorded about 3.5 million square feet of positive absorption in 2025, but the composition of that demand—heavily skewed toward modern product—is amplifying the risk of functional obsolescence for older assets.

Newmark expects vacancy to continue rising in 2026 as the supply-demand gap, which peaked in 2025, narrows but does not fully close; deliveries are still forecast to outpace absorption as the current pipeline works its way through lease-up.

The firm notes that the average cold storage lease signed over the past five years has been roughly 120,000 square feet, while most new developments exceed 230,000 square feet, contributing to longer stabilization timelines for some projects. That size mismatch, layered on top of a clear tenant flight to quality, suggests that both new and legacy assets will need sharper positioning to compete.

For investors, the through-line in Newmark's analysis is less about a cyclical softening in demand and more about a structural reallocation of demand and capital. Rents, development and transaction activity are all being pulled toward modern, user-aligned facilities, while vacancy and negative absorption concentrate in legacy stock that no longer fits the operating requirements—or the balance sheet strategies—of today's cold chain occupiers.

Source: GlobeSt/ALM