Cold Storage Warehousing

4 Factors Driving Site Selection and Feasibility

Increased demands for fresh food through growing trends like online grocery shopping and meal kit delivery services, accelerated by COVID-19, have left the frozen fulfillment, cold storage, and refrigerated warehousing market significantly underserved. Demand for cold storage near seaports for the import, export, and quarantine of foods, as well as temperature-controlled pharmaceutical storage is also on the rise.

According to Supply Chain Dive, nearly 80% of cold storage facilities are at least 20 years old. Existing inventory is often unable to support current needs and operations due to being less energy efficient and lacking qualities necessary for third-party logistics providers (3PLs).

The need for newly developed or renovated cold storage facilities is here to stay.

Meeting Demand

Developing modern cold storage facilities requires implementing and overcoming unique design features and challenges. Design factors such as building height, utility demand, and foundation requirements can be significantly different from those required for standard warehousing and distribution centers. Understanding these factors is critical to delivering a successful project.

Evaluate these four design factors early in the due diligence process to help your team identify sites and assess the feasibility of your project as quickly as possible.

1. 1. Building Height

Cold storage buildings can range in height from 80 to 150 feet in order to accommodate refrigerated warehousing automation systems – much taller than a standard distribution center. Unless you are considering a smaller-scale micro-fulfillment center – typically 15,000 to 50,000 SF – this requirement could be a deal-breaker with respect to acquiring municipal approval.

What’s Important During Due Diligence

Work with your design team to understand the permitted building height and assess the surrounding properties within the proposed building’s “line of sight.” Your team can help you anticipate potential opposition to the project and advise you on your chances of obtaining a height variance if the height is not permitted by-right.

Did you know? Micro-fulfillment centers are beginning to pop up for refrigerated last mile distribution. Products are stored for a short period of time with a faster turnaround. These facilities do not require the increased building height and often, retail facilities can be repurposed for this use.

2. Utility Demands for Refrigeration

Water and power demands are significantly higher for cold storage than in a typical warehouse in order to support the various layers and temperature-controlled chambers within the facility – some dipping below -10°F. Increased water flows are required for the condensers, and power demand can range from 4,000 to 8,000-amp service.

What’s Important During Due Diligence

The required utility demands may not be available at the proposed site or could require significant upgrades or offsite extensions. Work with your design and consultant team to evaluate potential cost implications if these services are not already provided or readily accessible.

3. Geotech Investigations for Building Foundations

Due to the increased building height, cooling equipment, and automated storage and retrieval systems, cold storage facilities bear a much heavier load than standard warehouse buildings. Depending on your site’s soil conditions, costly reinforcements to the building foundation could be required to prevent shifting and extend the lifetime stability of your facility.

What’s Important During Due Diligence

Have your consultant perform a thorough geotechnical investigation as early as possible. An experienced geotechnical consultant should drill core samples across the entire site to better understand the types of soils. This information will allow the geotechnical consultant to recommend a building foundation that will keep the floor solid for years to come.

1. 4. Rail Access and Accommodations

2. Many 3PL and refrigerated warehouse tenants are interested in facilities located near rail lines. Receiving products via insulated rail cars and redistributing via trucks remains an effective transportation tool.

What’s Important During Due Diligence

To determine whether a particular site along a rail line is feasible, it’s critical to understand the rail provider’s routes and operations. Time and budget for design and permitting of the rail spur – the secondary track used to unload railcars without interfering with the main line – is also important. Engage a rail consultant to work with your design team to determine the layout of the rail spur and advise your team regarding the potentially lengthy approval process.

Moving Forward Faster

As demand continues to rise for fresh grocery deliveries, international trade, and pharmaceutical storage, 3PLs and tenants need more and more refrigerated warehouse space to keep up. Developing modern cold storage facilities is more costly than standard distribution centers – consequently, developers need to move faster than ever to remain profitable. By considering these four key design factors up front, your real estate teams can make informed decisions about potential sites, quickly, to keep the momentum going.