Growing online grocery sales will boost N.J. cold storage market, report says
As one of the nation’s top 10 markets for cold storage space, New Jersey is poised to benefit from what experts say will be the continued growth of online grocery sales.
A new research note by CBRE highlights the projected rise of online grocery sales in the U.S. in the next few years. While e-commerce accounted for only 3 percent of total grocery sales in 2017, representing about $19 billion, the firm said that number is expected to reach 13 percent or $100 billion by 2024, citing data from FMI/Nielsen.
Depending on the property type used to fulfill online grocery sales, up to 35 million square feet of cold storage for food distribution could be shifted from retail to industrial properties, CBRE said in its latest Marketflash report. The U.S. currently has some 3.6 billion cubic feet of food-commodity cold storage capacity covering 180 million square feet of industrial space, compared with 2 billion cubic feet of similar capacity covering 300 million square feet of retail space.
New Jersey is 10th in the nation in CBRE’s ranking of markets based on their footprint of industrial cold storage space. The Garden State has 5.7 million square feet of industrial space devoted to cold storage, researchers found, using estimates from the U.S. Department of Agriculture and a formula based on 24-foot ceiling heights and 85 percent footprint efficiency.
Such projects have been a visible piece of New Jersey’s robust industrial construction pipeline in recent years. For instance, in 2016, a joint venture of Elberon Development Group and Avidan Group LLC opened a new 140,000-square-foot freezer warehouse in Elizabeth that serves the French food distributor Seafrigo.
Last March, Preferred Freezer Services said it would open its ninth cold storage warehouse in the region with the addition of a 197,000-square-foot facility in Kearny. The building, located at nexus of Interstate 280 and the New Jersey Turnpike, is scheduled to open in summer 2018 and will add freezer space needed to support the growing needs of the firm’s company’s customers in this area.
The project follows Preferred Freezer’s opening of a refrigerated storage and distribution center in Woodbridge, which was developed by Advance Realty and F. Greek Development.
CBRE researchers said states with the most food-commodity industrial cold storage space tend to be near major food producers and population centers. Citing data from the USDA, the firm said California, Washington and Florida were the largest.