What to Consider in New Cold Storage Construction

Industrial real estate is currently experiencing a boom in this country, and that holds true in Texas. One of the most ripe markets for industrial real estate development is cold storage warehouse development. Multiple factors are driving demand for cold storage warehouse space: online ordering, even for perishable items, is on the rise; panic-buying during the pandemic accelerated e-commerce; and health-conscious consumers are exhibiting an interest in frozen foods not seen since the mid-1900s.

Considering that warehouses and cold storage facilities can be run more efficiently and cheaply than supermarkets, many retailers are eager to embrace the converging trends. However, cold storage facilities are costly to build (and take longer to construct, compared to a dry warehouse), discouraging speculative development. Nevertheless, it is time for the market to accelerate its response and ramp up construction in order to meet the new demands.

How to Decide on Where to Build a Cold Storage Warehouse

Performing a thorough constructability evaluation, along with choosing an effective project delivery method, can improve the ROI of cold warehouse construction. Owners should commit to a project delivery method such as design-build or at a minimum design assist, which engages the entire team as early as possible during concept planning. This sets the stage for a rigorous pre-construction phase that weighs multiple options and accounts for many variables. Given the expense of refrigeration, having a contractor-led design-build process (in which the contractor weighs in early on various engineering scenarios and their cost) can help balance the cost of equipment vs. life-cycle costs for the facility. It also decreases the facility’s service life energy usage, achieving simpler maintenance and more. A guaranteed maximum price contract can also help manage project costs, as well as aid in fast-tracking construction.

Traditionally, warehouses have been constructed on sites that are close to manufacturing locations or close to where food is grown and harvested. Considerations when choosing a location for these facilities include access to an interstate, site grades, and a building area that can accommodate the additional structural requirements of cold storage facilities.

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Additional Considerations for Cold Storage Warehouses

One thing almost all modern cold storage facilities have in common is the need for tall volumes. Automated storage and retrieval systems usually operate in vertically-oriented spaces. This dovetails well with the fact that building “up” reduces a building’s footprint and is a logical way to use tight urban lots and reduce real estate costs.

For both new-build and existing structures, all decisions should be made in accordance with local zoning and building codes. Environmental assessments are a good idea if there is a possibility that the site’s surroundings have low air quality or other environmental risks. Traffic assessments will also be important in any non-industrial zone. Availability of labor is a critical consideration; the number of sophisticated systems that must be installed in a cold storage facility require multiple teams of skilled construction workers. Several factors can make acquiring this labor difficult. Storage and distribution facilities being built in zones not previously used to such a market may not have attracted workers to the area. Moreover, there has been a longstanding industry-wide workforce shortage, which has been exacerbated by the disruptions of the 2020 pandemic. For the same reasons that labor may be difficult and expensive to procure in zones that have not typically seen warehouse construction, specialized equipment and materials may be hard to source.

Casey Development, Ltd: Cold Storage Warehouse Developers

Casey Development, Ltd. is poised to meet the demand for increased cold storage warehouse space. With online retailers and grocers offering faster delivery time, the need for cold storage warehouses is in high demand in Central Texas metro areas. Contact our team today to learn more about how Casey Development, Ltd. can help you get started with cold storage warehouse construction.