Cold Storage Faces a Transition as Long-Term Demand Continues Building

The U.S. cold-storage market is navigating a near-term supply-demand imbalance, posting negative net absorption during the first six months of 2026. On the other hand, the sector’s long-term demand fundamentals remain intact.

Newmark’s 1H 2026 Cold Storage Market Overview pointed to population growth, domestic food production, e-grocery and increasingly sophisticated pharmaceutical and biologics supply chains as key demand drivers.

Meanwhile, occupiers are becoming more selective, putting older facilities at a disadvantage as tenants favor modern, higher-quality product.

Focus on Facilities

Approximately 41 million cubic feet of cold-storage space was delivered in 1H 2026, while net absorption stood at 56 million cubic feet, resulting in a 7.7% vacancy rate.

But bifurcation is the trend. Facilities delivered since 2020 have generated higher demand, while older legacy properties experienced negative absorption since 2022. Those vintage assets account for 68% of vacancy, compared with 24% for post-2020 product.

High construction costs that range from $130 to $350 per square foot are also a challenge. Newmark said increased costs and longer construction timelines mean new cold-storage projects are likely to be build-to-suit, owner-user or pre-leased developments.

Meanwhile, lower conversion costs of $100 to $150 per square foot could spur repositioning of older dry-warehouse stock, Newmark said.

Grocery Creates a Headwind

Although food prices have moderated from their 2020-2022 surge, they remain more than 30% above 2019 levels. Consumers also faced pressure from reduced SNAP benefits and a gas-price spike since March 2026, further squeezing food budgets, Newmark said.

Performance varies by category. Grocery unit sales fell 1.8% year over year, with fresh produce among the hardest-hit. Frozen produce, however, posted unit-sales growth of more than 5%, while frozen-food demand generated a modest year-over-year increase in total U.S. cold-storage inventories.

E-Grocery Provides a Boost

U.S. online grocery sales jumped 21.5% year over year in July, compared with a 2.6% decline in in-store sales, according to Newmark.

As the order mix continues shifting toward delivery and home fulfillment, cold storage remains an important part of the supply chain. Retailers are relying on existing stores, third-party logistics providers and dedicated fulfillment facilities to accommodate the changing demand profile.

Pharmaceutical Fundamentals

Newmark said that demand for temperature-sensitive biologics, including GLP-1 therapies, is projected to grow at an 8.3% compound annual growth rate through 2033.

GLP-1 adoption also could support food-storage demand by influencing the consumption of protein and fresh produce.

Meanwhile, pharmaceutical products requiring cold storage accounted for roughly 35% of pharmaceutical sales, up from 26% in 2017. Logistics companies including DHL, C.H. Robinson, FedEx and UPS are investing billions of dollars in specialized pharmaceutical cold-chain capacity.

The Takeaway

Cold storage is undergoing a period of transition marked by negative absorption, a flight to quality, macroeconomic pressures and shifting demand across end uses.

Newmark said conditions should improve in 2H 2026 as inventories stabilize and scheduled move-ins are completed. Vacancy, however, is expected to remain around its long-term average.

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