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Cold Storage Shortage - Houston

Last Updated May 27, 2022

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Cold storage opportunities in Houston, Texas are few and far between. With approximately 7 million people in the Houston Metro area, one would expect to find existing warehouses fitted with freezer and cooler improvements. However, businesses looking to lease or purchase industrial cold storage facilities are in for a real surprise. There are currently NO EXISTING “modern” cold storage buildings available in the Greater Houston area. There are a few properties that can be retrofitted with the freezer and/or cooler mechanicals - however, the owners are waiting for tenants before they install the improvements. Also, there are 2 or 3 lease spaces with minimal existing freezer and/or cooler storage, but the total area of the spaces are 3-5 times that of the freezers and/or coolers. Additionally, the equipment that  is in place in antiquated and/or in disrepair. 

Why is There Such a Void in the Supply of Cold Storage?

The main reason is cost. It is prohibitively expensive to construct facilities that support Freezer temperatures. Cooler space is slightly more affordable, however, it is still substantial and subsequently makes it difficult to justify speculative development with those improvements. 

Another reason for the cold storage supply shortage is the size of the target market. Houston has approximately 4 proposed projects under construction that can accommodate freezer or cooler space. All four are over 200,000 SF and the owners will only consider tenant sizes of at least 40,000 SF or so. There are fewer prospects over 40,000 SF that there are from 5,000 SF to 20,000 SF. Also, the larger tenant sizes generally correlate to better credit and longer term leases - hence, more desirable to the owners.

Lastly, given the high cost of construction, existing buildings with freezer and/or cooler space do not last long when vacant, or about the be vacant. In fact, if a business is considering selling a building of this type, word generally gets out in the food distribution industry that the building is coming to market. Someone in the business who is paying attention generally hears about the coming availability and swoops in to buy it.

3PL Cold Storage is an Option

A lack of cold storage lease or purchase alternatives is a boost to the 3PL (3rd party logistics) cold storage companies like Americold, Preferred Freezer Services and Houston Cold Storage. Unfortunately, the cost to store product with 3PL providers can be exorbitant with onerous in-and-out fees. Also, access to one’s goods can often require 24 to 48 hours notice.

As you likely already know, there are many factors to consider when leasing or purchasing warehouse property in general. Adding cold storage capacity to the mix adds a good deal of complexity to that. Our Houston Affiliate is building a good deal of experience in the area, and we hope if you have Houston Cold Storage needs, you give us the opportunity to serve you. Click here to get started, call us at the number listed in the upper right, or use our chat box in the lower right.

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