Online Grocery Shopping Growth Raises the Demand for Cold Storage Units. Opportunity for real estate? 

02.12.22 08:19 PM Comment(s) By Assetsoft 3

The pandemic has left some permanent marks on the world, including in the real estate industry. Though business suffered a lot, and many real estate businesses struggled to stay afloat, there were some silver linings too. The demand for warehouses rose due to e-commerce. Sustainable and green housing plans became more important as the pandemic made people more health concerned.  


Another silver lining amidst tough times was the rise in demand for cold storage units all across the USA. How did that happen? The main reason is the rise in online grocery shopping due to the pandemic. Forbes news reports say that the pandemic changed the way people imagine grocery shopping. Even non-tech-savvy people like the older generations also partook in this trend and learned new ways to shop online.  


According to the USA Super Market survey and reports, the online grocery shopping market will soon account for 20% of the total grocery market in America. Though the use of new technology selection to make shopping digital was already on the rise, it got a greater push during the pandemic. People shopped online for clothes and consumer products but still preferred visiting stores to get groceries. The pandemic made the final shift. 


We understand that online grocery shopping increased due to the pandemic, but what does it mean for real estate? There is a business opportunity here that you can tap into amidst the volatile state of this industry. Let us find out more about it in this blog. Read on to find out.  

eCommerce is Growing

Consumer behavior has changed due to the pandemic, and more and more Americans are avoiding shopping in closed places like malls and retail stores. According to Government Census reports and market research, e-commerce sales increased by a whopping $244.2 billion or 43% in 2020 from 2019. This is a huge surge in the first year of the pandemic.  


This led to a lot of retail real estate outlets suffering in business. But many real estate owners saw a major opportunity in this too. The demand for warehouses increased due to the rise in e-commerce shopping, and they invested in warehouses to stay afloat. ChainStorage reports on JLL market research say that the demand for warehouses increased by 22% year-over-year in 2021.  

Online grocery shopping is also growing 

As the demand for warehouses rises, another real estate opportunity lurks around in the market. Many experienced real estate owners and business managers have already taken notice of this trend and invested in it. Online grocery shopping is growing and is increasing the demand for cold storage. 


America does not have enough cold storage to meet up with this demand, so businesses have to improvise. They either have to construct new cold storage units or revamp old properties to fit the demand. What move is the best fit for you is something that your strategy and leadership body need to decide. And it needs to decide fast before the market becomes saturated with competitors.  


Even offline stores like Walmart and local grocery stores have also started their own online deliveries not to let competitors take over. Even Amazon started and aggravated its own online grocery sales. Market data says that online grocery sales increased by nearly 54% in 2020 alone. This also had a direct impact on storage real estate. This is one market that real estate business owners must tap into, and soon.  

Demand for cold storage units is rising 

CRBE data on new construction of cold storage units have found that in 2019, America had only 300,000 square feet of cold storage space. This space is set to increase, with a lot of new constructions. Data says it will be around 3 million square feet very soon. The same report says that back in 2019, online grocery sales were only 3% of the total market. Now it was at 13% in 2021. 


Though the pandemic initiated these changes, these changes are here to stay. The pandemic has permanently altered the way humans behave and purchase. Consumer buying habits and patterns are changing, and shopping outlets and brands are changing accordingly. Along with it, real estate is also changing. If you fail to keep up with these changing trends, you can become irrelevant in business.  

What does the data say? 

CRBE data predicts that the overall cold storage units and total space in the USA will be somewhere around 225 million square feet by this year. The vacancy rates are also very low at just 3.1 %. Research has also found that since there is not enough real estate to accommodate this sudden and rising demand, many investors are confident in starting new projects.  


Beyond the USA, in the global market, big online sellers and giants like Amazon Fresh, FreshDirect, and Misfit Market are out here completely changing the face of the market. The Counter reports say that the global cold storage market is set to reach $18.6 billion by 2027 compared to only $7 billion in 2019. 


CNBC reports have found out that more than 25% of the malls and big retail outlets in the USA are expected to shut down very soon. This has had a massive impact on the real estate industry. Now, retail shops and malls are less in demand, and warehouses and cold storage units are the new thriving business opportunity. Offline and physical shopping is a slowly dying industry, and as a real estate owner, you need to refocus your business strategies in other places to get the ball rolling.  

Parting Thoughts 

The real estate industry is changing, and you must change to keep your business afloat. The competition is steep in the market, with more than a million agents and brokers working across the country. If you do not keep up with these trends, your competitors will, and you will lose business in no time. 


To know which strategies and trends are currently shaking up the market, get in touch with us. Our team has over a decade of experience working in the real estate industry. We are always updated about the latest market trends. With our knowledge, we can help you better plan your strategy and leadership to make the most of these rising trends. 


Talk to us for more! 

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