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Cold storage is charting a complicated path within the broader industrial real estate sector, with new data from Newmark highlighting both headwinds and areas of resilience. The firm’s latest cold storage report points to record levels of new supply colliding with a slowdown in food inventories and softer consumer spending, creating pressure on fundamentals even as users continue to lease space.
Despite that challenging backdrop, Newmark reports that U.S. cold storage absorption reached 3.5 million square feet in 2025. Senior research analyst Jamil Harkness notes that the notable storyline is not sector weakness, but the fact that demand stayed positive throughout a difficult period. At the same time, vacancy has climbed to near a two-decade high, underscoring the impact of heavy deliveries on the market.
Cold storage properties differ materially from standard industrial facilities, given their temperature-controlled environments and role in supporting food, pharmaceutical, and biologics supply chains. Harkness points out that these assets require substantial insulation, robust refrigeration systems, enhanced power reliability, and specialized flooring and sprinkler systems. Because their design emphasizes cubic capacity, throughput, and product integrity rather than just square footage, conventional industrial performance benchmarks often do not capture how this niche behaves.
Performance is increasingly split between modern and legacy buildings. According to Newmark, contemporary cold storage facilities posted a record year of absorption in 2025, while older properties saw record move-outs and consolidation. Harkness attributes this divergence to functional obsolescence, as many older assets lack competitive clear heights, efficient dock configurations, modern refrigeration, sufficient roof loads, and layouts that support faster product movement and labor-saving systems. As a result, newer facilities are recording positive absorption, while vintage product trends negative.
Texas stands out as a key growth market in Newmark’s analysis. Total cold storage space and inventory in the state has expanded by 35% since 2015, well ahead of the national rate, and sector employment has risen by 70% over the same period. Harkness cites multiple demand drivers working together: strong population growth, large-scale food production, increasing refrigerated trade flows, and the presence of major distribution hubs including Dallas-Fort Worth, Houston, and Laredo.
The logistics backdrop is reinforcing that momentum. The Port of Houston logged a 13% year-over-year gain in refrigerated container traffic in 2025, while Laredo plays a central role in cross-border refrigerated trade. Texas also ranks first nationally in the number of farms and ranches, further tying the state’s agricultural base to cold storage expansion. Harkness emphasizes that the state’s growth is being propelled by the combined influence of population, production, ports, and trade, rather than a single isolated factor.
Looking ahead, Newmark expects elevated vacancies and supply that continues to outpace absorption over the next 12 to 18 months, even as the construction pipeline contracts. Structural tailwinds from population growth, food production, e-grocery adoption, pharmaceutical logistics, and efforts to bolster network resiliency are expected to support fundamentals, though benefits will accrue unevenly. Modern facilities are positioned to outperform, while older assets may remain under pressure. Harkness characterizes the coming period as more of a market reset than a long-term downturn for the cold storage segment.
The post Texas Leads U.S. Demand for New Cold Storage Facilities Despite Mixed Market Performance appeared first on CRE Market Beat.
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