COUNTDOWN TO NAIOP I.CON EAST
2024/06/05 08:00:00
Enter to win PXG Golf Clubs at NAIOP I.CON East!
We’re looking forward to meeting you in Jersey City! Find the Alston Construction flag located in front of the Ballroom on Wednesday, June 5th and Thursday, June 6th, 2024, for your opportunity to win a set of PXG Irons. Simply drop off your business card or fill out an entry form for a chance to take home these premium golf clubs. Winners will be contacted directly, so don’t miss out on your chance to meet us at the best industrial real estate event of the year!
Evolution of Cold Storage
Q & A with Alston Construction’s Industry Experts
Q: What factors contribute to the recent demand for cold storage facilities?
A: Several factors are contributing to the high demand:
1. Aging Buildings: The average age of cold storage facilities in the U.S. is over 40 years old, leading to a supply-demand imbalance, low vacancy rates, and the need for replacement due to inefficiency.
2. Regulations: Stringent regulations on food safety, refrigerants, and environmental standards are forcing older buildings into ineffectiveness, requiring the construction of new, compliant facilities.
3. Technology: Newer buildings can leverage technological advancements to increase clear height, enhance energy efficiency, and improve overall operations, making them more attractive for businesses.
4. Supply Chain Shifts: Population is shifting to the East with new rail routes prepared to drive a Mexico to Canada supply chain.
Q: Why are developers increasingly interested in cold storage buildings?
A: There are several reasons driving this trend:
1. Increased Demand: Speculative cold storage is becoming a significant part of the market. The increased demand for cold storage facilities driving speculative development in order to expedite speed to market.
2. Low Vacancy Rates: Low vacancy rates and the availability of capital are making these investments attractive for new developers and public refrigerated warehouse operators.
3. Available Capital: Paired with the availability of capital; developers are still trying to figure out how to be the most flexible for their tenants while still keeping upfront investment and TI costs down.
4. Market Growth: Factors such as the growth of e-commerce grocery sales, estimated at $25 billion per year, and the shift in supply chains to eastern ports are further fueling demand for new facilities.
Q: What challenges does the industry face amid this increased demand?
1. Balance: The challenge lies in maintaining the appropriate balance to avoid overbuilding speculative buildings. Based on the projected need, we’re several years from creating a surplus.
2. Qualified Teams: It’s crucial for developers to hire qualified design professionals and general contractors with experience in cold storage facilities to ensure the success of these projects. Developers are seeking Design-Build General Contractors that will help mitigate risks and navigate unfamiliar territory in this rapidly evolving market.
Q: How can Alston Construction's cold storage team help meet clients' needs in this challenging market?
A: Alston Construction’s new cold storage team is well-equipped to address these challenges. With extensive experience in cold storage construction, they serve as a valuable resource to clients. Their expertise allows them to provide innovative solutions, navigate complex regulations, and ensure efficient project delivery. By partnering with Alston’s local business units and cold storage team, clients can benefit from tailored strategies that meet their specific needs and help them stay ahead in the competitive cold storage market.
