Cold Storage As A Business Model

Cold storage is the warehousing or transportation of any temperature-controlled product that prevents that substance from decaying or not adhering to laws and regulations. These include products like perishable food, beverages, pharmaceuticals, and consumer products that can’t survive in normal storage conditions.

The market for cold storage includes both public (3PL) and private warehouses. The public segment holds the largest share in the U.S market. A public warehouse offers various services such as storage, handling, and transportation for a fee and is operated as an independent business. Given the high costs associated with construction and maintenance of cold storage facilities,  development of private warehousing is limited to large companies.

One main factor dominating the cold chain market is the power of consumers. Consumer tastes have changed and continue to evolve towards a preference for healthier fresh food products in a wide variety of options. Moving away from highly processed foods with a long shelf life to temperature sensitive perishable food products requires an adjustment in the food supply chain. From U.S. ports to distribution centers, 3PLs and privately-owned refrigerated warehouses, designing a cold chain that meets consumer needs can be expensive.

The barrier to entry is very high for industrial cold storage infrastructure from a cost and availability standpoint. There are a number of factors that influence these costs, including the cooling equipment, additional insulation, and the facilities location. While several variables will affect the overall cost of cold storage, the cost per square foot is higher than standard warehousing. According to management firm JLL, “cold storage construction cost averages $150-170 per square foot, compared to $50-65 per square foot for dry warehousing space”.

There is virtually no speculative market creating new supply in cold storage like there is in the dry warehouse market. This scarcity of new construction and low turnover volume of existing  buildings causes wild fluctuations in pricing from $2.50 to $16.00 SF based on the quality, market demand, and location of facilities.

The Hollingsworth Companies currently has a 143,790 SF facility available for lease in Prince George, Virginia. The warehouse includes 34,800 SF of cold storage separated into freezer, cooler, and cool dock with 10 loading docks. The facility also includes 101,710 SF of dry space with an additional 6 loading docks.

For more information regarding this facility, please contact Tom Mann at or 865-457-3601.

“Joe Hollingsworth participated as one of our first equity investors. In addition, Joe Hollingsworth has served as a board member and leading advisor for strategic planning and direction.” — Scott Kelley, President and CEO, Service Center Metals