Cold storage's vacancy record splits the sector by vintage

Cold storage is no longer a growth story with a vacancy footnote: net absorption fell 56 million cubic feet in the first half of 2026, the first negative reading since 2007, while 41 million cubic feet of new supply came online and pushed vacancy to 7.7%, a record above the 20-year high set at the end of 2025. The numbers come from a Newmark report covered by Bisnow, and they put a favored niche in the awkward position of adding supply into a demand pullback.

Newmark's analysts — Amy Binstein, Lisa DeNight, Jamil Harkness and David Bitner — trace the softening to the consumer: food prices are up more than 30% from 2019, SNAP benefits have been cut, gas prices are high, and grocery unit sales fell 1.8% year over year. That, they write, leaves "relatively static real spending" and "leaner, more precisely managed inventories across the supply chain," the opposite of the pandemic-era stockpiling that made cold storage a must-own trade.

The market's pain is unevenly distributed by vintage: buildings built before 2006 account for 68% of all vacant cold storage space and carry an 8.2% vacancy rate, while buildings from 2006 through 2019 sit at 3.4%. Nearly all of the space backfilled in the first half of the year was built in 2020 or later, and nearly all of the negative absorption was in buildings from 2006 or earlier — a decisive preference for newer boxes.

For lenders, that vintage split is the underwriting problem. A cold storage building's value sits in insulated envelopes, refrigeration plants and floor loading — systems that age less gracefully than drywall — and an 8.2% vacancy rate in the pre-2006 stock suggests a meaningful share of that collateral is being passed over for newer space. This publication has argued that the property recovery runs on supply discipline; cold storage is the counter-example, where a favored niche built first and found demand second.

The construction pipeline is widening the disconnect. The average cold storage lease signed in the last five years was 125,000 square feet; the average project under construction now is 300,000 square feet — developers are delivering boxes more than twice the size tenants have been taking, which the report's authors expect will stretch lease-up periods. In two of the top five cold storage markets by square footage — New York-Philadelphia and Los Angeles-Inland Empire — almost no new supply is under construction, leaving users to choose among buildings averaging 29 to 52 years old.

The cost math explains why developers have not simply shrunk the building. Cold storage construction runs $130 to $350 per square foot, against $80 to $150 for a traditional warehouse, and at those figures a 125,000-square-foot cold shell carries an outsized share of refrigeration plant cost while a 300,000-square-foot box spreads that plant across more leasable area. The sector is building for its own economies of scale at the exact moment tenants are signing for a different, smaller product.

The user bid is the market's other adjustment: cold storage users now account for nearly 36% of buyers, up from 32% in 2025 and just 10% in 2024, per Newmark, with Walmart's $223 million purchase of a 2010-built Riverside, California, warehouse as the marquee example. That shift converts future rental demand into owned real estate, leaving the next wave of construction to compete for a thinner pool of tenants.

For allocators and lenders, the read is to separate the product classes rather than abandon the sector. The 2020-and-later buildings are absorbing the demand; the pre-2006 box is the vacancy problem, and a record vacancy is a repricing event rather than a collapse of the cold chain. The trade, as it has developed in office and industrial, is to pay up for the newer asset at a lower going-in yield and finance the older asset only at a discount that clears.

That Riverside trade may set the tone: a 2010 building, bought by a user, at a price that will be comped against everything else built in the last decade. Cold storage has moved from a capacity trade to a quality trade, and the vintage spread will be the yield for the next few years.