The U.S. cold storage market is going through a period of adjustment. And older facilities? They are struggling to keep occupancy levels high, while newer cold storage buildings are seeing steady demand.
That is one of the big takeaways from Newmark’s first-half 2026 U.S. Cold Storage Market Overview, which found that this key sector recorded negative net absorption during the first half of the year, the first time that has happened during a first half since 2007.
About 41 million cubic feet of new cold storage space was delivered during the period, while net absorption fell by 56 million cubic feet. Thanks to this imbalance, vacancy climbed to an average of 7.7% in the U.S. cold storage market during the first six months of the year, according to Newmark.
But that negative absorption? It doesn’t provide an accurate picture of the strength of the U.S. cold storage industry.
Newmark found that tenants are increasingly seeking space in modern cold storage facilities. According to the company’s report, cold storage properties delivered since 2020 have captured nearly all recent demand, while older facilities continue to lose occupancy. Legacy properties have posted negative absorption since 2022, a trend that points to growing functional-obsolescence risks for aging facilities.
For owners of older cold storage properties, the current environment is a challenging one. Just look at the numbers: As of the second quarter, legacy facilities carried an 8.2% vacancy rate, compared with just 3.4% for properties delivered from 2006 through 2019. Newer facilities delivered since 2020 had the highest vacancy rate in the first half of the year, at 10.9%. But much of that reflects the lease-up of recently completed space rather than the same kind of structural decline facing older buildings.
Legacy facilities accounted for 68% of all vacant cubic feet, compared with 24% for post-2020 properties and 8% for the 2006-2019 cohort, Newmark reported.
Population growth continues to fuel food distribution patterns across the country. Newmark is predicting that the Dallas-Fort Worth market could require another 2.8 million square feet of cold storage space by 2035 based on projected population growth. Houston could need 1.3 million square feet, while Tampa-St. Petersburg-Clearwater could require 1.1 million square feet and Atlanta about 1 million square feet.
The pharmaceutical side of the business is another major source of demand. Newmark noted that products requiring pharmaceutical cold storage have grown from 26% of pharmaceutical sales in 2017 to roughly 35%. Logistics companies including DHL, C.H. Robinson, FedEx and UPS are responding by investing billions of dollars in specialized cold-chain capacity.
Food distribution is changing, too. U.S. e-grocery sales rose 21.5% on a year-over-year basis in July, while in-store sales declined 2.6%. Because delivery and ship-to-home orders are more cold-chain intensive than pickup orders, retailers and logistics providers are expanding temperature-controlled capacity.
But building that capacity isn’t cheap. Newmark estimates that cold storage construction costs between $130 and $350 a square foot, compared with roughly $85 to $150 a square foot for conventional dry warehouses. Those costs, combined with higher capital costs and softer near-term demand, mean that new projects are likely to be dominated by build-to-suit, owner-user and pre-leased developments.
That dynamic is already reshaping the development pipeline. The average cold storage lease signed during the past five and a half years has been roughly 125,000 square feet, while properties under construction average nearly 300,000 square feet. The mismatch is contributing to longer lease-up periods.
For investors and occupiers, then, the message from Newmark’s first-half report is becoming clearer: Cold storage remains a durable real estate sector, but not all cold storage is created equal.
Modern facilities with automation, higher clear heights and sophisticated temperature-control systems are attracting demand from tenants. Older properties face a bigger challenge: Can their owners upgrade, reposition or replace them before they become obsolete?
