Cold Storage & Specialized Industrial Sustain Momentum Amid CRE Headwinds

By Majid Radaei, RadCRE · · Industry Insights

Despite broader CRE turbulence, cold storage and other specialized industrial assets continue to outperform, driven by supply chain shifts and e-commerce. Transaction volume remained robust in 2025, with cap rates holding firm.

Cold Storage and Specialized Industrial: A Resilient Niche in Commercial Real Estate

While traditional commercial real estate sectors grapple with higher interest rates and economic uncertainty, specialized industrial asset classes, particularly cold storage and advanced manufacturing facilities, have demonstrated remarkable resilience and continued investor interest throughout late 2024 and early 2025. These niche segments are benefiting from structural shifts in supply chains, a surge in cold-chain logistics requirements for food and pharmaceuticals, and reshoring trends.

Sustained Demand and Investment Activity

According to recent reports from CBRE and Newmark, investment into cold storage facilities remained strong in 2025, albeit with a slight moderation from the record-breaking peaks of 2021-2022. Transaction volume, as tracked by MSCI Real Assets (formerly RCA), saw approximately $4.8 billion in cold storage deals completed in 2025, reflecting persistent demand from institutional investors and private equity firms. Major players like Lineage Logistics and Americold continue to expand their portfolios, often through both acquisitions and speculative development.

Cap rates for prime cold storage assets have largely held firm, averaging between 4.75% and 5.75% for stabilized, Class A properties in core markets such as Dallas-Fort Worth, Southern California, and Central Florida. This contrasts with the upward pressure on cap rates observed in many other asset classes. Lease rates for cold storage also continued to climb, driven by critically low vacancy rates, which hovered below 3% nationally for refrigerated warehousing space. For instance, a new 300,000 SF cold storage facility in the Inland Empire leased up prior to completion at rates exceeding $1.30/SF NNN, illustrating the competition for modern, efficient space.

Advanced Manufacturing and Data Centers Thrive

Beyond cold storage, other specialized industrial segments are also exhibiting robust performance. The semiconductor industry's expansion, spurred by the CHIPS Act, has fueled demand for advanced manufacturing facilities. Intel's ongoing $20 billion investment in new facilities in Ohio, and TSMC's $40 billion Arizona expansion, represent significant capital infusions into highly specialized industrial real estate. Companies like Prologis and Duke Realty (now part of Prologis) have also reported strong activity in custom-built, tech-enabled manufacturing and distribution centers.

Data centers remain another high-performing niche, driven by the escalating requirements for AI and cloud computing. Major hyperscale operators continue to acquire vast tracts of land and develop new campuses, particularly in power-rich markets. For example, Blackstone's QTS Data Centers announced a $7.5 billion expansion plan across several key markets in early 2025, underscoring the aggressive growth in this sector.

RadCRE Perspective

Majid Radaei, Founder of RAD Commercial Realty, notes: "The resilience of cold storage and other specialized industrial assets isn't just a fleeting trend; it's a fundamental shift. While the broader industrial market might see some cap rate expansion due to higher capital costs, these highly specific niches tend to decouple. Investors are willing to pay for mission-critical infrastructure. For our clients active in this space, we're seeing strong competition for quality assets. The barriers to entry—high construction costs, specialized knowledge, and lengthy permitting—mean less speculative overbuilding than in general warehousing. This scarcity value, combined with inelastic demand from sectors like food, pharma, and technology, will continue to support valuations. We're actively advising clients on structuring non-recourse permanent financing for these assets, often leveraging CMBS or life company debt, where spreads are still competitive for high-quality single-tenant or multi-tenant cold storage at T + 180-250 bps for attractive LTVs, significantly better than the SOFR + 300-600 BPs we're seeing for bridge loans on more challenged property types."

Outlook

Looking ahead, the outlook for specialized industrial assets remains positive. Continued population growth, e-commerce proliferation, pharmaceutical advancements, and government incentives for domestic manufacturing are long-term tailwinds. While some investors may exercise caution given the broader economic landscape, the scarcity of modern, technologically advanced cold storage and manufacturing facilities will likely maintain their premium valuation and rental growth trajectory.

Tags: cold storage investment, specialized industrial real estate, data center acquisitions, advanced manufacturing CRE, CRE capital markets, RadCRE, industrial cap rates, commercial real estate financing

Sources: CBRE Research, Newmark Research, MSCI Real Assets, CoStar, GlobeSt.com, Commercial Observer