Unlocking the Keys to Cold Storage Development Success

SEATTLE—While the demand for cold-storage facilities has ramped up during COVID, these types of assets can be costly to build and operate. Understanding and addressing the special considerations involved in building cold-storage facilities are the keys to success, says Graycor Construction Company.

Scott Skala, Graycor vice president, and Jyot Parmar, Graycor construction manager, shared some insights into recent demand, associated costs, project delivery methods, trends and strategies for cold storage development.

GlobeSt.com: To what can you attribute the rising demand in cold storage facilities before, during and post pandemic?

Skala: E-commerce, even for perishable items, is on the rise. Online grocery shopping was clearly ticking upward even before the pandemic. Most predictions made in 2018 and 2019 estimated that online orders would constitute around 10% of grocery shopping by 2022. With the unforeseen events of 2020, that trend has accelerated due to the increased demand of online groceries sales.

While food is still currently being produced, breakdowns in the food logistics and distribution system have left producers with no other option than to discard perfectly good food. The shortage of available cold storage space on the receiving end is not enough to accommodate a surge of food products that are churned out.

Another surprise trend has been a new interest in frozen foods among health-conscious consumers. After their initial popularity in the mid-20th Century, sales of frozen food declined. But with research showing that flash-frozen foods retain more nutrients, consumers are getting the message. In the case of frozen food purchases as with e-commerce, the pandemic accelerated a trend. Frozen foods’ increasing popularity had already been noted in the years leading up to the COVID-19 outbreak and when the pandemic hit, “frozen foods quickly emerged as a growth leader, with nearly double the typical sales during the top panic purchasing week,” according to the American Frozen Food Institute. While that spike eventually lowered, the Institute found demand remained 30 to 35% higher throughout spring 2020 than it had been the previous year.

GlobeSt.com: Many of the coronavirus vaccines such as the Pfizer COVID-19 vaccine must be stored at sub-zero temperatures. How is this impacting cold storage? 

Parmar: Most perishable food products do not require storage in ultra-low temperature facilities. The types of cold chain facility that would store the COVID-19 vaccine are generally medical and healthcare ultra-cold storage facilities. In some instances, existing cold storage facilities can build in smaller free-standing freezers, i.e. a box-in-a-box, to further lower the temperature in a space that is already below zero to make it suitable for storing vaccines. With an increase in demand on these super-cold storage facilities, we could very well see impact to the overall cold chain industry.

GlobeSt.com: What are the key drivers responsible for the increased construction cost of cold storage facilities versus dry warehouse?

Skala: A recent report from CBRE states that costs for development of a cold storage warehouse can be two to three times higher than for a dry warehouse. Cold storage facilities can also take up to five months longer to build. How much time is dependent on the type of structure, i.e., rack-supported buildings can be built faster in many instances than a conventional structural steel building of comparable size. A cold facility also has various arrangements of refrigeration equipment that require setup in a larger mechanical room than a dry facility. The mechanical room must also be large enough to house the increased amount of electrical switch gear it takes to power the refrigeration equipment.

Refrigeration components such as the equipment itself as well as control systems, wall insulation, roof requirements, floor insulation and subgrade heating are just some of the factors that will increase the overall construction cost of cold storage facilities.

GlobeSt.com: What are considerations when selecting site for building cold storage?

Parmar: There are several considerations that need to be taken in account during the site selection process for cold storage facilities. These factors include logistics, real estate, workforce, business environment and economic incentives. Again, the needs of the owner and use of the facility play a significant part. Considerations of where owners are looking to build, urban, suburban or rural, may place constraints on the size of the facility, where urban and suburban forces a smaller footprint with a vertical build.

When building new cold storage buildings, larger sites may be needed to accommodate a mechanical room and additional transformers stored outside for the added power or a site big enough to construct support buildings for the facility. All other factors that would apply to the selection for a dry facility are the same.

GlobeSt.com: What are preferred project delivery methods for cold storage construction?

Skala: A design-build or design-assist project delivery method is preferred on cold storage construction projects. This upfront planning and collaborative approach with the owner and designer can greatly increase the success of constructing such intricate facilities as cold storage.

GlobeSt.com: What are some of the modern features in cold storage facilities we’re seeing today and what are some trends we’ll see in the next two to three years?

Parmar: It’s all about the technological innovation and automation that are being used to optimize efficiency and food safety in the operations of cold storage facilities. Increasingly, the use of automated storage and retrieval systems/AS/RS is upending traditional structural designs for warehouses. Rack-supported buildings are a conceptually different type of building, in which the independent storage rack system of the AS/RS forms the structural system of the entire facility. Walls and roofs are put in place as a skin after rack construction.

Rack-supported buildings offer time savings during construction because material lead times are often shorter and construction tasks occur faster. With no internal columns creating wasted space, rack-supported facilities have lower costs per square foot. They also save time during the facility’s operations phase because automated equipment moves product very efficiently. In addition to these benefits, rack-supported structures are stronger than conventional steel frames.

Graycor recently built a 635,000-square-foot AS/RS cold storage facility equipped with WITRON technology. High bay areas for racking reached 80-feet tall. Tall volume is one thing almost all modern cold storage facilities have in common. AS/RS usually operate in vertical-oriented spaces. This dovetails well with the fact that building up reduces a building’s footprint and is a logical way to use tight urban lots and reduce real estate costs. When looking to repurpose an existing structure, building height and/or floor-to-floor heights are clearly major considerations.

GlobeSt.com: Given that cold storage facilities are more costly than other types of warehouse facilities, what are some strategies that are implemented in the construction and how have they benefited owners and developers?

Skala: Cold storage is not a simple one-size-fits all approach. Most cold storage facilities are designed around the type of product being stored and its shelf life. The strategies implemented in the planning, design and construction of cold storage facilities must meet the needs of both the owner and the project. Virtual design and construction with building information modeling continue to provide invaluable information by revealing clashes and conflicts with MEP/FP, material handling equipment, racking, etc., before they occur in the field, thus preventing significant rework that adversely impacts the budget and schedule.