The U.S. cold storage construction market is in the middle of a self-correcting cycle — and understanding it matters for anyone tracking industrial construction, logistics real estate, or supply chain infrastructure. After an unprecedented wave of speculative building between 2021 and 2025, the sector is now working through an estimated 10 percent oversupply even as the long-term demand fundamentals remain strong. What happens next will shape a significant slice of the national industrial construction pipeline.

How the Boom Happened

Cold storage construction entered speculative territory for the first time in roughly 30 years during the pandemic era. Supply chain disruptions in 2020 and 2021 exposed how dangerously thin temperature-controlled warehouse capacity had become, and capital flooded in. Low interest rates, surging e-grocery demand, and pharmaceutical cold chain growth — amplified by COVID-19 vaccine distribution requirements — made speculative cold storage construction look attractive.

According to Colliers' national industrial research team, 19 speculative cold storage projects totaling 5.2 million square feet were built in 2022 and 2023 combined. Only five projects were completed in 2024, adding 1.1 million square feet, and another 2.2 million square feet of speculative space was delivered in 2025. This remains a small fraction of the broader industrial pipeline — at the end of 2024, 295 million square feet of industrial construction was underway nationally — but in the specialized cold storage market, the new supply was significant.

The Correction: What the Numbers Show

By 2026, the cold storage market had built approximately 14.5% more capacity than it did in 2021, while demand grew only 5% over the same period. The result is a market that is roughly 10% oversupplied, according to analysis from CX TMS drawing on Lineage's Q4 2025 earnings data.

Lineage Logistics — the world's largest temperature-controlled warehouse operator, with over 500 facilities and 3.1 billion cubic feet of capacity across North America, Europe, and Asia-Pacific — reported physical occupancy of 79.3 percent in Q4 2025, down 50 basis points year-over-year. Same-warehouse pallet throughput declined 3 percent. Lineage idled 10 sites in 2025, sold a Southern California facility for $60 million as part of portfolio rationalization, and characterized 2026 as a "transition year" for the sector.

Americold Realty Trust, the second-largest cold storage REIT with approximately 237 temperature-controlled warehouses and 1.5 billion refrigerated cubic feet of capacity, faces similar conditions. Contractual occupancy fell 470 basis points to 74.7 percent, and CEO projections call for flat net sales in 2026 with pricing up but volume down by low-to-mid single digits for most customers.

The oversupply is not evenly distributed. Lineage reported that roughly 60 percent of U.S. markets do not have excess supply — the overhangs are concentrated in specific logistics corridors including Dallas, Houston, and New Jersey, where speculative construction was most active during the boom years.

What Is Still Being Built — and Why

Speculative construction has largely stopped, but build-to-suit activity continues. Refrigerated & Frozen Food's 2026 outlook identifies several projects underway or recently completed:

• Lineage broke ground on a fully automated Dallas cold storage facility expected to open in late 2027, part of its $1 billion development pipeline
• In Indiana, a 322,600-square-foot build-to-suit facility for Arcada Cold featuring 50-foot clear height and LEED certification is expected to open in Q1 2026
• ARCO is upgrading and expanding warehouses in the Pacific Northwest for Performance Food Group and in California
• Interstate Warehousing's Arizona facility is advancing through its second phase
• Lineage is expanding its Louisville, Kentucky warehouse

Lineage expects total cold storage capacity in its network to grow by just 1.5 percent in 2026 — a dramatic deceleration from the 14.5 percent cumulative growth of the prior four years. Developers and lenders have pulled back from speculative projects as the oversupply reality has set in. This cooldown is considered necessary for the market's recovery.

Two Growth Frontiers Attracting Capital

Pharmaceutical cold chain is the fastest-growing demand segment. The pharmaceutical cold chain packaging market is projected to grow from approximately $27.1 billion in 2025 to $31.4 billion in 2026 — a 15.7 percent increase — driven by expanding vaccine distribution, commercialization of cell and gene therapies, and the growing share of biologic drugs requiring precise temperature management. Ultra-cold storage infrastructure, which surged during COVID vaccine rollout, is becoming a permanent fixture of pharmaceutical logistics networks. This demand is largely met through build-to-suit arrangements with pharmaceutical manufacturers and specialty 3PL operators.

Port-adjacent and intermodal cold storage is the other emerging frontier. According to Colliers research cited in the American Journal of Transportation, demand is rising for modern cold storage facilities near major cargo and port hubs and intermodal terminals. The rationale is straightforward — refrigerated goods arriving by container ship need immediate temperature-controlled handling, and proximity to ports reduces transit time for perishables. In April 2025, Americold began constructing a cold storage facility at Port Saint John, partnering with CPKC and DP World, and the Cold Summit II intermodal project in Dallas represents the model of integrated port-hub cold storage.

The Long-Term Outlook

Despite the current correction, the structural case for cold storage construction remains intact. The U.S. cold storage market was valued at approximately $48 billion in 2025 and is projected to reach $135 billion by 2033, growing at a compound annual rate of 13.6 percent, according to Grand View Research. The average cold storage building in top U.S. markets is 31 to 40 years old, meaning a substantial portion of existing inventory will need replacement or major modernization over the next decade regardless of new capacity additions.

Construction cost dynamics make the case for patience before new speculative builds. Cold storage warehouse construction runs $250 to $350 per square foot in the U.S. — at least twice the cost of conventional dry warehousing — and average energy consumption of 24.9 kWh per square foot annually, four times that of a standard warehouse. These economics require long-term lease commitments and anchor tenants to underwrite financing, which is exactly why build-to-suit is currently dominating the construction pipeline while the speculative market recovers.

Sources

CX TMS — Cold Storage Market Oversupply Analysis (March 2026) | Colliers — The Future of Speculative Cold Storage Development (March 2025) | Refrigerated & Frozen Food — 2026 Cold Storage Outlook | American Journal of Transportation — Cold Storage Construction Slowdown (June 2025) | Grand View Research — U.S. Cold Storage Market Report 2026–2033