Commercial real estate developer Barber Partners LLC and Bain Capital are partnering on a joint venture focused on cold storage warehousing. The new program, called Chill Storage, is expected to spend $500 million on 15 state-of-the-art cold storage warehouse projects over the next several years.
Chill Storage’s first project is a 302,400-square-foot facility in the Dallas-Fort Worth metro area, according to Tuesday’s announcement. Construction on the building, which is slated as a Class A freezer and cooler facility, will begin early this summer. And Barber and Bain said that more Class A warehouses are on the horizon.
“Our team has successfully developed ground-up construction of commercial investment properties for a very long time, and we are experts at delivering first-class products to meet tenant/consumer demands,” said Patrick J. Barber, chairman of the board at Barber. “There is no question that there is an enormous need for new, modern cold storage facilities — even before COVID the consumption of prepared and frozen meals was rapidly on the rise.”
Bain told The Wall Street Journal that it will help finance the joint venture but declined to share how much each firm would contribute. It also said that Bain would work with Barber on the design of the 15 cold storage sites as well as other aspects of the project.
David DesPrez, a director at Bain, also told the WSJ that the companies are looking to bring in established supermarket chains and logistics operators as their first tenants. Chill Storage will lease the facilities to tenants unlike its new rivals Lineage Logistics and Americold Realty Trust, each of which operates its own warehouses.
“We are excited to partner with the Barber team to deliver next-generation refrigerated and freezer storage space,” said DesPrez in a press release. “With the growing complexity of the food and beverage supply chain, we believe our highly adaptable, modern warehouse design will allow us to meet the full spectrum of food tenant needs and provide critical infrastructure to the U.S. food distribution system.”
Watch: The latest trends for the cold chain
Lineage and Americold have been at the forefront of a cold storage market that’s heating up. The global cold storage construction market is expected to reach $23 billion by 2026. And according to a survey from commercial real estate services firm CBRE Group, nearly 40% of investors have an interest in cold storage in 2022, compared to just 9% in 2019.
A big reason for cold storage’s meteoric growth is the rise of online grocery. In 2019, e-grocery sales made up just 3.4% of all grocery sales in the U.S. But by 2021, that figure had risen to 9.5%, and by 2026, experts forecast online orders making up more than one-fifth of all grocery orders.
Chill Storage wants to be a part of that movement. DesPrez told The Wall Street Journal that the company will begin developing facilities in the Southeastern U.S., eventually moving to the Northeast and the West Coast as it looks to create a nationwide presence.