How does cold storage real estate work in Texas?

Types of cold storage

• Cooler (refrigerated): roughly 33°F to 55°F for produce, dairy, beverages and pharmaceuticals
• Freezer: around 0°F to -20°F for frozen food, meat and seafood
• Blast freezer: very low temperatures to freeze product quickly before storage
• Multi-temp: one building with cooler, freezer and ambient zones, common for grocery and foodservice distribution
• Last-mile or urban cold: smaller facilities, often 20,000 to 80,000 SF, close to population for grocery delivery, meal kits and restaurant supply
• Production and port-centric: facilities tied to processing plants or to reefer container imports at ports

Build cost premium vs dry warehouse

A 2026 cost guide from COR Advisors, compiling several industry cost reports, puts the ranges below. Treat them as order-of-magnitude benchmarks; actual cost depends on size, clear height, temperature, site and contractor.

The same source notes refrigeration equipment alone can be 25% to 35% of total project cost, and that annual energy bills for large facilities can run well into six figures.

What makes cold storage different to build and run

Power

Refrigeration compressors, condensers and evaporators need far more electrical capacity than a dry building, typically heavy 3-phase service with room to expand, plus backup generation for product protection. Confirm utility capacity and the cost and timeline of upgrades before you commit to a site.

Insulated panels and slabs

The building envelope is an insulated metal panel box. Cooler panels commonly run 2 to 4 inches thick and freezer panels 5 to 6 inches, per the COR Advisors guide. Freezer floors need a heated sub-slab or under-floor ventilation and a vapor barrier so ground moisture does not freeze and heave the slab. Getting this wrong is very expensive to fix.

Other specs

• Clear heights often 36 to 40 feet or more in new bulk facilities to maximize cubic storage
• Insulated dock doors, dock seals and vestibules to limit temperature loss
• Refrigeration system choice: ammonia, CO2 or synthetic refrigerants, each with different safety, regulatory and maintenance profiles
• Fire protection designed for low temperatures and rack storage

Tenant types

• Third-party logistics (3PL) cold operators: large public refrigerated warehouse companies and regional 3PLs
• Food producers and processors: meat, poultry, dairy, frozen foods and produce
• Grocers and foodservice distributors: multi-temp distribution centers
• E-grocery, meal kit and restaurant supply: smaller last-mile cold space
• Pharmaceutical and life sciences: specialized temperature-controlled storage

Leases tend to be long (10 to 20 years for build-to-suit) because tenants often install their own racking and refrigeration. Tenant credit and the allocation of refrigeration maintenance and replacement in the lease are central to value.

Texas demand drivers

A March 2026 Newmark report, covered by Connect CRE, found Texas cold storage inventory has grown about 35% since 2015, far outpacing the national average, with cold storage employment up about 70%. It also noted that Port Houston refrigerated container traffic rose 13% in 2025 and that Texas leads the nation in farms and ranches. The drivers:

• Population growth in the Texas Triangle, which increases grocery and foodservice volume
• Food distribution hubs in Dallas-Fort Worth, Houston and San Antonio serving the region
• Ports and the border: reefer imports through Houston and produce crossing at Laredo and other ports of entry
• The I-35 corridor: new speculative product is following demand, such as a roughly 325,000 SF speculative cold facility planned in Schertz near I-35, reported by Hoodline with delivery expected in 2027

For broader context, see our Texas Triangle industrial guide and Houston industrial market guide.

Market conditions in 2026

Demand is long-term, but the market is digesting a construction wave. Bisnow, reporting on Newmark's first-half 2026 data, put national cold storage vacancy at 7.7% with the first negative net absorption since 2007. The pain is concentrated in older buildings: facilities built before 2006 held most of the vacant space, while buildings from 2006 to 2019 ran about 3.4% vacancy. Newmark's 2H 2025 overview also reported the construction pipeline had fallen to its lowest level since 2020, which supports a recovery once existing space is absorbed. The takeaway: functional, modern space is leasing; obsolete space is not.

Can you convert an existing building to cold storage?

Sometimes. Conversion of a dry warehouse can be cheaper and faster than ground-up, but feasibility depends on a few hard constraints:

1. Slab: an existing slab usually cannot support freezer use without a new insulated, heated floor system on top, which raises the floor and eats clear height
2. Clear height: after the new floor and insulated ceiling, the remaining height must still work for racking
3. Roof structure: it must carry insulated ceiling panels, evaporators and piping
4. Power: utility capacity is often the deal-breaker
5. Site: room for condensers, generators, truck courts and reefer trailer parking

Cooler conversions are far more feasible than freezer conversions. Get a refrigeration engineer and structural engineer involved during due diligence.

Underwriting cold storage: worked example and risks

Illustrative assumptions only. A 120,000 SF cooler/freezer building costing $250/SF all-in totals $30,000,000. At a 7.00% target yield on cost, it needs $2,100,000 of NOI, or $17.50/SF NNN rent. A dry building of the same size at $110/SF ($13,200,000) needs only $924,000 of NOI, or $7.70/SF, to hit the same 7.00%. Cold storage rent must be more than double dry rent just to earn the same return, so verify that the market truly supports it. For comparison, our anchor 50,000 SF South Austin flex building trades at a 6.50% cap ($487,500 NOI on $7,500,000), a lower-risk benchmark.

• Single-tenant concentration: a specialized building with one tenant has a narrow re-leasing pool
• Refrigeration system life: who pays to maintain and replace it is a major lease term
• Energy cost and reliability: outages risk product loss; confirm backup power and insurance
• Functional obsolescence: older, low-clear facilities are where 2026 vacancy sits
• Exit cap rate: buyers price obsolescence and re-tenanting cost into the cap rate; see our cap rate guide

Frequently asked questions

How much does it cost to build cold storage per square foot?

2026 industry guides put coolers around $150 to $250 per SF and freezers around $200 to $350 per SF, versus roughly $60 to $150 for a dry warehouse. Site, size and temperature drive the actual number.

Is cold storage a good investment in Texas?

Texas has strong long-term demand from population growth, food distribution and port imports, but national vacancy rose in 2025 and 2026. Modern, well-located facilities with credit tenants have performed best; older buildings carry more risk.

Can a regular warehouse be converted to cold storage?

Often a cooler conversion is feasible; a freezer conversion is harder because it usually needs a new insulated, heated floor, which reduces clear height. Power capacity and roof structure must also be checked by engineers.

Who leases cold storage space?

Third-party cold logistics operators, food producers and processors, grocers, foodservice distributors, e-grocery companies and pharmaceutical users.

This guide is general information, not legal, tax, or investment advice. Cost and market figures are from the cited third-party sources as of their publication dates and vary by project; the worked example uses illustrative assumptions. Roesinger LLC is a licensed Texas real estate broker.