Cold storage is the fastest-growing subsector of industrial real estate in Texas, driven by food distribution, pharmaceutical logistics, and e-commerce grocery. It's also the most capital-intensive and specialized warehouse type to finance — here's how we underwrite it.
Refrigerated and frozen warehouse space costs 2-4x more to build than dry industrial space per square foot, once you account for insulated panel construction, refrigeration systems, backup power, and specialized racking. That capital intensity is exactly why cold storage commands rents 40-80% above comparable dry warehouse space in most Texas submarkets — and why lenders underwrite it differently than a standard distribution building.
We finance three categories of cold chain real estate: conversion projects (dry warehouse retrofitted with refrigeration), ground-up cold storage construction, and acquisition of stabilized, tenant-occupied cold facilities. Each carries a different risk profile and different terms.
What Drives Underwriting on Cold Storage
Refrigeration equipment age and condition matters more here than almost any other industrial category — a facility with an aging ammonia refrigeration system nearing end-of-life represents real capital risk that shows up in our underwriting, regardless of how strong the tenant's credit is. We also look closely at backup power (a cold facility without generator redundancy is one extended outage away from a total loss of inventory, which affects both insurance and lease structure), dock configuration for temperature-controlled loading, and whether the tenant's use is single-temperature or multi-temperature (freezer, cooler, and ambient zones in one building command premium rent but also premium construction cost).
Common Cold Storage Deal Types We Fund
Conversion
Dry-to-Cold Retrofit
Converting existing dry industrial to refrigerated space. Lower basis than ground-up, but requires careful underwriting of the building shell's ability to support insulation and refrigeration load.
Ground-Up
Build-to-Suit Cold Facility
New construction for a food distributor, grocery e-commerce fulfillment operator, or 3PL with a signed long-term lease. Highest cost basis, but strongest underwriting when anchored by a credit tenant.
Acquisition
Stabilized Cold Facility Purchase
Buying an existing, leased cold storage asset. We underwrite off in-place NOI, remaining lease term, and refrigeration system remaining useful life.
Texas's cold storage boom is concentrated around DFW, Houston, and San Antonio — driven by their positions as national distribution hubs and the continued growth of grocery e-commerce and meal-kit fulfillment. If you're acquiring, converting, or building refrigerated warehouse space anywhere in the state, send us the deal specifics — refrigeration system details, tenant credit, and lease terms if applicable — and we'll underwrite it directly.