How Rising Costs Impact the Development of New Industrial Cold Storage Facilities – The South Florida Story (Part II)

This post is part of a two-part series. Please visit Part I for more insight.

Rising costs have become one of the defining challenges for new industrial cold storage facility development in Miami and South Florida, fundamentally shaping both the pace and structure of projects in 2025.

Several important factors demonstrate how these escalating expenses are impacting the market:

1. Construction Costs 2–3x Higher Than Standard Warehouses

The development of cold storage facilities is substantially more expensive than traditional industrial spaces. In 2025, construction costs per square foot range from $130 to $350 in Miami and other major U.S. cities, making cold facilities two to three times as costly as standard distribution centers, which typically cost $78–$85/SF. Key cost drivers include:

·       Specialized high-efficiency refrigeration systems (CO2/ammonia).

·       Advanced insulation and vapor barriers.

·       High clear heights (often exceeding 50 feet).

·       Regulatory compliance with strict food safety, environmental, and energy standards.

Energy alone can account for 25% or more of ongoing operating expenses, and power bills in large-scale facilities can reach tens of thousands of dollars per month.

2. Land and Labor Costs Are Elevated in South Florida

South Florida’s desirable location near major ports, airports, and population centers makes land costly. Urban infill sites, in particular, come at a premium and often carry expensive building code requirements. Additionally, finding contractors with the specialized expertise required for securing and building cold storage is not easy—further adding upward pressure on total project budgets.

3. Project Financing and Delivery Methods Are Evolving

Due to high upfront capital needs, developers increasingly rely on:

·       Pre-leasing: Lenders are reluctant to finance speculative cold storage projects without committed anchor tenants.

·       Build-to-Suit Agreements: Large operators lease the full building and may sublet pallet space to smaller users, providing greater revenue predictability.

·       Public-Private Partnerships: Major projects like Miami International Airport’s new $141 million perishables facility are now leveraging combined private and public investment to defray costs and bring high-tech infrastructure online.

These financing strategies limit speculative construction and slow the pace of new deliveries.

4. Slower Project Timelines and Delays

Rising input costs and regulatory hurdles mean that cold storage projects often take six months longer to deliver than comparable dry warehouses. Uncertainty over tariffs, labor shortages, and supply chain delays for materials exacerbate these delays, sometimes leading to cancellations or postponements.

5. Higher Rents and User Costs

With construction and financing more expensive, the costs are inevitably passed on to users. Since 2019, average asking rents for cold storage have doubled (+96%), with Miami among the leaders in large rent and occupancy increases for upgraded facilities. For small food manufacturers and local companies, this can mean storing product in multiple locations or seeking alternative storage solutions, sometimes getting priced out by larger competitors who can afford premium, short-term leases.

6. Modernization and Efficiency as Cost Mitigation

Developers (and users) are increasingly focused on:

·       Maximizing pallet positions via greater building height.

·       Installing automation and energy-saving technologies to reduce long-term operating expenses, even if these add cost upfront.

·       Building flexible, multi-temperature zones to appeal to a broader range of tenants and mitigate vacancy risk.

Rising construction, land, labor, and energy costs act as a significant barrier to entry in Miami and South Florida, stalling speculative builds and concentrating development among highly capitalized players. This in turn keeps vacancy low and rents high, even as demand continues to rise. The result is a market where only the most strategic, well-financed, and technologically savvy projects move forward—ensuring that new cold storage capacity in South Florida remains both valuable and scarce.

The Industrial Team at ComReal has extensive experience in Rail Served warehouses in Miami and all South Florida. The team has successfully helped users and investors in the leasing and sales of these facilities. Contact the team for current availability of rail served warehouses and the status of this market.