The chronic dearth of cold storage leasing options in greater Toronto is expected to persist into 2026, largely because of a lack of developments on the horizon. That confounds Stewart Metcalfe, executive vice president of Colliers’ food and beverage practice group, because demand is higher than it’s ever been — creating what could be an opportunity.
“I’ve spent many years trying to convince the developer community that cold storage is actually, in my opinion, less risky than dry storage because, for every 1,000 dry buildings, there might be one cold building,” Metcalfe told CoStar News. “Food is recession-proof, whereas automotive parts aren’t necessarily recession-proof.”
Canada's shortage of cold storage, as the industry focuses on meeting demand for dry storage, has more firms looking at the opportunity for facilities that can hold perishable goods.
Take Slate Asset Management, for instance. The firm is bullish about the cold storage market’s prospects in greater Toronto and across Canada as the country’s population keeps growing, said Evan Meister, managing director at Slate. He leads its North American real estate investment and is based in Slate's Chicago office.
To that end, Slate recently purchased a majority stake in Cold-Link Logistics, one of North America’s 10 largest privately held cold storage platforms. All of Cold-Link’s inventory is in the United States, with an especially heavy presence in its home state of Florida, and locations in Iowa, Michigan and Mississippi.
Meister expects that Cold-Link will grow further in the states where it already has a presence, particularly because it focuses on what he called a “production advantage.”
“That means following your customers to where they produce,” Meister said. “The facility in Iowa is a great example — some of the largest customers are producing adjacent to, or within close proximity to, that facility. I think you’ll also see opportunities adjacent to ports, which we think will have a similar dynamic to the production advantage facility.”
Moreover, Cold-Link possesses among North America’s most modern inventory, said Meister — another reason the Toronto-based company purchased a majority stake.
“When you look at the stock of cold storage space in North America, the inventory is aging physically, but it’s also the efficiency with how you operate these facilities,” Meister said in an interview. “The Cold-Link platform has something like 70% of [its] pallet capacity and assets built in 2022 or later. We love that they have the modern infrastructure.”
While Slate believes there’s opportunity to expand Cold-Link, Meister said timing is everything.
“We will continue to evaluate opportunities and just wait for the right moment,” he said, “but we certainly think, as it relates to cold storage and population growth, there will be some opportunities both in the GTA [greater Toronto area] and Canada.”
Lack of development in Canada
Unlike in the United States, where building cold storage on spec, or without a tenant in hand, is commonplace, the Canadian sector is gripped by rampant risk aversion, Colliers broker Metcalfe said.
“Americans just have a higher risk threshold, and better finance resources, more banks, and they’re doing more speculative construction — that is, building without a tenant in tow — but on the Canadian side of the border, it’s virtually zero,” Metcalfe said. “The only development on the Canadian side of the border are being built for PRWs [public refrigerator warehouses] like Conestoga and grocers.”
Conestoga Cold Storage is putting up a 96 million-cubic-feet, 150-foot-tall facility in Halton Hills, northwest of Toronto, that will be replete with multiple loading docks. However, it’s among the few new builds in greater Toronto over the last few years.
That’s why public refrigerant warehouses typically run between 85% to 105% occupancy, meaning nonexistent vacancy forces some users to use aisles to store inventory.
“I have a lineup of clients that would love to control their own destiny and not be in a public refrigerator warehouse and just manage their own cold storage,” Metcalfe said. “And when they come up, most of them don't even make it to market. It’s really that quick.”
One reason for the paucity of cold facilities is that dry storage for nonperishable goods and nonfood items has been very popular. Metcalfe surmised upward of 15 million square feet of dry storage is developed each year in Canada, and most of that quickly fills with tenants. That was especially true during the pandemic, he said.
“But on the cold storage side, as we went through COVID, there was no incentive for the developer to do it because they’d just build a dry building and it would lease up. They didn’t need to differentiate themselves,” Metcalfe said. “In the U.S., to differentiate themselves with the plethora of developers down there, they needed to do something different, so they built cold storage.”
As for Cold-Link, its current management team will remain at the helm. Slate’s Meister said its strategy to reinvest equity back into the business couldn’t come at a more opportune time because the frozen food market is on the cusp of substantial growth.
“Between 2025 and 2029, it’s going to grow north of 5% approaching 8% compounded annually because of the reliance on cold storage facilities in the frozen market, but even for perishable stock,” he said, adding that the space has already grown significantly over the last decade. “We think that growth will continue over the life of this investment.”