Cold storage warehouse cost is an important consideration for organizations that store and distribute temperature-sensitive items such as food, medicines, and chemicals. Despite the availability of various rental options, most manufacturers still prefer to construct their own cold storage facilities.
Nevertheless, such endeavors require monetary investments, which frequently escalate in the absence of careful planning. The expenditure of constructing and managing a cold storage warehouse varies greatly, contingent upon numerous factors.
Consequently, it is critical to understand the elements influencing these costs in order to make educated choices. If you are looking for actual figures on this topic, then this article is for you!
After reading, you will have a more all-rounded and realistic perspective on the costs of cold storage facilities. This informative piece also offers insights on how firms can efficiently handle these expenditures.
Cold Storage Warehouse Cost: Average Estimation
The cost per square meter of constructing a cold storage warehouse can be substantially greater than that of a conventional inventory facility. Therefore, a significant amount of financial investment is required.
Typically, cold storage construction incurs expenses ranging from $2,600 to $3,700 per square meter. This figure is obviously more costly than the building expense of a traditional warehouse.
To get an idea of how much a cold storage warehouse will cost in total, multiply the required square footage by the price per square foot. With the average floor area of a cold storage warehouse being roughly 100 square meters, the total construction expenditure can vary from $260,000 to $370,000.
Depending on your unique storage needs, the real cost of the structure may change. Thus, please take these numbers with a pinch of salt, as they are pure estimations.
Common Elements Influencing A Cold Storage Warehouse Cost
Now that you know the general expense of a cold storage warehouse, let’s dive deeper by breaking down the cost and understanding what elements contribute to the final price tag. Firstly, you will explore general variables that impact cold storage warehouse costs.
Warehouse Location
The cost of a warehouse is significantly influenced by its location, and cold storage facilities are no exception. Depending on one’s location, land costs, proximity to transit networks, and utility expenses may all vary.
For instance, building a cold storage warehouse in South Africa might be many times more economical than setting up one in the United States. Hence, it is essential to conduct a thorough location analysis when designing a new cold storage premise.
Warehouse Dimensions
Dimensions are another major factor impacting the total cost of your prospective warehouse. And this is quite straightforward, as more personnel and resources are required to construct and manage larger inventory facilities.
Let’s take a look at the above example again. Suppose there are two cold storage warehouses in the same city, New York, but one premise is double the size of the other. Undoubtedly, the bigger facility will cost more.
Thus, let’s carefully evaluate your firm’s storage demands and reconcile them with your budget for cold storage warehouses before finalizing the ultimate expenses.
Warehouse Layout
In addition to the size, the facility’s design also plays a large part in the final cold storage warehouse cost. In this case, the warehouse design or layout includes the refrigeration system, insulation, and construction materials.
Particularly in the beginning, it would be preferable to achieve optimal performance by selecting a design that strikes a balance between functionality and cost-effectiveness.
Technology
Implementing advanced technologies such as automation can trigger a huge boost in your cold storage warehouse cost initially. However, these applications can ultimately lead to greater efficiency and cost savings in the long run.
So, the question here is whether your inventory demands require these hefty investments or not. Let’s carefully weigh their associated costs in the beginning with the long-term benefits before making a final decision.
Labor Expense
Another general factor you need to consider when estimating the cost of a cold storage warehouse is the labor expense, or your staff’s wages and benefits. This element may fluctuate depending on your warehouse’s location and the level of expertise you require.
Generally speaking, operating and managing cold storage warehouses demand higher skill levels. This means you must recruit higher-quality personnel to ensure the facility runs smoothly.
Also, each region has a different minimum labor wage. For example, the minimum hourly pay for a worker in the UK is obviously higher than that in India. Thus, a comprehensive analysis of labor expenses is necessary in order to ascertain the overall cold storage warehouse cost.
Compliance With Regulations
Compliance with regulations and standards, including those pertaining to food sanitation requirements, fire safety rules, and environmental concerns, is of the utmost importance in the cold storage warehouse sector.
Failure to comply may lead to significant monetary penalties and legal ramifications, both of which can substantially impact the expenses associated with warehousing.
Distinctive Aspects Impacting A Cold Storage Warehouse Cost
The six general elements above apply to all warehouse types, meaning that they all need your thorough consideration whenever you’re planning to build an inventory facility. However, when it comes to the specific cold storage premise, there are some unique aspects you need to take a look at for a more precise cost estimation.
Refrigerants
All cold storage systems employ the simple physics of moving heat energy from one specific area to another, allowing the first location to be colder than before. One common method of heat transfer is the use of a fluid called a refrigerant (or coolant).
Throughout the cold storage process, the refrigerant will be compressed to become a liquid and then vaporized continuously. When it condenses, it transfers heat to the new location. And when it vaporizes, it absorbs heat from the surrounding environment.
The most commonly used refrigerant in commercial cold storage is anhydrous ammonia (NH3). Most businesses favor this coolant due to its low cost and ease of use. Nevertheless, ammonia gas can be dangerous and combustible.
Another refrigerant alternative is Halocarbon, also known as Freon gas. Compared to its counterpart, this odorless, colorless, and noncorrosive vapor is nonflammable and has minimum toxicity. Whenever you encounter terms like R22 or R134A, you are looking at Freon gas.
The final cold storage warehouse cost is heavily dependent on your refrigerant choice. While ammonia is many times more affordable than R22 or R13A, this toxic chemical requires further training for workers as well as large investments in safety gear and pipe materials (as copper pipes are incompatible with ammonia). Consequently, all these additional needs can significantly raise your ultimate cost.
Cold Warehouse Types
When deciding the budget for constructing a cold storage warehouse, it’s essential to determine which type of facility you plan to build. There are numerous types of cold storage warehouses, each of which requires distinct attributes to achieve optimal temperature control and overall functionality. Let’s find out what they are below:
Reefer Containers
Also known as refrigerated containers or RF containers, these cold storage solutions are by far the most economical choice on the market. It typically operates between -30 degrees Celsius and 30 degrees Celsius, allowing the storage of heat-sensitive products (such as fruits and plants) in a controlled, low-temperature environment.
Reefer containers are mobile and highly customizable. You can equip them with various attributes, including sizes, floor coverings, indoor illumination, and remote heat control. Depending on your customization, the final price may differ.
Blast Freezers
Coming up next are the extremely frigid freezers called blast freezers. These machines are capable of chilling goods quickly prior to storing them for an extended period of time. Thanks to their rapid refrigeration power, blast freezers are frequently utilized in the transitional phase spanning from production to inventory.
Also referred to as shock freezers, this freezer type is ideal for storing food and fresh produce, such as fish or vegetables. Here’s why. When food is frozen, the water within it solidifies into ice. Thanks to the rapid chilling process, these ice crystals remain small in size, preventing them from bursting and harming the flavor and quality of food.
In short, blast freezers help preserve the nutrition and taste of the food, ensuring top-notch quality when it reaches consumers. Besides the food industry, this type of freezer is extremely adaptable to other businesses as well.
Ultralow Cold Storage
Abbreviated as ULT, this third variation of cold storage warehouse is dedicated specifically to the cold stocking of sensitive scientific specimens and samples, such as vaccines, blood components, and biomolecules. Unlike conventional freezers, ULT storage can reach as low as -80 degrees Celsius.
Normally, only specialized industries like clinical laboratories need ultralow cold storage, both for its unique application and for its high price. With the power to operate and maintain extremely low temperatures, you can expect these freezers to be expensive.
Depending on the dimensions, features, and capacity, a high-end ULT cold storage can cost up to $4,000 per piece, while other options have a more affordable price range of around $400 to $2,000 per piece.
Insulation
In addition to a suitable coolant, sufficient insulation is also necessary to maintain an acceptable temperature range in cold storage warehouses. You can implement insulation by using a variety of materials, such as fiberglass and polyurethane foams.
Each insulation material has its own unique R-value, a measurement of the insulating sheet’s capacity to withstand heat flow. Typically ranging from 1.5 to 7, the higher the R values, the better the insulation sheet is at insulating your premises. The following table summarizes the insulating power of the most popular materials:
| Insulating Materials | R Values (at 2.54-cm thickness) |
| Fiberglass | 2.20–4.00 |
| Rock Wool | 3.03–3.14 |
| Cellulose | 3.13–3.70 |
| Polystyrene | 4.00–5.00 |
| Polyurethane | 6.25 |
It is easy to guess that materials with higher R values incur more costly initial expenses, but can render stronger insulating capability and be more cost-saving in the long run. For example, while fiberglass is a more affordable material, its insulating power is no match for that of polyurethane.
Plus, certain insulation components, like cellulose, are combustible and thus require additional compliance with fire protection requirements. Since this element is critical in determining the final budget for a cold storage warehouse, let’s dig a bit deeper into some of the most widely used insulating materials:
Fiberglass
This is by far the most popular low-cost and nonflammable insulating material out there, thanks to its decade-long durability and low thermal conductivity, which is equivalent to less expensive energy bills in the long term.
However, fiberglass may endanger individuals if not handled carefully since its structure comprises glass powder and woven silicon. These substances are especially harmful when contacting human eyes, skin, and lungs.
Mineral Wool
This term is usually an umbrella name for various insulation kinds, including glass wool (made from recycled fiberglass), slag wool (made from the byproduct of the steel industry’s blast furnaces), and rock wool (made from rock minerals like basalt).
Although mineral wool does not provide much fire protection, it is actually non-flammable. Therefore, it is advised to combine this material with other combustible insulating components.
Cellulose
Next on this material list is cellulose, a loose insulating material composed of recycled cardboard, papers, and other elements. With R values ranging from 3.13 to 3.70, cellulose is suitable for most insulation applications, especially in cold storage warehouses.
Unlike mineral wool, this nonflammable material offers relatively good fire protection. This is possible thanks to the use of borate, a high-end flame retardant, in the manufacturing process of cellulose insulation.
Nonetheless, this material may exacerbate allergies and asthma problems as cellulose tends to absorb whatever particles it comes across, including pollutants like dust and mildew in the atmosphere.
Polystyrene
Another worth-noting material to insulate cold storage warehouses is polystyrene. It is usually available in two forms: (1) extruded polystyrene (XEPS, or Styrofoam) and (2) expanded polystyrene (EPS), with the former having higher R values than the latter.
In contrast to other insulating materials, both polystyrene types possess flat surfaces, making them safer to work with. The material also permits minimal moisture ingress, thereby inhibiting the growth of mold and guaranteeing a consistent and long-lasting thermal resistance.
Polyurethane
Due to its exceptional quality of thermal insulation, polyurethane foam (or PUR foam) is a relatively costly but practical investment for cold storage warehouses. What sets this insulating material apart is its easy application. You can simply spray PUR foam onto virtually any surface, including intricate interior spaces.
Additionally, this flexible and highly adhesive material is extremely lightweight, thus reducing the weight pressure on your storage structure. It is also safe for warehouse staff, as polyurethane does not produce dust or hazardous gasses during its application.
Cold Storage Racking Systems
Typically made of stainless steel, cold storage racks must satisfy a few conditions to withstand the freezing environment inside cold storage warehouses. They must not only be durable but also guarantee sufficient inventory capacity and promote energy efficiency.
Other than those requirements, you can implement virtually any racking type in cold storage warehouses. Clearly, each racking system has a different price range, which can affect your ultimate cold storage warehouse cost. Let’s assess some popular rack types below:
Conventional Pallet Racks
This racking category includes manual systems like push-back, drive-in, and flow racks, each of which fulfills distinct logistical demands. While drive-in racks optimize storage capacity, push-back racks offer more operational agility and save time when handling pallets with forklifts.
The coolest thing is that you don’t have to choose one specific racking system. It is possible to integrate multiple distinct warehouse storage solutions within a cold storage warehouse, especially in sizable facilities. This approach allows you to take care of various product types while still saving costs.
Mobile Pallet Racks
These inventory systems are mounted on lateral-sliding mobile bases, enabling you to access all items directly in your warehouse. This compact solution works beautifully with cold storage facilities as it facilitates the optimal distribution of cold air across a large number of pallets.
Furthermore, with the parking option, mobile pallet racks improve air circulation during periods of inactivity, thus creating necessary separation among the racks and the evenly spaced aisles.
Pallet Shuttle Solutions
This high-density racking solution utilizes a shuttle to perform all tasks within the system. There are two modes available:
- Semi-automated pallet shuttle: where warehouse staff places an item on the rail and the shuttle delivers it to a designated spot.
- Fully-automated pallet shuttle: where at each level, stacker cranes or transfer vehicles are utilized to transport items to their proper route and placed into their storage channels via a motorized shuttle.
While the latter option works best with high-rise inventory facilities, the semi-automated pallet shuttle is more suitable for cold storage warehouses. Shuttle racking is more expensive than traditional pallet racking.
Automated Storage And Retrieval Systems (AS/RS)
As you might guess, this final racking system is the most expensive to implement. However, it is also the most advanced inventory solution you can have for your cold storage warehouse. If you need to know more about pallet rack costs read this article.
To begin, AS/RS accommodates greater quantities of products and can insert and retrieve pallets, both vertically and horizontally, more quickly with the use of stacker cranes.
Moreover, this advanced system reduces the amount of space that requires cooling, which substantially reduces energy costs. The best part is that it provides warehouse operators with better product control, guarantees real-time inventory, and adheres to the most traceability criteria.
Construction Methods
There are various building methods applicable for constructing a cold storage warehouse. However, conventional construction and prefabricated buildings remain the most prevalent techniques in the industry.
While the traditional technique means setting everything from the ground up, the prefabricated method refers to the process of assembling pre-engineered components on-site. This latter construction method exhibits greater efficiency and cost-effectiveness for sizable cold storage warehouses.
On the other hand, conventional building techniques are more suitable for smaller projects and offer increased design flexibility and advantageous modifications. With larger structures, it may require more time and resources. If you want to learn about cold storage design, read this article.
Backup Generators
Cold storage warehouses consume a significant amount of energy to remain functional. These energy amounts are used not only for temperature control but also for the HVAC system, illumination, and other elements (like security monitors, automatic doors, and response networks) in the facilities.
Hence, having a reliable backup generator is undoubtedly important to ensure the constant operation of the cold storage warehouse. Without it, heat-sensitive products are susceptible to spoilage, decay, or inedibility (in the case of food).
There are numerous backup generator types, based on the fuel utilized, that you can choose for your cold storage facility. But the two most popular fuel types are diesel and natural gas, with the former being more costly. Backup generators also account for a considerable part of your cold storage warehouse costs.
Cold Storage Warehouse Construction: Money-Saving Pointers
In this part, you will dive into some practical money-saving suggestions to estimate the optimal cold storage warehouse cost. By utilizing these tips properly, you can easily plan a well-informed budget.
- Being location-wise: Placing your cold storage facility near major transportation hubs or highways is the solid foundation for more profits. These strategic spots can help minimize delivery expenses and save time, which can save you a big chunk of money in the long run.
- Purchasing high-quality equipment: Whatever equipment you’re planning to purchase for your cold storage warehouse, always opt for high-quality ones. While quality gear may initially be more expensive, it can ultimately result in reduced maintenance and repair costs.
- Aiming for energy efficiency: Quality also means energy efficiency. By installing energy-efficient lighting and HVAC systems, using insulation that satisfies or surpasses local codes, and utilizing renewable energy sources (like solar and wind power), you can significantly reduce your facility’s operation cost.
- Tracking energy consumption: Consistently assess your energy usage in order to identify potential areas for cost optimization. You can easily do it by implementing an energy management system (EMS) in your cold storage warehouse.
- Conducting regular maintenance: Maintaining your equipment routinely is essential for its smooth operation. Start by making a detailed schedule for all gear on your premises, including the necessary repairs and their respective due dates. Don’t forget to share it with all staff and make sure it is strictly adhered to.
- Upgrading staff’s expertise: As mentioned above, operating cold storage warehouses is more complex than other warehouse types. Thus, it’s a must to train your staff, ensuring that they are able to run equipment safely and effectively. These trainings also help reduce operational costs and prevent unforeseen accidents.
Conclusion
Cold storage warehouse cost is a complex topic that involves a plethora of variables. Thus, without a clear and solid understanding of what constitutes the final price tag, you can easily go over budget.
Realizing that pain point, this post has presented a comprehensive list of elements that influence a cold storage warehouse cost. These variables range from general elements like location, size, layout, and technology to distinctive aspects like coolants, insulation materials, cold warehouse types, cold warehouse racks, and building techniques.
Assuming an industry standard expense range of $2,600 to $3,700 per square foot, a typical 100-square-meter cold storage warehouse may cost around $260,000 to $370,000. It is essential to note that these figures are rough estimations and may fluctuate depending on many factors.
