Cold Storage Feasibility Study: Capacity, Demand, Rules and Financing

A cold storage feasibility study tells a lender whether one refrigerated warehouse, on one site, with one operator and one customer plan, can fill enough pallet positions at high enough rates to pay for power, labor and debt, while meeting the rules that govern refrigerants, ammonia and food. The building is costly to build and hard to reuse, so the study tests the customers and the operating plan as closely as it tests the box.

Three facts shape most cold storage loan files:

• Capacity is growing, but not in public warehouses. U.S. gross refrigerated warehouse capacity reached 3.99 billion cubic feet on October 1, 2025, up 10.7% from 2017. Over the same years public warehouse space fell 13.3% while private and semiprivate space nearly doubled [1].
• The industry is concentrated. The four largest firms in refrigerated warehousing earned 51.3% of the industry's 2022 revenue of $7.64 billion [2][3].
• SBA treats most cold stores as special purpose property. Cold storage facilities "where more than 50% of total square footage is equipped for refrigeration" are on SBA's list, which raises the 504 borrower contribution to 15%, or 20% for a new business [4].

This page sets out what the study must prove and how each capital source reads it. A model study, an illustrative analysis built on public data, applies the method to a public refrigerated warehouse financed with a USDA Business and Industry guarantee. Cold storage is a specialized branch of the industrial feasibility study, and rural projects often run through the programs covered on the USDA feasibility study consultant page.

Every study ends in one of three conclusions: feasible as proposed; feasible with stated conditions, such as a smaller first phase, signed storage agreements for a share of the positions, or a larger equity contribution; or not feasible as proposed, with the changes that would make it work.

What is a cold storage feasibility study?

It is an independent analysis, written for the lender's file, of whether a proposed or existing refrigerated warehouse can support its financing. It covers the market for temperature-controlled storage around the site, the customers and their contracts, the building and its refrigeration system, the rules that apply, and the cash flow that pays the debt.

Federal statistics give the business two names. The Census Bureau classifies it as refrigerated warehousing and storage, NAICS 493120 [3]. USDA's National Agricultural Statistics Service (NASS), whose 2025 count was its 54th biennial survey of refrigerated warehouses, splits the stock into two types [1]:

1. Public refrigerated warehouses. NASS defines them as facilities "maintained for storing food for others at specified rates per unit" [1]. These are third-party businesses whose revenue comes from storage, handling and related services.
2. Private and semiprivate warehouses. These are maintained by a food producer, processor or manufacturer to store its own products, "although some space may be used by others at specified rates per unit stored" [1].

Most loan requests fall into one of five project types:

• A new public refrigerated warehouse built on speculation or with anchor customers, often freezer-heavy.
• An expansion of an existing operator's building, adding freezer cells, docks or blast freezing.
• A captive cold store built by a processor, packer or distributor next to its plant or route network.
• A conversion of a dry warehouse to cooler or freezer use, which turns on floor, roof, power and clear height.
• An acquisition of an operating cold storage business, where the study tests the customer base and the condition of the refrigeration plant.

A feasibility study is not an appraisal. An appraisal estimates value at a date; a study tests whether the project works and what would have to change. SBA may request a feasibility study, and its procedures name the triggers that apply to cold storage: market saturation by industry type and location, a "highly specialized Project property," and a project size disproportionate to the community it will serve [4]. USDA requires one, "prepared by an independent qualified consultant acceptable to the Agency," for Business and Industry guarantees above $1,000,000 to a new business [5]. For what separates a study a lender can rely on from one it cannot, see what makes a feasibility study bankable.

What does a lender need the study to prove?

A lender needs proof that customers will fill the positions at rates that cover operating costs and debt service at the program's coverage, and that the building, its refrigerant and its food handling meet the rules. SBA projections must show coverage of 1.15 or better within 2 years of funding or of the end of construction [4].

Exhibit 1. What the lender asks and what the study shows

Source: 13 CFR 121.201; SBA SOP 50 10 8.1; USDA NASS; 40 CFR part 84 and 91 FR 31284; 29 CFR 1910.119; 40 CFR 68.130, as cited in each row.

How much refrigerated warehouse space does the United States have?

It had 3,987,732 thousand cubic feet of gross refrigerated space in 931 warehouses on October 1, 2025, of which 3.25 billion cubic feet, or 82% of gross, was usable [1]. Cubic feet is the right unit for cold storage, because rack height, not floor area alone, sets how much product a building holds.

The mix has shifted. Public warehouses held 78.7% of gross capacity in 2017 and 61.6% in 2025, as public space fell and private space grew [1].

Exhibit 2. U.S. gross refrigerated warehouse capacity, 2017 to 2025 (thousand cubic feet, October 1)

Source: USDA NASS, Capacity of Refrigerated Warehouses, 2025 Summary, table of gross capacity by type, 2017 to 2025 [1]. Changes calculated by FSC: total +10.7%, public -13.3%, private and semiprivate +99.5% from 2017 to 2025; total +7.9% from 2023 to 2025.

Three cautions apply before a study leans on these numbers. First, NASS says the published totals "should be considered minimum figures as there are cold storage firms that are not known to NASS" [1]. Second, usable reports came from about 374 firms that represent about 38% of the capacity tabulated, with the rest estimated [1]. Third, a shift between the public and private columns can reflect how operators classify themselves as much as new construction. The warehouse count rose from 900 in 2023 to 931 in 2025, but public warehouses fell from 492 to 476 while private and semiprivate warehouses rose from 408 to 455 [12][1]. A study uses the series to describe direction, then confirms local supply facility by facility.

Freezer space dominates. Usable freezer space was 79% of usable refrigerated space in 2025 [1]. NASS defines cooler space as space held between 0 and 50 degrees Fahrenheit and freezer space as space held at 0 degrees or lower [1].

Exhibit 3. Gross and usable space by type and temperature, October 1, 2025 (thousand cubic feet)

Source: USDA NASS, Capacity of Refrigerated Warehouses, 2025 Summary, refrigerated storage by type of warehouse [1]. Shares calculated by FSC. NASS defines usable space as gross space "less an allowance for aisles, posts, coils, blowers, etc."

Public warehouses tend to be the larger buildings. Of the 931 warehouses, 275 had 5,000,000 or more cubic feet, and 188 of those were public, while 114 of the 146 smallest warehouses were private or semiprivate [1]. The average public warehouse held about 5.16 million gross cubic feet in 2025, against about 3.36 million for private and semiprivate warehouses (calculated from the totals and counts) [1].

Exhibit 4. Refrigerated warehouses by size group, October 1, 2025 (number)

Source: USDA NASS, Capacity of Refrigerated Warehouses, 2025 Summary, refrigerated warehouses by size group [1].

For a lender, the size table answers a practical question: whom will the new building compete with? A 4 million cubic foot freezer warehouse competes with the 219 buildings in its own size band and the 275 above it, most of them public operators, not with the small private rooms at the bottom of the table.

Where is cold storage capacity concentrated?

It follows food production more than population. The ten states with the most gross refrigerated space held 62.8% of the national total in 2025 (calculated), and several of them hold far more space per resident than the national figure of 11.7 cubic feet [1][13].

Exhibit 5. Ten states with the most gross refrigerated space, 2025

Source: USDA NASS, Capacity of Refrigerated Warehouses, 2025 Summary, gross and usable space and warehouses by state [1]; U.S. Census Bureau, Vintage 2025 Population Estimates, July 1, 2025 [13]; County Business Patterns 2023, state and U.S. files, NAICS 493120 [14][15]. Space per resident calculated by FSC. NASS and Census count different things: NASS counts warehouses, public and private, that store food for 30 days or more, while County Business Patterns counts employer establishments classified to refrigerated warehousing.

The per-resident column shows why a population-only demand model fails. Wisconsin holds 49.7 gross cubic feet per resident and Washington 37.6 [1][13]; space on that scale serves producers and buyers far beyond the state's own households. Texas holds 8.0 per resident, yet it had more refrigerated warehousing establishments than any state but California (ranked by FSC) [14]. Several states with real demand show "(D)" in the NASS tables, meaning data were withheld "to avoid disclosing data for individual operations" [1]. In those states the study builds supply from its own facility survey.

Revenue tells a third story. The 2022 Economic Census counted 1,330 refrigerated warehousing establishments with $7.64 billion in revenue and 56,195 employees [3].

Exhibit 6. Refrigerated warehousing (NAICS 493120): ten states with the most revenue, 2022

Source: U.S. Census Bureau, 2022 Economic Census, Transportation and Warehousing, summary statistics by state (EC2248BASIC) [3]. Ranked by FSC on revenue.

New Jersey ranks second in revenue with 65 establishments but tenth in NASS gross space [3][1]. That gap fits a market where buildings serve a dense consuming region and earn more handling revenue per cubic foot; a study checks that reading against the operators it surveys rather than assuming it.

What is stored in cold storage, and how seasonal is it?

Frozen vegetables, natural cheese, frozen potatoes, poultry and fruit are the largest reported holdings, and the monthly NASS Cold Storage report tracks each of them [7]. On September 30, 2026, warehouses held 7.28 billion pounds of commodities in freezers and 1.82 billion pounds in coolers, and public warehouses held 88.2% of the freezer stocks (calculated) [7].

Exhibit 7. Stocks in cold storage, September 30, 2026 (thousand pounds)

Source: USDA NASS, Cold Storage, released October 23, 2026, United States tables [7]. The commodity groups overlap with the cooler and freezer totals; they are not additive.

The monthly report covers a narrower list than the capacity survey: about 750 public and private warehouses that are cooled to 50 degrees Fahrenheit or lower and normally store food for 30 days or more [7]. Product that turns through a distribution center every few days does not show up. A study for a distribution-oriented building therefore uses customer throughput data, not NASS stocks, to size demand.

Seasonality is the second lesson. Freezer stocks in 2025 rose 16.8% from their low on May 31 to their high on October 31, and frozen vegetable stocks rose 52.1% from June 30 to October 31 (calculated) [16]. A warehouse that serves vegetable packers is fuller in autumn than in spring; one that serves poultry or meat processors may follow a flatter curve.

Exhibit 8. Month-end U.S. cold storage stocks, 2025 (thousand pounds)

Source: USDA NASS, Cold Storage 2025 Summary, February 2026 [16].

The study turns this curve into an occupancy assumption by month. If the anchor customers peak together, the building must be sized for the peak and will carry empty positions in spring; if their peaks offset, average occupancy can run higher. The model shows both cases, because a lender's coverage test uses the annual result while the operator's cash needs follow the monthly one.

How is the refrigerated warehousing industry structured?

It is a small industry of large buildings, with growing employment and a handful of firms that earn most of the revenue. County Business Patterns counted 1,376 employer establishments in NAICS 493120 in 2023 with 66,236 employees, against 1,354 establishments and 58,851 employees in 2019 [15][17].

Exhibit 9. Refrigerated warehousing and the industries that fill it, 2019 and 2023

Source: U.S. Census Bureau, County Business Patterns 2019 and 2023, U.S. files, all legal forms [17][15].

Refrigerated warehousing employment rose 12.5% and annual payroll 33.5% from 2019 to 2023 (calculated), to $3.77 billion, or about $56,905 per employee [15][17]. Employment in the food industries that fill the warehouses grew more slowly, from 1.5% for grocery wholesalers to 8.4% for dairy products (calculated), so growth in cold storage jobs did not simply follow growth in food plants. That is one reason a cold storage study tests demand at the level of named shippers rather than counting plants.

Exhibit 10. Refrigerated warehousing establishments by employment size, 2023

Source: U.S. Census Bureau, County Business Patterns 2023, U.S. file, NAICS 493120 [15]. Establishments with 100 or more employees held 56.0% of employment (calculated).

Ownership is concentrated. In the 2022 Economic Census, the 4 largest firms operated 350 of the 1,330 establishments and earned 51.3% of revenue; the 50 largest earned 73.9% [2].

Exhibit 11. Concentration in refrigerated warehousing, 2022

Source: U.S. Census Bureau, 2022 Economic Census, concentration by largest firms (EC2200SIZECONCEN), NAICS 493120 [2].

Concentration matters to a lender in two ways. A new independent warehouse usually competes with a national operator for the same processors, so the study needs evidence of why customers will move or split their volume. And a national operator can price a market down when it has spare space, so the downside case tests lower rates as well as lower occupancy.

How does a cold storage warehouse earn revenue?

Most revenue is rent for space and labor to move product. In 2022, warehousing and storage services were 65.0% of refrigerated warehousing revenue and handling services 27.8%, with packing, freight arrangement and supply chain services making up most of the rest [18].

Exhibit 12. Refrigerated warehousing revenue by product line, 2022

Source: U.S. Census Bureau, 2022 Economic Census, products by industry (EC2200NAPCSINDPRD), NAICS 493120, U.S. [18].

The study builds revenue from the same lines, in the units a cold storage operator bills:

• Storage. Charged per pallet, per hundredweight or per position, usually by the month. Some operators bill a first month on receipt and renew on an anniversary date; others charge a recurring rate on pallets in the building. The billing method changes revenue per pallet when turns change, so the study models the method in the customer's contract, not a generic rate.
• Handling. Charged per pallet or per hundredweight to receive and ship product. Revenue follows throughput, not occupancy, so a high-turn distribution customer can earn more than a slow-moving frozen inventory customer in the same space.
• Blast freezing and tempering. Charged per pallet or per pound. These cells need extra refrigeration capacity, so the study ties their revenue to the plant's design load.
• Value-added services. Case picking, labeling, repacking, cross-docking, inspection support and transport arrangement. Only about 10.5% of establishments reported packing revenue in 2022 [18], so the study does not assume a new operator will earn it without a named customer.
• Dedicated space. A customer leases a room or a block of positions at a fixed monthly charge. This is the closest a cold store comes to a lease, and lenders give it the most weight.

The 2022 data also show what a typical establishment looks like: about $5.74 million of revenue and 42 employees, with payroll equal to 40.8% of revenue (calculated) [3]. A study compares the borrower's model with these averages and explains any large difference.

How the study sets rates

Rates come from the market the building will compete in, not from national averages, because the federal sources used here publish revenue totals, not storage or handling rates by market. The study builds a rate set from three places: the agreements and quotes the borrower's prospective customers hold today, the rate sheets and interviews it gathers from competing warehouses, and the operator's own history for an existing business. It then checks the result against a federal benchmark: the Economic Census shows revenue per establishment and the split between storage and handling (Exhibit 12). A model whose revenue per position sits far above what competing buildings earn needs an explanation, such as a value-added service mix or a dedicated-room contract, before a lender will rely on it.

The study also tests the rate structure, not only the level. A building that charges a monthly storage rate with an anniversary renewal earns more per pallet when product turns quickly; one that bills only for pallets on hand at month end earns less. Handling charged per pallet moves with throughput, and handling charged per hundredweight moves with product weight. The model uses the structure in the customers' agreements so that a change in turns or product mix flows through to revenue correctly.

How does the study convert cubic feet into pallet positions?

It starts with the building's gross cubic feet, then removes the space a rack layout cannot use. NASS reports capacity in cubic feet [1], but customers buy pallet positions, so the study converts one to the other with the building's actual clear height, rack levels and aisle plan.

The conversion runs in five steps:

1. Floor area in storage. Docks, staging, blast cells, battery charging, mechanical rooms and offices take part of the floor. The storage share is an input, set from the plan.
2. Floor area per pallet stack. Selective rack needs an aisle at every face; double-deep, drive-in, push-back and mobile rack trade access for density. The plan sets the floor area per stack, including its share of aisles.
3. Rack levels. Clear height, less the clearance required below sprinklers and structure, divided by the load height plus beam and lift allowance per level, gives the number of levels.
4. Positions. Stacks times levels gives positions, split between freezer and cooler rooms.
5. Cubic feet per position. Gross cubic feet divided by positions gives a factor the study uses to convert NASS capacity in the market area into competing positions.

A 48 by 40 inch pallet loaded 60 inches high holds 66.7 cubic feet of product, but in the model below each position needs about 267 cubic feet of gross building volume once aisles, docks, clearances and mechanical space are counted. That ratio, about one quarter, is why a building's cubic feet overstate what it can sell.

Exhibit 13. How clear height and layout change capacity (model results)

Source: FSC model; every input is an illustrative assumption, not a market fact. All cases use a storage share of 75% of floor area, a 60-inch load height, 10 inches per level for beams and lift clearance, and 36 inches of top clearance.

The second and third rows show the effect of height. On the same 60,000 square feet, ten more feet of clear height adds two rack levels and 3,000 positions, a 50% gain, while the roof, floor and walls grow far less. That is why the study tests clear height first, and why a low dry warehouse is a weak candidate for freezer conversion.

The calculator below runs these steps and carries them through to revenue, power cost and coverage. It tests whether the positions a building can hold, at an assumed occupancy, turns and rates, produce enough net operating income to cover debt service at the lender's ratio, how many dock doors the throughput needs, and what occupancy the loan requires. Every default is an illustrative input, not a market rate; the study replaces each one with evidence for the specific building.

How does the study size demand for a specific site?

It starts with named customers and works outward, because cold storage demand is a list of shippers, not a share of population. National and state data set the context; the loan rests on who will put product in this building, how much, for how long and at what rate.

Exhibit 14. Demand evidence, from strongest to weakest

Source: FSC method. The statistics in the last row are USDA NASS capacity and stocks reports and Census County Business Patterns, cited in the sections above.

The trade area depends on the business model. A storage warehouse next to a vegetable or potato packing district draws product from the packers within a short haul and ships to national buyers. A distribution warehouse near a metropolitan area draws product from far away and ships to stores and food service within a day's delivery. A port-related warehouse depends on import and export volume through one gateway. The study defines the area by where the customers' product comes from and goes to, then counts competing positions inside it.

Supply is counted building by building. NASS state tables give a total, but withheld cells and the minimum-count caveat mean the study must identify each competing facility, its temperature zones, its clear height and age, whether it is public or captive, and any expansion under way. Captive space matters because a processor that builds its own freezer takes its volume out of the public market.

Four demand tests carry most of the weight:

1. Pallets per customer. For each anchor shipper, average and peak pallets on hand, inbound pallets per week and the share of its volume it would move.
2. Occupancy curve. Month-by-month positions used, built from customer peaks rather than a single annual average, checked against the seasonal pattern in NASS stocks [16].
3. Lease-up. How long the building takes to reach stabilized occupancy, with storage agreements in hand at opening and the rest absorbed at a rate the competitive survey supports.
4. Concentration. The share of revenue from the largest customer and the largest three. A building with one customer is a credit bet on that customer; the study says so and tests its departure.

How does the study read customer contracts?

It reads them the way a lender will: for term, volume, price, and the right to leave. A public warehouse earns most of its revenue from storage and handling agreements that are shorter and looser than a building lease, so the study measures how much of the cash flow is actually committed.

The study abstracts each agreement and anchor letter on the same points:

• Term against loan term. Storage agreements are often much shorter than the loan or renew year to year; a dedicated-room contract can run longer. The study shows committed revenue by year next to the debt schedule.
• Volume commitment. A minimum number of positions or pallets, a take-or-pay charge, or none. An agreement with no minimum is a rate sheet, not a commitment.
• Price and escalation. Storage and handling rates, how they reset, and whether power or labor costs pass through. Pass-through clauses protect coverage when tariffs rise.
• Termination and assignment. Notice periods, termination for convenience, and whether the agreement can be assigned to a lender or a buyer.
• Liability and insurance. The operator's liability for product loss, the limit per unit, and the cargo and legal liability insurance that backs it; a temperature failure in a full freezer is one of the operator's largest risks.
• Credit of the customer. For each anchor, the study reviews public filings or financial statements, payment history with its current warehouse, and how much of the customer's own volume the building would hold.

The result is a table of committed, probable and speculative revenue, with occupancy and coverage shown for the committed share alone. Lenders differ in how much of the probable share they count, but every lender wants to see the committed share stated plainly.

What does it cost to build and run a cold storage warehouse?

It costs more per square foot than a dry warehouse because of the insulated envelope, the floor system, the refrigeration plant and the power service.

The core cost risk in a new cold store is a budget that local storage and handling rates cannot carry. The study therefore builds the budget from current bids and quotes rather than older cost data, and shows what storage and handling rates the budget requires.

A development budget for a cold store has more specialized lines than a dry warehouse budget. The study lists each one with its source, a bid, a quote or a labeled assumption:

• Land and site work, including the truck court, trailer parking, utility extensions and stormwater controls.
• Floor system. A freezer floor needs insulation and a heating or ventilation system beneath it so the ground does not freeze and heave.
• Envelope. Insulated metal panels, vapor barrier, roof and the details at every penetration.
• Refrigeration plant. Engine room or packaged units, evaporators, condensers, controls, and leak detection where the rules require it.
• Electrical service. Switchgear and the utility's line extension, often a long-lead item, plus any backup generation.
• Docks. Insulated doors, seals or shelters, levelers and any vestibule.
• Racking and fire protection, designed together, because rack height and sprinkler clearance set the number of levels.
• Equipment. Lift trucks, chargers, warehouse management software and temperature monitoring.
• Soft costs, interest during construction, working capital and start-up losses until occupancy stabilizes.

Operating costs follow three main drivers. Labor is the biggest line in the federal data: payroll was 40.8% of refrigerated warehousing revenue in the 2022 Economic Census (calculated), and payroll per employee reached about $56,905 in 2023 [3][15]. Power is the other large cost a cold store cannot avoid, and its price varies widely by state. Refrigeration maintenance, insurance, property taxes and lift truck costs complete the list.

Exhibit 15. Average price of electricity, year to date through August 2026 (cents per kilowatthour)

Source: U.S. Energy Information Administration, Electric Power Monthly, Table 5.6.B, data for August 2026, released October 23, 2026 [19]. States are the ten with the most refrigerated warehouse space in Exhibit 5.

The industrial price in California was 2.3 times the U.S. average in the first eight months of 2026, and in Texas about three quarters of it (calculated) [19]. A cold store usually buys power on a commercial or industrial tariff with demand charges, so the study uses the utility's actual rate schedule and the engineer's load profile rather than an average price. State averages are only the first check that the model's power cost is in the right range.

Energy efficiency can also change the financing. SBA's 504 program allows a larger loan for a project that reduces the borrower's energy consumption by at least 10% [20], and the USDA Rural Energy for America Program funds energy efficiency improvements for rural small businesses [21]. Both need an energy audit or assessment, which the study coordinates with the engineer.

Which refrigerant rules apply to a new cold storage warehouse?

EPA's hydrofluorocarbon rules set a ceiling on the global warming potential of the refrigerant in new cold storage warehouse systems, and a separate set of leak repair and leak detection duties for existing systems. Under the rule effective July 27, 2026, the limit for new cold storage warehouse systems is 700 until January 1, 2032, and then 150 or 300 depending on charge size [9][8].

Exhibit 16. EPA refrigerant rules that affect a cold storage warehouse

Source: 40 CFR part 84 (revised as of July 1, 2025) and EPA final rule 2026-10387, 91 FR 31284, May 26, 2026, as cited in each row.

The rule history matters to a study written in 2026. EPA's 2023 rule would have required new cold storage warehouses installed from January 1, 2026 to use refrigerants below 150 or 300; the 2026 rule set an interim limit of 700 to allow nonflammable, lower toxicity options where ammonia or flammable alternatives are impractical [9]. EPA also noted that most cold storage warehouses already use refrigerants that would have met the 2023 limits, including ammonia and carbon dioxide [9].

For the feasibility study, the refrigerant choice changes four numbers: the plant's capital cost, its energy use, its maintenance and compliance cost, and the safety programs the operator must run. A low-charge ammonia system, a carbon dioxide system and a system using a synthetic refrigerant under the interim limit each carry a different budget and a different risk. The study records which one the engineer chose and why, and confirms that the installation date falls under the limit the budget assumes.

Leaks are an operating cost as well as a compliance duty. A repair must normally be made within 30 days of a refrigerant addition that shows the leak rate was exceeded, or 120 days if an industrial process shutdown is required [8]. An appliance with 15 pounds or more that leaks 125% or more of its full charge in a calendar year must be reported to EPA [8].

When does an ammonia system trigger OSHA and EPA programs?

At 10,000 pounds of anhydrous ammonia, a cold store falls under both OSHA's process safety management standard and EPA's risk management program [10][11]. Smaller inventories still carry emergency planning and release reporting duties at much lower thresholds.

Exhibit 17. Federal thresholds for anhydrous ammonia at a cold storage warehouse

Source: 29 CFR 1910.119 and 1910.111 (revised as of July 1, 2025); 40 CFR 68.10, 68.130, part 355, 370.10 and 302.4 (revised as of July 1, 2025), as cited in each row.

The study does not design the safety program; the engineer and the operator do. It confirms that the design charge, the programs it triggers and their cost are in the budget and the operating plan, and that the site's setting fits an ammonia plant. It also checks training for lift truck operators, since OSHA requires an evaluation of each operator's performance "at least once every three years" [27].

Which food safety rules apply to the operator?

A cold storage warehouse that holds food for U.S. consumption must register with FDA, and if it only stores packaged food that needs temperature control, it must run the modified temperature control program in 21 CFR 117.206 [28][29][30]. Sanitary transportation, traceability and USDA registration rules add duties at the dock.

Exhibit 18. Federal food rules that reach a cold storage warehouse

Source: 21 CFR parts 1 and 117 (revised as of April 1, 2025); 9 CFR 320.5 (revised as of January 1, 2026), as cited in each row.

The traceability rule needs a date check in every study. In August 2025 FDA proposed to extend its compliance date by 30 months, "from January 20, 2026, to July 20, 2028" [38]. A warehouse that receives foods on the list must record the lot code, quantity, product, previous source, receiving location, date and reference document for each lot [36], so the study confirms that the warehouse management system can do it and that the cost is in the operating budget.

These rules matter to feasibility because customers choose warehouses that can pass their audits. A new operator that cannot show temperature records, corrective action procedures and lot-level records will struggle to sign food processors, whatever its rates.

What site and building specifications does the study test?

It tests whether the site and the design can deliver the positions, throughput and temperatures the model assumes, at the cost in the budget. The main items are:

• Power. Available capacity at the site, the utility's line extension schedule and cost, the tariff, and backup generation for a building that cannot lose temperature.
• Clear height and column spacing. These set rack levels and aisle widths, so they set positions; Exhibit 13 shows the effect.
• Floor. Insulation and frost heave protection under freezer rooms, and slab flatness for the lift trucks the rack design assumes.
• Temperature zones. The split between freezer, cooler and convertible rooms, matched to the customer mix, and any blast freezing capacity.
• Docks. Door count against peak daily pallet moves, refrigerated dock or vestibule, and trailer parking for drop trailers.
• Access. Distance to the interstate, to the customers' plants and to the delivery area, with truck routes that avoid weight or height limits.
• Stormwater and land. Federal stormwater rules reach construction that disturbs one acre or more: small construction activity covers one to five acres, and five acres or more counts as construction activity associated with industrial activity [39]. A cold store's roof, truck court and trailer parking usually pass both thresholds.
• Zoning and neighbors. Industrial zoning that permits a 24-hour truck operation and, for an ammonia plant, the setting that the risk management program will evaluate.
• Labor. A workforce for cold work on several shifts, with wages that match the model's labor cost.

Which financing paths fit a cold storage project?

SBA 504, SBA 7(a), the USDA Business and Industry guarantee and conventional bank loans all finance cold storage, and the choice turns on loan size, location, owner occupancy and how special purpose the building is. Exhibit 19 compares them.

Exhibit 19. Financing paths for a cold storage warehouse

Source: 13 CFR 120.931; SBA SOP 50 10 8.1; SBA 7(a) loans page; 7 CFR part 5001 (revised as of January 1, 2026); 7 CFR part 4280 (revised as of January 1, 2024); 12 CFR 3.2 and 34.43, as cited in each row.

SBA 504

The 504 program fits an operating business that will occupy the building it finances. The project limit reaches $5.5 million for a small manufacturer or for a project that reduces the borrower's energy consumption by at least 10% [20]; SBA's page states the program maximum as $5.5 million [43]. A cold store on SBA's special purpose list needs a 15% borrower contribution, and the debenture then finances no more than 35% of the project; for a new business with a special purpose property the contribution is 20% and the debenture no more than 30% [4].

For the energy route, SBA requires that a new facility replace an existing one in the same local area and use 10% less energy on a square footage basis, documented by an independent energy audit or engineering report [4]. That suits a processor or operator replacing an old freezer with a new one. A first-time owner cannot use it, because "This category may not be used for Projects involving new businesses" [4].

SBA 7(a)

The 7(a) program reaches $5 million [40] and can finance real estate, equipment, working capital and acquisitions. It fits a smaller cold store, a conversion or the purchase of an operating business. SBA also lists refrigerated warehousing among the food supply chain industries eligible for its working capital program for manufacturers and the food supply chain [4].

USDA Business and Industry

The B&I guarantee fits larger rural projects. The borrower limit is $25 million [5], and a guarantee above $1,000,000 to a new business needs a feasibility study by an independent qualified consultant [5]. Within limits the Agency publishes each year in the Federal Register, it may charge a reduced guarantee fee, if the lender requests it, for a project that "Processes, distributes, aggregates, stores, and/or markets locally or regionally produced agricultural food products and promotes access to healthy foods" [5]. A public refrigerated warehouse serving regional growers may meet that test; one serving national brands may not.

Exhibit 20. USDA OneRD guaranteed loan fees, fiscal year 2026

Source: USDA, OneRD Annual Notice of Guarantee Fee Rates, Periodic Retention Fee Rates and Loan Guarantee Percentages for Fiscal Year 2026, 91 FR 11272 [44].

The guarantee fee is charged on the guaranteed portion: the rule calculates it "by multiplying the total loan amount by the percentage of guarantee by the guarantee fee rate" [5]. The model study linked above works through a full B&I structure for a freezer-heavy public warehouse.

USDA Rural Energy for America Program

REAP grants and guaranteed loans fund energy efficiency improvements and renewable energy systems for agricultural producers and rural small businesses. Under the codified rule, a grant may not exceed 25% of eligible project costs, and the maximum request for an energy efficiency improvement is $250,000, unless a Federal Register notice says otherwise [21]. Grant assistance to one person or entity is capped at $750,000 per federal fiscal year under the same proviso [21]. A rural cold store replacing compressors, adding variable frequency drives or installing rooftop solar can pair a REAP grant with a B&I or bank loan; the study keeps the grant out of the coverage test until it is awarded.

Conventional bank loans

Under the capital rule of the Office of the Comptroller of the Currency (OCC), a construction loan for a speculative public warehouse is a high volatility commercial real estate exposure unless, among other conditions, the borrower contributes capital of "at least 15 percent of the real property's appraised, 'as completed' value" [41]. The OCC's appraisal rule requires an appraisal by a state certified appraiser for a commercial real estate transaction above $500,000 [42]. In both cases the feasibility study supplies the demand and cash flow evidence the appraiser and the credit officer rely on. The model's 7.0% interest rate is an assumption; the bank prime rate was 7.00% and the 10-year Treasury yield 4.88% on November 9, 2026 [45].

How do tax rules change the cash flow?

They change the owner's after-tax return more than the lender's coverage test, but they change the equity case, so the study flags them for the owner's tax advisor. The building is nonresidential real property with a 39-year recovery period [46]; the refrigeration equipment, racking and lift trucks are not, and a cost segregation study usually separates them.

Exhibit 21. Federal tax rules a cold storage owner should check

Source: 26 U.S.C. 168 (United States Code, 2024 edition); Public Law 119-21, approved July 4, 2025, as cited in each row.

The qualified production property rule needs care. It covers manufacturing, production or refining that results in "a substantial transformation of the property comprising the product" [47]. A freezer attached to a food plant and used by the owner as part of production may fall within it; a public warehouse that only stores other companies' food, or a building leased to an operator, does not appear to. The study states the assumption the model uses and leaves the conclusion to the tax advisor.

What happens to the collateral if the operator or main customer leaves?

The lender is left with a specialized building that another cold storage operator may want, at a price that depends on its height, condition, refrigeration plant and location. SBA's own list treats cold storage over 50% refrigerated as limited or special purpose property [4], and USDA requires a going concern value to be deducted from the market value before collateral is discounted [5].

The study answers four collateral questions:

1. Who else would operate it? The number of public operators and processors in the region, and whether any of them is short of space.
2. Could it run as a dry or cooler-only building? Lower clear height and freezer floors limit reuse; the study states what a conversion would need.
3. What is the refrigeration plant worth to a buyer? An ammonia plant near the end of its life, or a system with a leak history under EPA's leak repair rules, can be a cost to the next owner rather than an asset.
4. How long would re-leasing take? The downside model carries the building through a vacancy period on reserves and guarantees.

The building's strength as collateral comes from the same features that make it work as a business: height, location near food producers or consumers, modern refrigeration and enough docks. A study that finds those features supports both the cash flow and the collateral; a study that finds them missing says so.

What changes when the project is an acquisition or an expansion?

The study shifts from proving demand to proving that the existing business keeps its customers and that the building and plant will last the loan term. An operating cold store has a record, so the study starts from its financial statements, customer list and occupancy history and asks what the new money changes.

For an acquisition, three tests dominate:

1. Customer retention. Which customers are tied to the seller personally or to the seller's other facilities, which agreements can be assigned, and how much revenue would be at risk in the first year after closing.
2. Plant and building condition. The age and condition of compressors, condensers, evaporators, controls and the freezer floor, with the capital spending the next owner faces, including any refrigerant or leak detection work the EPA rules require.
3. Value split. SBA requires a business valuation that allocates separate values to land, building, equipment and intangible assets, and total debt for a change of ownership is limited to the business valuation amount [4]. An initial acquisition must meet a coverage of 1.25 [4].

For an expansion, the study tests the new phase and the whole operation together. It asks whether current customers are turning away product today, whether the new rooms match the temperature zones they need, and whether the existing docks, power service and refrigeration plant can carry the added load without a rebuild. A phase that looks feasible on its own can fail if it forces an engine room or electrical upgrade the budget left out.

What risks does the study model?

It models the risks that move coverage most: occupancy, rates, throughput, power, labor and the loan terms. The three calculator cases show how differently similar-looking projects perform.

Exhibit 22. Model results for the three calculator cases

Source: FSC model, calculator test cases; all inputs are illustrative assumptions, not market facts, and the outputs are model results. Loan of $22,000,000 in Cases A and C and $8,000,000 in Case B, at 7.0% over 25 years.

Case A passes with a margin: occupancy can fall to 83.3% before coverage drops below 1.25. Case B fails narrowly, and the cause is height: the same 60,000 square feet at 40 feet of clear height would hold 9,000 positions instead of 6,000. Case C passes coverage but fails the dock test: 18 turns a year means about 1,238 pallet moves a day, which needs 21 doors at the assumed 60 moves per door, against 14 planned. A lender that looks only at coverage would approve a building that cannot move its own volume.

The downside cases a study runs on top of these are:

• Occupancy. Lease-up slower than planned, and the loss of the largest customer.
• Rates. Storage and handling rates cut to match a competitor with spare space.
• Power. A higher tariff or demand charge, and a hot summer with higher load.
• Labor. Wages and turnover above plan, which hit a high-turn building hardest.
• Construction. Cost overrun and delay, with interest during construction.
• Refrigerant and safety. A plant redesign or added compliance cost if the refrigerant choice changes.
• Interest rate. For a variable rate loan, a higher rate at reset.

What must a cold storage feasibility study contain?

1. The conclusion first, with any conditions or required changes spelled out.
2. The project defined: floor area, clear height, temperature zones, positions, docks, blast capacity, phasing and the business model.
3. Program fit: size standard, special purpose status, equity contribution, rural eligibility for USDA, and any energy public policy route.
4. The trade area, defined by where customers' product comes from and goes to.
5. Supply: each competing warehouse, public and captive, with space, temperature zones, height, age, occupancy, rates and expansions.
6. Demand: named customers, storage agreements and letters of intent, pallets on hand, turns and peaks, and regional food production.
7. An occupancy curve by month and a lease-up schedule.
8. Revenue by line: storage, handling, blast freezing, dedicated rooms and services, using the billing method in the contracts.
9. A building and site review: power, floor, envelope, docks, racking and fire protection, access and stormwater.
10. Refrigerant and safety: refrigerant, charge, the EPA limit that applies, leak detection, and the OSHA and EPA programs the inventory triggers.
11. Food safety: registration, temperature controls, sanitary transportation and traceability readiness.
12. A development or acquisition budget, every line cited to a bid, a quote or a labeled assumption.
13. Operating costs: labor by shift, power from the tariff and load profile, maintenance, insurance and taxes.
14. Cash flow, debt service and coverage on the program's basis, with the downside cases above.
15. A collateral and re-leasing case, and every source and assumption listed, with model outputs labeled as such.

What drives the scope of a cold storage study?

The scope grows with the number of decisions the lender has to make, not with the size of the building alone. A study for an expansion by an operator with years of records rests on those records. A study for a new public warehouse with no customers signed needs a full competitive survey and customer interviews. Four items set the scope:

• The business model. A single-customer captive building needs a credit review of that customer; a multi-customer public warehouse needs a market study.
• The capital source. USDA B&I sets its own feasibility study requirements for new businesses; SBA may request a study when the property is highly specialized; a bank sets its own.
• The state of the design. A study can test a concept, but bids, an energy model and a refrigeration design make it more useful to the lender.
• The data the borrower can share. Customer volumes, operating history and contracts shorten the work; their absence lengthens it.

How the study runs

1. Scoping: confirm the capital source, program, loan size, business model and the tests that apply.
2. Document intake: plans, budget and bids, refrigeration design, customer agreements and letters, operating history for an existing business, and any purchase contract.
3. Field and market research: site inspection, survey of competing warehouses, interviews with customers and shippers, and the regional data in this page.
4. Model: positions, occupancy curve, revenue by line, operating costs, debt service, base and downside cases.
5. Review: the draft is checked against the lender's questions and revised only for new facts.
6. Final report: signed by Sarrah Allen, MAI, with written answers to the lender's follow-up questions. More about who prepares the study is on the about page.

Download the evidence behind this page's exhibits (CSV, 489 data points with sources)