Investing in Niche Sectors: Cold Storage, Bio Labs, Creative Space

Partners. Fellow allocators. Landlords of weird boxes. Underwriters of other people’s operational pain.

Let’s begin with the obscenity:

The most “defensive” real estate in 2025 isn’t offices, isn’t multifamily, and isn’t the industrial you see on billboards — it’s the niche stuff you can’t tour without a safety vest, a lab waiver, or a neighbor complaint.

Cold storage. Bio labs. Creative space.

These three sectors look unrelated until you stare at them like an allocator instead of a broker. Then you realize they’re siblings:

• all mission-critical

• all capex-heavy

• all operationally sticky

• all capable of printing rent premiums… until the cycle turns and the dumb money learns what “specialized” actually means

This memo is about how to touch niche sectors without turning your portfolio into a museum of expensive mistakes.

Bright yellow industrial garage doors line a modern warehouse exterior under a clear blue sky, creating a striking contrast against the sleek gray metal walls.

The Three-Sentence Confession

Niche sectors outperform when they are undersupplied, operationally painful to build, and tied to real-world throughput — food, science, content. They underperform when capital floods in chasing “defensive yield,” because specialized buildings become generic problems the second the tenant disappears. The trade is not “buy niche.” The trade is: buy the right niche, in the right geography, with the right lease structure, and an exit plan that assumes you’ll be early… or you’ll be someone else’s liquidity. Good. Now we can talk like adults.

Market Posture: Why Niche is Having a Moment (and why that’s dangerous)

After 2020, the market developed a fetish for anything that sounded like “essential infrastructure.” The narrative was:

• people always eat → cold storage is bulletproof

• biotech is the future → labs are unstoppable

• content is infinite → studios will rent forever

Narratives are cute. Narratives also get you stuck holding a $400/sf science box leased to a company with 12 months of runway.

Today the niche play is splitting into two universes:

1. Operator-backed, cashflow-real niche (boring, durable, repeat demand)

2. Spec-built, thesis-driven niche (beautiful decks, fragile tenants)

Your job is to tell them apart before the market does.

Signals & Numbers: The “Desk-Drop” Facts that Matter

Cold Storage: rent inflation + limited vacancy (but capex is brutal)

• Newmark notes average cold storage taking rents have grown over 100% since 2020 and that the U.S. cold storage pipeline is ~7.4M sf (as of their 2025 market overview). (Newmark)

• AEW (citing CoStar) highlighted cold storage vacancy at ~3.1% in Q4 2023, averaging ~3.6% since 2010, below broader industrial averages and with lower volatility. (AEW)

• Colliers flagged the completions drop in speculative cold storage: ~5.2M sf built in 2022–2023 combined vs ~1.1M sf completed in 2024 (in their discussion of speculative development trends). (Knowledge Leader)

Life Science Labs: Oversupply + Tenant-Favorable Market (right now)

• CBRE reports U.S. lab/R&D vacancy (top markets) at ~23.4% in Q3 2025, with average NNN asking rent ~$70.42/sf and a market that is only starting to see modest absorption improvement. (CBRE)

• CBRE’s 2025 outlook notes a wave of completions hitting an already oversupplied market, heavily concentrated in the “Big 3” clusters. (CBRE)

• JLL frames the environment as tenant-advantaged, with elevated vacancy and rent pressure in key clusters. (JLL)

Creative Space: “Studios” are not a monolith (demand ≠ stable underwriting)

• Deloitte has argued that, as of 2023 analysis, soundstage demand outpaced supply in LA and NYC through 2025, while other global markets increased supply toward equilibrium. (Deloitte Brazil)

• The Financial Times reports the UK approved a £750M Marlow Film Studios development—government-backed industrial policy behavior, not just “creative vibes.” (Financial Times)

• The Wall Street Journal describes real stress among major soundstage owners in LA as streaming slows: higher vacancies, falling rents, debt restructurings, and fewer big-budget projects versus prior years. (The Wall Street Journal)

If you’re hearing “niche is defensive,” you are listening to someone selling you late-cycle comfort.

The Allocator Lens: Niche Sectors are Operating Businesses Wearing Real Estate Suits

Here’s the rule that saves you:

The more specialized the building, the more you are underwriting the tenant’s operating model — not just rent. Cold storage is a refrigeration + energy + throughput business. Labs are an HVAC + power + compliance business. Creative space is a scheduling + acoustics + local permitting + production incentives business. Which means cap rates lie. The cap rate is the cover story. The real story is: who can operate here, at what cost, and how fast can you re-tenant if they leave?

COLD STORAGE: The “Boring” Niche with Real Teeth

Cold storage is the market where everyone’s bullish until they meet the electric bill.

Why it works

Cold storage demand is anchored to things humans stubbornly continue doing:

• eating

• buying frozen food

• moving groceries across regions

• optimizing supply chains

It’s also hard to build. Not “hard like you need a consultant.” Hard like:

• refrigeration systems

• ammonia or CO₂ systems

• specialized insulation

• high power requirements

• complex maintenance

• food safety standards

• throughput requirements that punish bad design

That is why rents can surge when supply is constrained—and why Newmark highlights the dramatic rent growth since 2020. (Newmark)

AEW’s vacancy data (citing CoStar) shows why institutions like this sector: historically lower vacancy and lower volatility than general industrial. (AEW)

Where Allocators Get Trapped

Cold storage is also where “niche” becomes “illiquid” fast if you buy wrong.

The traps:

• obsolescence (ceiling height, dock config, automation readiness)

• energy cost exposure

• tenant concentration

• location mismatch (needs to be near nodes, not just cheap land)

• capex shock (refrigeration + envelope upgrades don’t negotiate)

And then the classic sin: buying cold storage “because industrial is hot,” without admitting cold storage has its own cycles and tenant credit dynamics.

Infrastructure Reality: Consolidation + Scale

This sector is also shaped by giants. Lists and analyses in industry coverage highlight the scale of leaders like Lineage and Americold in cubic feet footprints. (SupplyChain247)

Translation: in many markets, the best tenants have bargaining power and options. Your “moat” is design + node location + execution, not simply “temperature-controlled.”

Cold Storage Underwriting Bullets (desk format)

You care about:

• power cost sensitivity and redundancy

• refrigeration system age + compliance

• ceiling clear height and pallet density

• automation compatibility

• dock/yard flow + trailer storage

• proximity to intermodal/highway + customer nodes

• lease structure: who pays energy? who pays maintenance? who upgrades?

If your broker can’t answer those quickly, you’re not buying an asset—you’re buying a mystery.

BIO LABS: The Sexiest Niche… Currently in a Tenant Market

Life science real estate had a glow-up when biotech funding and hiring were surging. Developers did what developers do: they built. Now the market is dealing with the consequences. CBRE’s Q3 2025 figures show vacancy in the top markets around 23.4% and rents under pressure (CBRE). Reports and commentary highlight oversupply concentrated in the biggest clusters, with completions stressing fundamentals.

The key truth

Labs are not like offices.

A lab building has:

• heavy mechanical systems

• specialized air changes

• backup power requirements

• chemistry constraints

• higher TI costs

• longer downtime between tenants

Which means: Vacancy in labs is not “empty space.” It’s capital sitting idle with a maintenance habit.

Why labs still matter

Because science is not going away. But the winners are not “labs.”

The winners are:

• prime clusters with durable talent pipelines

• buildings with flexible lab-to-office ratios

• landlords who can help tenants scale or right-size

• creditworthy tenants or mission-critical users (institutional, large pharma, university-affiliated ecosystems)

Where allocators get trapped

The lab trap is simple: you buy the building, but you didn’t buy the tenant. Early-stage biotech tenant risk is venture risk in a lab coat.

When VC slows, leasing slows. And CBRE data shows leasing activity and absorption have been uneven even as conditions stabilize marginally. (CBRE)

This is why JLL frames the market as tenant-favorable. (JLL)

So the correct posture is not “avoid labs.”The correct posture is:

• be paid for risk (basis points + structure)

• demand credit enhancement (security deposits, parent guarantees, milestone rent schedules)

• prefer retrofit/reposition plays where replacement cost is the actual moat

• underwrite re-tenanting as if you’ll have to do it

CREATIVE SPACE: three different businesses pretending to be one sector

“Creative space” is where people launder optimism into cap rates.

It includes:

1. Soundstages / production studios

2. maker/artist studios + small-bay flex

3. creative office (the vibes-first cousin of coworking)

Only #2 behaves like durable real estate. #1 behaves like a specialized hospitality business with government incentives. #3 behaves like a mood.

Soundstages: demand is real, but the cycle is violent

Deloitte’s industry view pointed to demand outpacing supply in certain core markets through 2025, which fueled development enthusiasm. (Deloitte Brazil)

But enthusiasm meets reality when:

• streaming budgets tighten

• strikes happen

• productions relocate for incentives

• majors internalize production space

• financing resets

WSJ coverage illustrates that even dominant owners can face vacancy and debt stress in downcycles. (The Wall Street Journal)

That is the problem with underwriting “content is infinite.”Content may be infinite. Budgets are not.

UK case: industrial policy is underwriting, not just tenants

The UK approving a £750M studio project is a signal: governments treat creative infrastructure as jobs + prestige + inward investment. (Financial Times)

That matters because the studio business is partially a political product:

• incentives

• planning

• labor

• tourism narrative

• local government alignment

If you underwrite studios like warehouses, you will cry into your IRR spreadsheet.

Creative small-bay / maker space: the sleeper

The most durable “creative space” isn’t celebrity studios. It’s:

• light industrial with good access

• small bays

• flexible terms

• community density

• tenants who build physical things (set builders, photographers, artisans, niche manufacturing)

It’s not sexy. Which is why it can work.

Field case: how niche wins when you’re early (and bleeds when you’re late)

A mid-sized allocator I know (not a megafund—actual humans) built a niche sleeve with three rules:

1. Buy the bottleneck, not the buzzword

2. Assume re-tenanting will happen

3. Never buy specialized space without a “generic fallback” conversion plan

They bought:

• cold storage near a distribution node with modern specs

• a lab building in a secondary life sciences market at a discount (not the frothy cluster)

• a small-bay creative/flex building with conversion optionality

The “win” wasn’t price appreciation.

The win was this:

• cold storage stayed leased because it solved a node problem

• lab space got leased slowly—but at terms that reflected tenant advantage, not landlord fantasy (and they’d bought it cheap enough to wait)

• creative flex had constant churn but stable rent because it met real local demand

Meanwhile, the allocator who bought a trophy soundstage portfolio at peak streaming optimism is now negotiating with the gods of refinancing.

That is niche in one paragraph: bottlenecks win, hype bleeds.

Behind the curtain: what the press won’t say about niche investing

1. Niche is a story people tell when they want yield without admitting risk.

2. Specialization is illiquidity disguised as sophistication.

3. “Mission-critical” tenants also have mission-critical negotiating leverage.

4. Capex is the rent you didn’t account for.

5. Exit markets are thinner—so your buyer is usually another institution, not a “market.”

And the one everyone hates: If rates stay higher for longer, niche sectors stop being trophies and become operating disciplines. Which is where amateurs exit and professionals accumulate.

A Vault-style leak (you didn’t get this from a broker)

A cold storage operator once said (deadpan, like it was obvious): “People tour the building and ask about rent. I ask about power redundancy and how fast trucks can turn. That’s the difference between a warehouse and a refrigeration business.”

That’s the whole sector.

How sophisticated capital actually plays these three niches

Not advice. War-room observation.

Cold Storage — the “node + spec” strategy

• buy modern-ish facilities in real logistics nodes

• prioritize tenants with diversified customer bases (not a single fragile food brand)

• structure leases to protect energy/capex exposure

• underwrite automation upgrades as an advantage, not an afterthought

• treat capex like a reserve line item, not a surprise

Bio Labs — the “tenant market” entry strategy

• assume tenant leverage (because vacancy data says so) (CBRE)

• focus on clusters with durable talent + institutions

• buy below replacement cost or with a path there

• demand credit structure

• underwrite conversion flexibility (lab-to-office ratio, MEP capability)

Creative Space — split the sector, don’t average it

• studios: underwrite incentives, budgets, financing, and alternative uses (events, attractions) (The Wall Street Journal)

• maker/flex: buy small-bay, high-utility spaces with conversion optionality

• avoid pure “creative office” unless you’re paid for volatility and have leasing machine competence

Risks (because we deal in reality, not vibes)

Cold storage risks

• power costs and grid constraints

• refrigeration capex

• obsolescence if spec is wrong

• tenant consolidation pressure

• exit market thinness

Lab risks

• oversupply and slow leasing cycles (CBRE)

• tenant credit fragility

• expensive downtime between tenants

• mechanical failures that aren’t “maintenance”—they’re existential

Creative space risks

• production cycle volatility and incentive arbitrage (Financial Times)

• specialized buildouts limiting re-tenanting

• “demand” that disappears when capital tightens

The meta-risk across all three?

Believing specialization is a moat when it’s actually a constraint.

Desk-drop table: what you’re really underwriting

Sector	What Looks Like the Thesis	What Actually Drives Returns	Biggest Hidden Risk	Best Exit Story
Cold Storage	“Essential food infrastructure”	Node location + spec + lease structure	Capex + power exposure	Institutional buyer / REIT / operator
Bio Labs	“Biotech is the future”	Cluster strength + tenant credit + flexibility	Oversupply + downtime cost	Core buyer in cluster / convertibility
Creative Space	“Content demand is infinite”	Incentives + scheduling + alternative uses	Cyclical demand + debt stress	Specialized buyer; fallback use essential

If you can’t articulate the “best exit story” in one sentence, you don’t own an investment. You own a project.

Allocation thought experiment (purely hypothetical, obviously)

If I had to build a niche sleeve today—in this exact cycle—I’d skew toward what the market is currently mispricing:

• 45% Cold storage (node-driven, modern spec, lease-protected)

• 35% Labs (but only in discounted entries or secondary clusters with institutional gravity)

• 20% Creative (mostly small-bay maker/flex; studios only with incentive clarity + fallback uses)

Not because I love niche.

Because I love basis points with survivability.

Closing shot

Niche sectors are where you go to escape commoditization… and accidentally inherit operational complexity. The winners don’t “invest in niche. ”They buy bottlenecks, structure leases like adults, and plan the exit before the ribbon cutting.

Anything else is just an expensive hobby with HVAC.

…and that’s all I’ll say until we’re off this channel.