**Industrial Outdoor Storage Gains Momentum as a High-Performing CRE Asset**
Once considered merely an auxiliary component of warehouses and logistics centers, industrial outdoor storage (IOS) has evolved into a high-performing, standalone real estate asset class attracting increased investor attention.
According to a report by Newmark, IOS has significantly outpaced traditional industrial properties in terms of rent growth. Since 2020, IOS rents have surged by 120%, compared to a 58% increase in bulk warehouse rents over the same period.
In terms of market size, the current supply of IOS across the U.S. is estimated at 1.4 million square feet, with a potential market capitalization of $200 billion. Newmark suggests that if trends continue, the IOS sector’s capitalization could ultimately surpass $1 trillion.
### What is IOS?
Industrial Outdoor Storage generally refers to land-based facilities used for various commercial and industrial functions. The Newmark report identifies two primary categories of IOS:
– **Transport, Logistics, and Fleet Operations**: This includes land and flow-through facilities that support cargo movement, such as cross-dock truck terminals, trailer parking, shipping container storage, and fleet maintenance yards.
– **Equipment and Bulk Storage/Rental Operations**: This encompasses facilities focused on yard storage and staging areas, including contractor yards, building material supply centers, car rental storage lots, and landscaping business depots.
### Market Fundamentals
While bulk warehouse development activity has surged—reaching 2.5 times the 2015–2019 average between 2020 and 2025—IOS has seen little purpose-built development due to tight zoning regulations and land-use restrictions.
Several key challenges and trends are impacting the IOS sector:
– **Land Density**: In major urban areas where developable land is scarce, some tenants of bulk warehouses are turning to IOS for additional space for parking or cargo drop yards.
– **Softening Fundamentals**: Although vacancy rates have risen for both bulk warehouses and IOS, rent trends have diverged. Bulk warehouses have seen softening rents, while IOS rents continue to climb on a national average.
– **Fragmented Pricing**: IOS remains largely held by a fragmented group of owners. Institutional investment is still in its infancy, leading to inconsistent pricing models and limited access to acquisition and development financing.
### Outlook for IOS
Despite its early stages of institutionalization, IOS is increasingly being targeted by major equity managers. Over the past five years, the number of IOS properties tracked within the National Council of Real Estate Investment Fiduciaries (NCREIF) Expanded National Property Index has more than doubled.
With strong demand and thin supply, investors are beginning to recognize IOS as a maturing asset class. As institutional capital continues to flow into the space, the sector could shift from a fragmented niche to a mainstream component of commercial real estate investment portfolios.
Industrial outdoor storage may no longer play second fiddle to warehouses—it is quickly becoming a CRE category worth watching.
