Industrial outdoor storage (IOS) is gaining traction among major institutional investors, with Brookfield and Blackstone leading the charge. Brookfield's recent $1.2 billion acquisition of Peakstone Realty Trust, which includes over 70 IOS properties, highlights the growing interest in this fragmented market.
Blackstone has also made substantial loans to IOS owners, totaling more than $1.1 billion. The demand for IOS is fueled by the increasing need for heavy equipment, particularly as artificial intelligence expands. Rents for IOS have surged, doubling in major markets since 2020, with average rents reaching nearly $11,000 per usable acre.
This growth is attributed to infrastructure and energy activities, with cities like Baltimore and Houston seeing the highest increases. Despite the influx of institutional capital, there remains potential for smaller investors, as well-placed IOS sites can yield strong returns even at smaller scales.
The market's fragmentation allows individual investors to find opportunities, although zoning challenges persist. The lower capital expenditure requirements and higher yields compared to traditional industrial properties make IOS attractive. As institutional interest grows, competition will likely increase, but smaller investors can still capitalize on opportunities below institutional thresholds