Unlocking the Value of Industrial Outdoor Storage in Commercial Real Estate

In a commercial real estate landscape shaped by e-commerce, logistics expansion, and land scarcity, Industrial Outdoor Storage (IOS) has emerged as a quiet powerhouse. Once overlooked in favor of traditional warehouses and distribution centers, IOS is now recognized as a mission-critical component of modern industrial strategy.

What is Industrial Outdoor Storage (IOS)?

IOS refers to properties designed primarily for the outdoor storage of goods, equipment, or vehicles. These sites often have limited structures and rely on zoning entitlements to accommodate uses such as:

• Truck and trailer parking

• Construction equipment storage

• Shipping container yards

• Fleet maintenance and laydown space

IOS properties are typically low-coverage, high-utility parcels of industrial-zoned land—an asset that’s increasingly hard to come by in high-demand metro markets.

Why IOS is Gaining Attention

1. Essential to the Supply Chain

As supply chains become more complex, IOS supports the movement of goods by acting as buffer space near ports, distribution centers, and city hubs. Companies involved in logistics, transportation, and construction use IOS sites to store equipment and vehicles in proximity to urban centers, minimizing travel time and fuel costs.

2. Zoning & Scarcity = Strong Demand

Municipal restrictions on outdoor storage uses, combined with ongoing industrial land scarcity, have led to limited new IOS development. According to a report from the NAIOP Research Foundation, local zoning challenges make entitled land highly valuable—and nearly impossible to replace once redeveloped.

This scarcity, particularly in port-centric markets like Southern California, Miami, and the Northeast, is driving increased investor and tenant interest.

3. Low CapEx, Flexible Use

IOS properties are attractive from a cost and operational standpoint. With little or no vertical development, they typically require:

• Minimal tenant improvements

• Lower ongoing maintenance

• Greater flexibility for diverse uses

Recent commentary on IOS market performance by Green Street shows that cap rates for IOS have compressed, signaling growing confidence in this emerging asset class.

Where IOS Shines

According to the Urban Land Institute (ULI), the most valuable IOS sites are strategically located in infill areas with excellent freeway access and proximity to major shipping infrastructure such as ports, intermodal rail terminals, and airports. These locations provide critical access for companies managing last-mile logistics and fleet operations.

Things to Consider Before Investing

While IOS presents strong upside potential, there are still key considerations:

• Zoning compliance and permitted uses

• Drainage, soil conditions, and environmental impact

• Infrastructure for security, lighting, fencing, or paving (if required)

• Tenant turnover risk and lease structure

IOS leases can be shorter in duration than traditional warehouse leases, but rents have grown steadily due to increasing demand.

What’s Next for IOS?

As e-commerce logistics, infrastructure development, and urban expansion continue, IOS is positioned to become one of the most in-demand alternative investments in commercial real estate. The sector’s low-cost structure and high utility make it a compelling option for both investors and tenants seeking flexibility and access.

With continued supply constraints and shifting logistics strategies, IOS may soon graduate from niche to necessity.