- Outdoor storage yards that stage equipment and materials near data center sites are in high demand, with CBRE showing a 32% rent increase since 2021 and over 110% in top port markets.
- Brookfield is buying Peakstone Realty Trust for $1.2B, J.P. Morgan Asset Management and Zenith IOS are assembling about 100 properties, and a Starwood Property Trust venture made a $672M loan in August.
- New yards are nearly impossible to permit and data centers are displacing existing ones, so aggregators are betting aging owners sell into a market one investor puts near $300B.
Industrial outdoor storage yards are riding the data center boom, and big-name investors are moving in, The Wall Street Journal reports.
CBRE puts national rent growth for the yards at 32% since 2021.
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Why Data Centers Need Yards
Per DAT Freight and Analytics, a single gigawatt of new data center capacity generates about 100,000 truck trips hauling steel, concrete, generators and gear.
Those materials and the trucks that haul them sit in yards, often under 10 acres, close to the construction site.
Supply Can’t Keep Up
Investors told WSJ that winning approval for a new yard is close to impossible across most of the U.S. Neighbors and city officials tend to dislike the noise and the look of them.
Pasha Johnson, principal at Tarsadia-backed Steel Peak, told WSJ that cities aren’t approving more of them.
In the eight hottest port-linked markets, which include Houston, Savannah and Norfolk, Alterra IOS pegs rent growth at better than 110% since 2020. Phoenix and Atlanta, both data center hubs, are also seeing sharp increases.
Institutions Move In
Brookfield said this year it will buy Peakstone Realty Trust, an outdoor storage owner, for $1.2B. J.P. Morgan Asset Management and Zenith IOS are pulling together roughly 100 properties spanning 33 markets.
In August, a Starwood Property Trust venture lent $672M against a yard portfolio.
Single lots are too small to interest Wall Street, so roll-up players including Alterra IOS, Catalyst Investment Partners and Zenith IOS stitch together portfolios from regional owners. Catalyst has assembled $1.4B of yards over six years, and Blackstone’s lending business has provided over $1B across storage deals.
The theme has been building. CRE Daily covered GlobeSt’s list of AI real estate plays beyond data centers in October, and construction-support storage was one of its six.
Why It Matters
Property funds now put more money into data center REITs than into office, residential or retail REITs, per Nareit data cited by WSJ.
Newmark’s Chris Hope told WSJ that yard rent is a tiny slice of a data center developer’s budget, which lets landlords hold pricing power.
Most yards still belong to small operators like trucking and equipment rental firms, and many owners are nearing retirement. Investors expect sales.
What’s Next
Max Heiden, co-founder of Catalyst Investment Partners, estimates about $300B of U.S. outdoor storage could eventually trade.
Data centers are also eating into supply. In Manassas, Va., new data centers are slated to replace 200-plus acres of yards, upward of a fifth of local supply, Heiden told WSJ.
Higher interest rates have slowed yard sales like other property types, WSJ notes, but investors still see buying opportunities ahead.
