- Wall Street firms are pouring money into industrial outdoor storage (IOS) lots due to skyrocketing demand from data center construction, driven by the rapid growth of artificial intelligence.
- J.P. Morgan, Blackstone, and Alterra Property Group are among the top investors, with billions committed since 2021—up sharply from the sub-$600M invested between 2015 and 2020.
- Rents for IOS have surged 123% since 2020, far outpacing traditional industrial warehouse rates, with demand constrained by zoning and land-use restrictions.
A Hidden Asset Finds Its Moment
According to the New York Times, until recently, industrial outdoor storage (IOS) lots—gravel or asphalt spaces near highways and ports—attracted only smaller investors. They typically leased the land to trucking companies or held it until nearby development made it more valuable.
Now, that’s changing. Wall Street firms are buying up IOS properties as the data center boom fuels fresh demand. These lots have become essential infrastructure for storing construction gear and equipment.
The AI/Data Center Connection
Artificial intelligence is driving a surge in data center construction across the country. For example, Gray, a Kentucky-based construction firm, is currently building 22 new facilities.
Each site needs nearby land to store millions of dollars’ worth of tools, trailers, and generators. According to Gray’s data center VP Ben Burgett, the cost of renting IOS lots is rising—but so is the volume of work.
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Big Money Moves In
Major institutional investors are now dominating the IOS sector:
- In August 2024, J.P. Morgan Chase created a $700M joint venture with Zenith IOS. The venture expects to close $150M in deals by the end of the year.
- In February, Blackstone committed $189M to a fund with Alterra Property Group. The fund will buy 49 IOS sites across 22 states.
- In July, Alterra secured nearly $344M in financing from Truist and Bank of Montreal to acquire 64 IOS properties.
This wave of capital isn’t just a trend. Since 2021, institutional investors have poured over $4.7B into IOS properties. That’s a massive jump from the $600M total invested between 2015 and 2020, per Matt Hunsucker of IOS List.
Why IOS is So Hot
At first, the demand surge came from e-commerce. Warehouses and last-mile delivery hubs needed nearby outdoor space for trucks and containers. Now, AI has added a powerful new growth engine.
“Every data center generates IOS demand, just like infrastructure projects do,” said Leo Addimando, Alterra’s managing partner.
The financial appeal is clear. IOS rents have jumped 123% since 2020, compared to 58% for warehouses, according to a recent Newmark report. Additionally, IOS sites benefit from proximity to shipping corridors and limited new supply.
What’s Next
Limited inventory will continue driving prices up. In fact, the US has just 1.4M acres of IOS land—roughly the size of Delaware. The current vacancy rate is only 5%, said Cary Goldman of Timber Hill Group.
Strict zoning laws and local opposition make it difficult to build new IOS lots. “Most municipalities don’t want it because it’s not pretty,” added Hunsucker.
Because of this, small brokers and dealers are buying up old truck stops and auto yards. They’re bundling these properties into portfolios attractive to institutional buyers.
“With supply shrinking and demand strong, it all just combines into a really attractive investment,” Hunsucker said.
Why It Matters
From e-commerce to AI, the need for outdoor storage space is growing fast. Wall Street firms see IOS not just as land—but as a strategic real estate asset tied to global tech and logistics trends.
