- IOS rents have soared 123% since 2020, driven by limited supply, rising demand, and fragmented ownership structures ripe for consolidation.
- Vacancy in IOS averages just 4.9%—less than half of the 10.5% vacancy rate for bulk warehouses across 15 key US markets.
- Institutional capital is accelerating its move into IOS, with recent portfolio deals exceeding $90M, despite freight slowdowns and construction dips.
A Niche That’s Outperforming
Industrial outdoor storage was once a niche sector with little institutional attention. Despite this, it has defied the odds during recent macroeconomic challenges. These include a freight recession, volatile trade policy, and a sharp decline in commercial construction. Triten Real Estate Partners and Alterra IOS report strong performance, validating early investment strategies in the IOS sector, reports Bisnow.
Scarcity Drives Value
The IOS sector’s biggest strength may be its chronic supply constraints. Municipal zoning hurdles, limited land availability, and development restrictions have kept new supply low. Meanwhile, demand has broadened to include trailer parking, equipment rental, and construction materials storage. Newmark reports IOS vacancy at just 4.9%, with some markets like Orlando dipping as low as 2.5%.
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Institutional Momentum Builds
Investment activity has surged. In recent months:
- JP Morgan acquired a 16-property IOS portfolio for $95M.
- Morgan Stanley bought a single Southern California facility for $92M.
- Catalyst Investment Partners recapitalized two IOS portfolios with a state pension fund for $163.5M.
- Alterra and JP Morgan Asset Management sold a 51-property portfolio to Peakstone Realty Trust for $490M in 2024.
“There’s a lot of new groups specifically chasing IOS,” said JLL’s Charlie Strauss.
Houston: A Case Study In Demand
In Houston, IOS demand is booming beyond port-related activity. Manufacturing has expanded its share of the tenant base from 10% to 30%, driven by onshoring and infrastructure upgrades. Despite freight sector slowdowns, infrastructure-related demand—such as contractors and equipment rental—has picked up the slack.
Aggregation Play Pays Off
Triten and other early movers like Alterra bet that institutional capital would eventually enter the space in force. That prediction is now playing out, with larger portfolios beginning to transact. Institutional partners—REITs, pension funds, and sovereign wealth funds—are actively acquiring.
“The only question was whether that would play out,” said Triten’s Zach Dobin. “And it did.”
Looking Ahead
The transition to institutional ownership is still in early stages, but it’s gaining momentum. The number of IOS properties in the NCREIF Expanded National Property Index has more than doubled in five years. Greater investor interest is not only fueling acquisitions but also increasing market transparency—long lacking in the sector.
As the demand-supply imbalance persists, expect IOS to remain a favored play among industrial-focused investors.
Why It Matters
IOS is emerging as one of the few industrial real estate segments with sustainable growth potential and limited new competition. For institutions seeking resilient cash flows and portfolio diversification, IOS may be the next big bet.
