A surge in e-commerce activity during the pandemic sent fulfillment providers scrambling to find additional space to meet the need. Warehouse acquisition and build costs have soared alongside rents, which appear poised to see major hikes again this year. While the need for finished space remains high, so does the need for lesser-improved real estate.
Demand for industrial outdoor storage (IOS) is at an all-time high. This subset of the commercial real estate market consists of lots and yards, which are used as storage facilities. The tenants are often transportation and logistics providers as well as companies serving the construction and infrastructure markets. The common theme among this asset class is that less than one-quarter of the acreage is usually occupied by a building. It’s more or less a staging area for heavy vehicles and equipment, stacks of containers and materials. The facilities are also being used for truck parking, which is in short supply.
The increased need for IOS space has created interest from institutional investors with one real estate startup looking to capitalize on the emerging asset class in a big way.