Industrial Outdoor Storage: Real Estate’s High-Growth Market 2025

Prime Highlights:

Industrial Outdoor Storage (IOS) is seeing unprecedented demand and rent growth, driven by AI and data center construction.
Major investors, including Blackstone and J.P. Morgan-backed ventures, are now entering the IOS market.

Key Facts:

IOS rents have surged 123% since 2020, outperforming traditional bulk warehouse properties.
Approximately $300 billion of IOS real estate is owned by private businesses and represents a significant investment opportunity.

Background:

Industrial Outdoor Storage (IOS), often overlooked in commercial real estate, is quickly becoming an attractive option for investors. These outdoor storage sites, paved or gravel lots used for storing construction equipment, vehicles, containers, and bulk materials, are increasingly vital staging grounds for data center construction and other infrastructure projects.

According to Leo Addimando, CEO of Alterra IOS, there is over $300 billion worth of IOS real estate owned by businesses that is ripe for investment. “It’s the real estate hiding in plain sight,” he said. While most IOS space in the U.S. is owned by municipalities, privately held properties offer a strong opportunity for investors.

Demand for IOS sites is rising quickly, and rent growth has been especially strong in Phoenix, Memphis, and Atlanta. In some areas, IOS rents are now similar to bulk warehouse rents per acre, and the vacancy rates are about half of traditional warehouses, showing the sector’s strong performance.

Institutional investors are taking note. In August, Zenith IOS formed a $700 million joint venture backed by J.P. Morgan Asset Management, while Blackstone recently committed over $400 million in loans to IOS portfolios managed by Alterra and Jadian Capital. Alterra also closed a $150 million loan facility from Blue Owl Capital to support future acquisitions.

Despite its growth, the sector faces challenges, including zoning restrictions and economic headwinds. “The No. 1 biggest risk is zoning,” Addimando noted, as municipalities are reluctant to expand IOS land due to low job generation and tax impact.

With approximately 1.4 million acres of IOS across the U.S. and well-located sites becoming scarce, the sector offers a compelling, high-growth opportunity for investors seeking alternatives to traditional commercial real estate.