While many types of asset classes in industrial real estate are experiencing a period of rebalance between supply and demand that has caused vacancy rates to tick upwards, industrial outdoor storage (IOS) remains more popular than ever. It’s even fair to say that this subset of industrial has managed to maintain much of its pandemic-era popularity, with some estimates putting the vacancy rate for IOS below 3%. This popularity has made industrial outdoor storage as popular with investors as it is with tenants.

These sites vary widely, ranging from basic fenced-in lots to fully paved yards with useful outbuildings and high-end security. So, what is it that makes IOS such a popular asset class?

The Most Versatile Asset Class

Industrial storage may not look as impressive as an advanced manufacturing center at first glance, but its functionality spans more use cases than virtually any other type of industrial real estate asset. Some of the industries that need IOS properties include:

• Construction
• Transportation/logistics
• Utilities/energy
• Retail
• Waste management

Essentially, IOS serves as the behind-the-scenes backbone of a broad spectrum of modern operations. Need a place to stage trailers during peak season? IOS. Storing rebar and heavy equipment for a six-month build? IOS. Stationing your fleet near a population center? You guessed it — IOS.

This flexibility is what makes it so uniquely resilient. While some property types are tied to a narrow set of demand drivers, IOS can easily adapt to shifting market demands. It can be used either short-term or long-term, subdivided for multiple tenants, and pick up tenants from one industry if another sees a downturn. Sites close to urban centers offer a high value for last-mile inventory staging or trailer drops, large facilities near ports or interstate corridors support container storage and intermodal operations, and suburban and rural locations are ideal for many types of small businesses to store equipment and materials.

In short, IOS is basically the Swiss Army knife of industrial real estate. As businesses seek the ability to scale up and down with market demands, the value of flexible space like IOS has never been clearer.

Finding the Right IOS Site

Just like warehouses and factories, not all industrial outdoor storage sites are created equal. Additionally, what is required of the site will vary widely by specific tenant needs. Here are some factors to consider as you look for the right site for your business:

• Location. Most tenants will want a site with easy access to major interstates or highways, and some may also need to prioritize port or rail access. Infill sites — like those located near major logistics hubs, port areas, or metro areas — will usually command a premium rate for the convenience they offer.
• Site condition and amenities. For a small contractor looking to store building materials, a gravel or dirt lot with a high fence might be considered good enough. Conversely, businesses that need to store heavy equipment or truck trailers will most likely want a paved lot with secure access, good lighting, and drainage.
• Utility access. Not all IOS sites have plumbing or power, but many use cases will require these things, so it’s important to make sure that the available utilities meet your specific needs. For example, a lot for an electric vehicle fleet will need ample power to support the installation of vehicle charging stations, whereas a container overflow lot probably won’t have such stringent power needs.
• Size and layout. The most useful IOS sites tend to be those that can be adjusted to or reconfigured to suit different needs. A site for bulk material storage most likely just needs a big open space, for instance, while a trailer lot needs defined lanes for trucks to move safely around the yard.

“Industrial outdoor storage is so much more than a vacant lot,” says Frank Crivello, Milwaukee-based founder and chairman of Phoenix Investors. “The most valuable sites are going to be the ones that make moving in easy for tenants. They’re already-zoned, well-located, and ready to go.”

Finding the right industrial outdoor storage site can be a game-changer for your operation. Given the popularity of this asset class across so many industries, however, finding the right spot can prove challenging. If you’re looking for your next industrial outdoor storage space, please don’t hesitate to reach out to Phoenix Investors for help.

About Phoenix Investors

Founded by Frank P. Crivello in 1994, Phoenix Investors and its affiliates (collectively “Phoenix”) are a leader in the acquisition, development, renovation, and repositioning of industrial facilities throughout the United States. Utilizing a disciplined investment approach and successful partnerships with institutional capital sources, corporations and public stakeholders, Phoenix has developed a proven track record of generating superior risk adjusted returns, while providing cost-efficient lease rates for its growing portfolio of national tenants. Its efforts inspire and drive the transformation and reinvigoration of the economic engines in the communities it serves. Phoenix continues to be defined by thoughtful relationships, sophisticated investment tools, cost-efficient solutions, and a reputation for success.