Industrial Outdoor Storage: CRE's Hidden Gem
Terrydale Capital
Aug 28, 2024 6 Min read
In the ever-evolving world of commercial real estate, a niche sector has been gaining traction: Industrial Outdoor Storage (IOS). This specialized category, often overlooked, is becoming increasingly attractive to investors due to its unique characteristics and growing demand. In this blog, we’ll explore what Industrial Outdoor Storage is and why it presents a compelling investment opportunity.
What is Industrial Outdoor Storage?
Industrial Outdoor Storage (IOS) refers to properties specifically designed or used for the storage of industrial materials, equipment, vehicles, and goods in an outdoor setting. Unlike traditional warehouses or logistics centers, IOS properties do not focus on indoor storage but rather provide vast outdoor spaces tailored for various industrial needs.
These properties are typically characterized by:
- Large, Open Areas: Expansive outdoor spaces that can accommodate heavy equipment, trucks, construction materials, or shipping containers.
- Minimal Structures: While some IOS properties might include small offices, security booths, or maintenance facilities, the primary value lies in the open land itself.
- Accessibility: IOS properties are often strategically located near major highways, ports, or industrial hubs to facilitate easy access for transportation and logistics.
- Zoning Compliance: These properties are usually zoned for heavy industrial use, allowing for activities that wouldn’t be permitted in other commercial or residential areas.
The Benefits of Investing in Industrial Outdoor Storage
- Rising Demand: As supply chain complexities increase and e-commerce continues to grow, the need for IOS properties has surged. Companies require more space to store and manage goods outside traditional warehouse settings, making IOS a hot commodity.
- Lower Initial Investment: Compared to traditional industrial buildings, IOS properties often require less capital to develop or acquire. The absence of large structures means lower construction and maintenance costs, making it an accessible entry point for investors.
- High Returns: With increasing demand and relatively low supply, IOS properties often command premium lease rates. Tenants in need of outdoor storage are willing to pay a premium for the right location and space, leading to potentially higher returns for investors.
- Flexibility in Use: IOS properties cater to a wide range of industries, including logistics, construction, automotive, and energy sectors. This versatility makes them appealing to a broad tenant base, reducing vacancy risks.
- Stable Cash Flow: Long-term leases are common in the IOS sector, providing investors with a reliable and stable income stream. Companies that rely on outdoor storage often seek long-term agreements to secure their operational needs, benefiting property owners with consistent cash flow.
- Appreciation Potential: As industrial land becomes scarcer, particularly near major urban centers, the value of IOS properties is likely to appreciate. Investors who secure well-located IOS sites may see significant capital gains over time.
Challenges to Consider
While the benefits are substantial, there are some challenges to be aware of when investing in IOS properties:
- Regulatory Hurdles: Zoning laws and environmental regulations can vary significantly by location, potentially limiting the availability of suitable IOS properties.
- Weather Exposure: Since IOS properties are primarily outdoor, weather conditions can impact the usability and lifespan of the stored goods and equipment.
- Limited Market Knowledge: As a niche sector, IOS may require more specialized knowledge and market research compared to more traditional real estate investments.
Conclusion
Investing in IOS properties could be a smart move for those looking to diversify their portfolio and capitalize on the evolving industrial landscape. As this sector continues to grow, it’s worth keeping an eye on Industrial Outdoor Storage as a valuable addition to any commercial real estate investment strategy.
Terrydale Capital stands at the forefront of the commercial real estate market as it continues to evolve. Through our variety of strong industry connections, we stand at the ready to tackle any deal that comes our way and usher it towards success. When you need the right team behind your investment, contact us today!
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