Industrial Strong, IOS Stronger – Sept. 21, 2026
Industrial outdoor storage is outperforming the broader industrial sector, which explains why institutions are drawn to it
It’s not a new real estate asset class by any means, nor is it particularly flashy, but it has become a hot commodity among institutional investors. The category is industrial outdoor storage (IOS), which itself is an umbrella term for an assortment of related but not interchangeable product types. They include truck terminals, container depots, contractor yards, fleet maintenance facilities, equipment storage yards, and port- and intermodal-related facilities.
At present, IOS is outperforming the broader industrial real estate category, according to Kroll Bond Rating Agency (KBRA). While a new report from KBRA gave industrial high marks overall for vacancy rates, rent growth and transaction volume, it noted that IOS is surpassing the larger category for operating fundamentals. Rents tend to be higher compared to those for warehouses, and they’re also growing at a faster pace.
Another factor in IOS’ favor is high barriers to entry—or, put another way, a supply-demand imbalance. “Zoning restrictions, public opposition to outdoor storage uses, municipal resistance to truck traffic, and the limited availability of strategically located industrial land have restricted new [IOS] development, while growth in e-commerce, logistics networks, domestic manufacturing and supply chain diversification has increased demand,” KBRA reported.
Readers of Connect CRE were likely to have seen a number of stories over the past several months that reported on institutional investment in IOS properties. In August, for example, Town Lane, a New York-based real estate investment management firm founded by Blackstone alumnus Tyler Henritze, launched an IOS platform venture with Axis Partners, an Atlanta-based industrial owner and operator.
That same month saw Realterm—itself a notable IOS investor—and Starwood Property Trust close on a $672-million IOS portfolio financing, reportedly the largest of its kind to date. The 78-property IOS portfolio is owned by affiliates of Stonemont Financial Group and Cerberus Capital Management. It encompasses 830 acres of land across 33 U.S. markets.
“Investor demand for IOS remains strong following increased acquisition activity observed in 2025,” KBRA reported. “Institutional investors now account for an estimated 35%-45% of IOS acquisitions, up from approximately 25%-30% four years ago. However, 65%-75% of the existing property stock remains owned by private operators or long-term owner-users.” In that sense, IOS is similar to another longstanding and long-overlooked real estate category that has drawn extensive institutional activity but remains fragmented: single-family rentals.
Even as institutional investment in IOS has accelerated, “the sector continues to offer a yield premium relative to traditional industrial assets,” according to KBRA. “Capitalization rates for stabilized IOS properties generally range from 6% to 6.75% in primary markets and 6.75% to 7.75% in secondary markets,” That’s approximately 25 to 75 basis points above current cap rates for traditional industrial assets.
The U.S. IOS market was valued at $228.3 billion in 2025 and is forecast to reach $367.2 billion by 2033, KBRA reported. However, it’s not an uncomplicated sector. “Underwriting scrutiny is increasing, particularly around environmental, zoning, and entitlement risks, elevating the importance of localized market knowledge,” reported KBRA. “Environmental concerns, including prior industrial uses and stormwater management, can increase due diligence requirements and capital costs. In addition, zoning and entitlement risk is important, as municipalities may restrict outdoor storage and truck-intensive uses, potentially limiting a property’s ability to accommodate replacement tenants.”
These caveats aside, KBRA predicts that IOS will “continue maturing as a distinct commercial real estate asset class” as more institutions enter the sector and performance data become more widely available.