As the cost of traditional industrial warehouse space continues to rise due to increasing demand, companies are turning to unique solutions like Industrial Outdoor Space (IOS). Today we chat with Kevin Callahan, Senior Partner at Premier Development Partners, about the spread of IOS and the nationwide impact of this niche market.

The conversation below has been edited for length and clarity.

What is Industrial Outdoor Storage, and why is it increasing in popularity?

Industrial Outdoor Storage (IOS) is a strategic storage option often utilized by transportation and logistics companies. IOS has become a tremendous growth area in the national industrial marketplace, accounting for over 200 billion in annual revenue in the US. Previously a hot market along the coasts, IOS has grown in popularity nationwide, particularly in locations near airports, rail intermodals, or ports.

As warehouse space has become increasingly costly over the past few years, IOS offers a more affordable storage solution for items such as tractor-trailers, industrial equipment, materials, and goods. Additionally, leasing IOS space offers companies more flexibility than traditional warehouse space. Industries with seasonal demands can scale up storage during peak season and scale down outside of peak season.

 

What sets IOS apart from a simple parking lot?

As the market for IOS grows, the available sites have become more sophisticated. IOS often includes site amenities such as bathrooms, power and utilities, and fencing. IOS areas are also typically equipped with security enhancements like surveillance cameras and access control systems. Development companies considering expanding into the IOS market need to be aware of local zoning codes. For example, landscaping and fencing are often mandated by city code.

 

What are some things to consider when selecting an IOS space?

Certain site features are going to be of great importance when selecting an IOS space. For companies searching for an IOS space, location is likely going to be their number one priority.

For developers looking to develop an IOS space, concrete and asphalt are an item of great importance. You can use light asphalt for areas provided for employee parking, but for trailer parking you should use 8-inch concrete. Oftentimes concrete and asphalt are costly, and commercial grade or recycled concrete is a better alternative.

 

Land prices can range from $100,000-300,000+ an acre depending on the market.

According to JLL, leasing trailer spaces is $150-200 per space per month depending on the location, terms, and level of improvements, with development yields reaching from 8.75-9.5%, and exit yield from 7.75% to 8% on total cost.

 

Industrial Outdoor Storage is a great growth area and a market that companies should continue to watch and consider investing in.

About the Author

Kevin Callahan is a Senior Partner at Premier Development Partners. Kevin has acquired, developed, and manages over 3,500,000 million square feet of office and industrial investment property in Northeast Ohio, Illinois, and Florida. Kevin has over 40 years of experience in the commercial real estate industry. Kevin is a member of The Society of Industrial and Office Realtors (SIOR) and Cleveland Area Board of Realtors (CABOR). He has been a guest speaker and panelist at NAIOP and Team NEO.