IOS Tailwinds And Challenges

Structural Supply Shortage
There’s still not enough land that checks all the boxes for IOS use — heavy truck access, outdoor storage allowances, and proper industrial zoning. Even in major logistics hubs, those parcels are hard to come by. NorthMarq’s overview calls zoning restrictions the primary supply constraint, noting that many municipalities resist approving IOS projects due to truck traffic concerns, lower tax revenue, and community opposition. Those barriers create a built-in advantage for existing sites while keeping new competition limited.

Trade and Logistics Momentum
IOS demand is being driven by the same forces reshaping supply chains — nearshoring, e-commerce growth, and tighter delivery windows. Many trucking and logistics operators now use IOS yards as staging space between ports, intermodals, and distribution centers. Kimley-Horn’s research highlights Dallas–Fort Worth, Savannah, and Southern California as key examples, where IOS lots function as vital links in the freight network. These yards are no longer just parking—they’re critical logistics infrastructure.

Institutional Capital Is Pouring In
Once a fragmented niche, IOS is quickly becoming an institutional asset class. Dedicated funds, portfolio rollups, and joint ventures are reshaping the ownership landscape and improving liquidity. This institutionalization is bringing better financing terms, more data transparency, and professional management standards that are helping the market mature.

Zoning and Permitting Constraints
While scarcity creates pricing power, it also limits new development. Many cities continue to restrict outdoor storage and truck parking, even within industrial districts. Zoning—not land availability—is the biggest obstacle to growth. Municipalities are increasingly imposing higher screening, paving, and landscaping standards, which add cost and delay timelines for new projects.

Cost Management
Paving, drainage, security, and utility work can add up. Certain IOS tenants expect ready-to-use, fully improved lots—not gravel fields. As cities tighten environmental and stormwater standards, upfront costs must be managed properly.

YardDogs Take
IOS sits at the intersection of land scarcity, logistics necessity, and regulatory friction. The fundamentals still lean positive — low vacancy, steady demand, and growing investor sophistication / interest — but execution matters more than ever.

Groups that can navigate zoning complexity, control sitework costs, and underwrite based on appropriate market data will separate themselves from the pack.

Start with our guide: What is Industrial Outdoor Storage?

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