IOS: The Single-Most Supply And Demand Dislocated Sector Within RE

Industrial outdoor storage has moved from a niche property type to a more widely recognized segment of commercial real estate. In a recent Inside CRE podcast, Leo Addimando, co-founder and CEO of Alterra Property Group, discussed how the sector has evolved, why institutional capital is paying attention, and what still makes IOS difficult to scale.

IOS Remains Hard to Define
IOS properties typically have low building coverage and a large outdoor storage component. Addimando said most IOS users are not focused on the building as much as the yard, access, circulation, zoning, and location.

For many tenants, the usable outdoor area is the primary value driver. That is why Alterra looks at IOS through the lens of “usable acre,” rather than traditional building-based metrics such as price per square foot. However, usable acres for each buyer could be different creating nuances in what defines a usable acre.

Zoning Remains the Main Risk
Zoning is often the biggest risk in IOS. Many properties rely on industrial or manufacturing zoning that allows outdoor storage as a primary use, but there is rarely a specific IOS zoning category.

Small details in a zoning code can materially affect a site’s value. Restrictions on truck parking, outdoor storage, vehicle movement, or how long equipment can remain on-site can limit a tenant’s ability to operate.

Demand Has Shifted Toward Infrastructure
Historically, much of the demand for IOS came from logistics and transportation users. Infrastructure-related tenants now account for a larger share of demand.

That includes construction, utility, equipment rental, service, and infrastructure contractors. Data center development is also creating demand from users tied to power, water, fiber, and long-term maintenance work.

These users often need the same basic site profile: secure yard space, functional access, truck circulation, and proximity to customers or job sites.

Institutional Capital Is Still Early
The sector has attracted more institutional capital, but Addimando said IOS remains early in its evolution. The asset class is granular, operationally specific, and difficult to scale quickly.

Large investors often need bigger portfolios to justify entering the sector. Platforms such as Alterra have built scale by aggregating smaller assets over time.

Additional large portfolio trades and more public market participation could move the sector into a more mature phase.

YardDogs Take
The discussion highlights why IOS remains attractive but difficult to execute. The opportunity is tied to scarcity, tenant demand, and the operational importance of well-located yards.

The sector continues to benefit from three structural factors:

Zoning — limited supply of sites where outdoor storage is clearly permitted
Location — tenant demand for yards close to customers, labor, and infrastructure
Functionality — the need for sites that can support real-world truck, equipment, and service operations

IOS has become more institutional, but the details still matter. Investors who understand zoning, tenant operations, and usable acreage remain better positioned than those treating the sector as a simple extension of traditional industrial.

Just scratched the surface here - listen to the full podcast here.

Start with our guide: What is Industrial Outdoor Storage?

IOS Underwriting Model: Underwrite IOS in Under 2 Min — No Spreadsheet Required

📢 LIST YOUR PROPERTIES Reach 6,000+ IOS investors, operators, and industry professionals in our engaged community.

Get your property in front of qualified buyers and tenants actively searching for Industrial Outdoor Storage opportunities.

📰 SHARE YOUR COMPANY NEWS Got industry news to share? Email us at [email protected] with your company updates and announcements.