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Jax Daily Record Monday, Jul. 18, 202204:30 AM EST

Ben Stewart: Demand grows for outdoor storage 

Northeast Florida experts share their insights into the commercial real estate market at the end of the 2nd quarter of 2022.
by: Guest Writer

By Ben Stewart | First Vice President, CBRE Industrial & Logistics Advisory & Transaction Services

Until recently, industrial outdoor storage was overlooked and underappreciated in the world of industrial real estate. 

IOS, or industrial service facilities,  are outside storage facilities to support logistics and transportation providers along with bulk storage. 

Today these properties are being recognized for their current worth and future potential. 

IOS is estimated to be a $200 billion asset class and is on the verge of becoming an institutional asset. Investment firms are partnering with private equity firms that are targeting these facilities across the country. 

Here are three main reasons driving the IOS demand and growth:

Growing demand from tenants with strong credit. As new warehouse space is absorbed in a market, the IOS needs grow in tandem. 

Limited supply. IOS properties must be near other industrial developments or a major population center. Due to the infill nature of this land, there is short supply and few, if any, opportunities to develop new IOS facilities. 

New developments are timely, expensive and difficult to execute. Construction costs for these developments have risen substantially and materials often are in short supply. Many cities across the country are limiting approvals of these facilities due to their stigma. 

While IOS/ISF properties look like the more familiar boat and RV storage, their tenant base is vastly different. 

Publicly traded e-commerce and logistics companies need IOS for fleets of delivery vehicles. Port cities need them for container yards. Construction suppliers need them for roofing, plumbing and equipment storage.

IOS demand continues to grow and the outlook remains very strong. With a focus on major industrial markets and port cities, Jacksonville has become a highly ranked target for many investors.

Ben Stewart is the 2022 NAIOP Commercial Real Estate Development Association Northeast Florida Chapter Membership Chair.


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