Industrial Outdoor Storage (IOS): The Wild Wild West

If you had asked anyone in commercial real estate (CRE) just 18 months ago what “IOS” meant, you’d likely get a puzzled look. Industrial Outdoor Storage? Never heard of it.

Fast forward to today, and IOS has become the hottest niche in industrial real estate, sparking a nationwide rush that feels more like a gold rush than a traditional property trend. Investors, developers, and tenants alike are in a feeding frenzy to secure viable land sites. But why the sudden surge? And why does it feel like the rules are still being written? Welcome to the Wild Wild West of Industrial Outdoor Storage, a sector redefining how America thinks about industrial land.

What Is Industrial Outdoor Storage (IOS)?

At its core, Industrial Outdoor Storage refers to land sites used for industrial purposes that don’t necessarily require traditional buildings. Instead, the value comes from the yard space itself.

Think:

• Truck and trailer parking

• Equipment storage

• Construction materials or container storage

• Fleet vehicle parking

• Laydown yards for logistics and shipping companies

While these uses aren’t glamorous, they’re essential to keeping the nation’s supply chains, construction projects, and logistics networks running smoothly.

In short, IOS properties are the backbone of industrial operations; they may not make headlines like shiny new Class A warehouses, but without them, the industrial ecosystem grinds to a halt.

Why IOS Is Suddenly a Big Deal

So how did IOS go from obscure to overbooked practically overnight?

The answer lies in the perfect storm of industrial market dynamics, especially after the COVID-19 pandemic reshaped global logistics.

Here are a few major forces driving the boom:

1. The E-Commerce Explosion

E-commerce changed everything. With consumers expecting two-day (or even same-day) delivery, logistics companies have scrambled to find last-mile and middle-mile solutions. These distribution networks rely not just on warehouses, but on supporting land for trucks, containers, and overflow storage. The more packages Americans order, the more industrial land companies need.

2. Supply Chain Reconfiguration

The pandemic exposed vulnerabilities in global supply chains. As companies moved to onshore or nearshore operations, demand for domestic industrial land skyrocketed. But building new warehouses takes time and money, both of which are in short supply.

Enter IOS: a faster, cheaper, and more flexible alternative that can be put to work quickly without constructing a full building.

3. Rising Construction Costs and Interest Rates

With construction costs at historic highs and interest rates stubbornly elevated, developing new facilities has become prohibitively expensive for many investors.

IOS offers a compelling workaround. A fenced, graveled, and lit site can be operational in weeks or months, not years, and still command strong rents from tenants desperate for space.

4. Land Scarcity in Strategic Markets

Not all land is created equal. Industrial users need land near major transportation routes highways, ports, and airports. In land-constrained markets like Utah, the options are especially limited.

The Utah Factor: A Perfect Example

Utah’s industrial market illustrates the IOS story perfectly. The state has become a magnet for logistics and manufacturing, thanks to its centralized location, strong economy, and growing population. Yet it’s geographically boxed in by mountains on one side, the Great Salt Lake on the other. This natural constraint has created a land squeeze, driving up property values and making development sites incredibly valuable.

For companies that can’t justify building a full warehouse but still need secure outdoor space for operations, IOS sites have become a lifeline.

Investors are taking notice, too. Utah has seen a surge of activity as national players scout for land parcels they can convert into IOS yards, often competing with each other and driving prices up further.

The Catch: Zoning, Entitlements, and the IOS Learning Curve

Here’s where the “Wild West” analogy becomes more than a catchy metaphor.

Unlike warehouses, IOS properties aren’t always welcome in local zoning codes. Cities and counties have long prioritized clean, enclosed industrial development over open yards. Outdoor storage can raise concerns about aesthetics, environmental runoff, and noise.

That means entitled sites, those already approved for industrial outdoor use, are extremely scarce.

This scarcity creates several ripple effects:

• Longer entitlement timelines: It can take months or years to get local approvals.

• Higher entry barriers: Investors must navigate complex permitting processes.

• Premium pricing: Already-approved sites command significantly higher prices.

As a result, many investors find themselves in a modern-day land rush, jockeying for the few available properties that meet IOS criteria.

Some municipalities are now rethinking zoning rules to accommodate this demand, recognizing IOS as a legitimate industrial use rather than a temporary fix. But for now, scarcity is the name of the game, and it’s fueling the frenzy.

The Financial Opportunity: Turning Dirt Into Dollars

Despite the challenges, the economics of IOS can be incredibly attractive. Unlike traditional industrial assets that require millions in construction and tenant improvements, IOS often relies on simple but high-impact upgrades like:

• Fencing and gates for security

• Gravel or asphalt surfacing for durability and drainage

• Lighting and cameras for 24/7 operations

These relatively low-cost improvements can transform raw land into income-generating property, dramatically increasing its market value.

For example, a land parcel sitting idle might generate little to no revenue. But with basic IOS infrastructure in place, it can command rents of $3 to $6 per square foot annually, depending on location.

And since IOS tenants, think logistics companies, construction firms, or trucking fleets often sign multi-year leases for stability, the income stream is reliable.

The Investor’s Perspective: A New Kind of Industrial Play

For investors, IOS represents a high-yield, lower-capex opportunity in a market otherwise dominated by expensive warehouse developments.

Let’s break down why investors are chasing this asset class so aggressively:

1. High Demand + Low Supply = Pricing Power: The scarcity of entitled IOS sites means landlords can command premium rents.

2. Simple Operations: Unlike traditional industrial properties, IOS sites don’t require complex maintenance, HVAC systems, or tenant build-outs.

3. Scalable Strategy: Investors can replicate the model across multiple markets, aggregating portfolios of IOS sites into institutional-grade investments.

4. Future Flexibility: In some cases, IOS serves as a “land bank” strategy. Investors can generate near-term income from outdoor storage while holding the land for future development once market conditions improve.

Institutional capital has started to catch on. Major funds and REITs are now forming dedicated IOS investment platforms, acquiring portfolios across the country.

The Tenant’s Perspective: Move Fast or Miss Out

For tenants, especially those in logistics, trucking, and construction, finding IOS space has become increasingly competitive.

With limited inventory and rising rents, many companies are forced to lock in leases quickly, often paying a premium just to secure operational continuity.

This urgency has shifted IOS from a “nice-to-have” to a critical operational asset.

Fleet operators, for instance, need secure yards for trucks when they’re not on the road. Contractors need space for materials and staging. Without access to IOS, businesses simply can’t function.

Tenants who move early and secure long-term leases stand to benefit the most, avoiding the escalating rents expected to continue in constrained markets.

Challenges on the Horizon

Despite the enthusiasm, IOS isn’t without its challenges.

1. Regulatory Uncertainty: Zoning and environmental regulations vary widely by city and county, creating unpredictability for developers and investors.

2. Financing Complexity: Traditional lenders often struggle to underwrite IOS deals, viewing them as unconventional assets. That can make financing trickier and more reliant on specialized debt providers.

3. Tenant Turnover Risk: While many IOS tenants are stable, shorter lease terms or operational volatility in certain industries can affect cash flow consistency.

4. Land Pricing Volatility: As competition intensifies, investors must be careful not to overpay. The wrong parcel, in the wrong location, with limited entitlement potential, can quickly become a stranded asset.

Still, for those who navigate the nuances effectively, the potential returns are hard to ignore.

Utah and Beyond: Where the IOS Market Goes Next

Utah’s IOS boom is part of a broader national trend. Markets like Phoenix, Dallas, Atlanta, Houston, and Southern California are seeing similar surges.

Each market brings its own dynamics:

• In port cities, IOS supports container storage and drayage operations.

• In logistics hubs, it supports truck parking and distribution overflow.

• In construction-heavy regions, it supports staging and materials storage.

As industrial land grows more expensive, IOS will continue to fill the gap between raw land and full-scale development.

Expect to see:

• More institutional investment as the sector matures.

• Specialized IOS REITs or funds forming to consolidate assets.

• Municipal policy shifts that better accommodate outdoor industrial uses.

Conclusion: From Unknown to Unavoidable

Industrial Outdoor Storage has gone from a niche afterthought to one of the most talked-about sectors in commercial real estate, and for good reason.

It offers:

• Strong tenant demand

• Limited supply

• Simple operations

• Attractive risk-adjusted returns

But it also demands agility, creativity, and a willingness to navigate uncharted territory.

For landowners, IOS offers a way to unlock hidden value from underutilized properties. For tenants, it’s a competitive necessity to secure operations. For investors, it’s a frontier opportunity, one that rewards boldness and vision.

The truth is, industrial outdoor storage isn’t just a passing trend; it’s the logical response to a world where logistics, land scarcity, and capital costs are all converging.

It may still feel like the Wild West, but in this new frontier of industrial real estate, those who stake their claim early are likely to strike gold.

Parker Taggart is a Senior Associate at Legend Commercial, working alongside Skyler Peterson and Tre Bourdeaux as part of a market-leading team specializing in Industrial Outdoor Storage (IOS) and industrial real estate across Utah. Together, they focus on leasing, sales, and tenant/landlord representation for industrial properties and build-to-suit developments throughout Salt Lake, Davis, and Utah counties.