Iconic Equities, Leste Real Estate Seek $400M in Industrial Outdoor Storage

Iconic Equities and Leste Real Estate have partnered to acquire what they see as an eventual $400 million run in industrial outdoor space. Iconic is an industrial asset investment and development firm and Leste Real Estate is the real estate investment arm of alternative investment manager Leste Group.

The joint venture is giving itself two years to place the money and has started with buying Garnett Storage, a five-acre storage site in Coral Springs, Florida, for $9.5 million. Serving 289 tenants, it’s focused on “the complete outdoor storage needs for owners of boats, trailers, motor homes, jet skis and other commercial vehicles in Broward County and surrounding areas.”

The companies say they have identified a “substantial pipeline of IOS facilities for acquisition in major metropolitan areas and port markets across the US.”

Industrial outdoor space, or IOS, is a growing interest of institutional investors. Storage for trucks, buses, construction heavy equipment, containers and trailers, and bulk materials, or fleet facilities and truck terminals, all require types of space that are typically outside what warehouses can provide.

In a way, IOS has some of the same characteristics, from an institutional view, as single-family rentals once had. The market has been fragmented and owned by individuals and small entities, so was overlooked by large investors. But its importance is growing. For example, as companies seek more urban infill logistic locations, they also need places for delivery vehicles and inbound trucks and containers. 

“They’re not creating more land for outside storage. In most cities, nobody wants to see more outside storage,” Rob Kossar, vice chairman at JLL who oversees the company’s industrial division in the Northeast, told GlobeSt.com earlier this year. “It’s zoned out everywhere, so wherever it exists, it’s super-valuable. That’s why institutional investors have suddenly woken up (to IOS).”

It may also be that technology, which has allowed institutional investors to put money into individual homes and group them together in geographic areas, can also make owning and operating IOS feasible and a potential option for institutions.

Alterra launched a $1.5B expansion to defend its leadership in the sector, targeting IOS space from 5,000 to 100,000 SF on 2 to 30 acres, with deals between $5M and $20M.

Zenith IOS, a platform aiming for low-coverage industrial sites for tenants seeking outdoor sites, formed a $700 million joint venture with JP Morgan Chase to acquire urban infill locations in major cities.