The industrial outdoor storage asset type has been maturing over the past several years and is now reaching a stage of transition that is creating new opportunities to create value for existing owners and new market entrants.

Beginning about five years ago, investors began flocking to the IOS market and  institutionalizing the asset class via aggregation. Smaller investment firms were purchasing IOS properties on a one-off basis in the $1 million to $5 million range to accumulate larger portfolios and add value through capital expenditures or triple net reimbursement structures. More recently, aggregators have been recapitalizing their portfolios with institutional backing from fund managers that have provided additional capital to continue building their portfolios.

Now, early investors are beginning to explore opportunities to exit their initial investments as robust demand has led to growing pricing in the sector. Increased allocations from pension funds and other institutions are expected to continue to boost pricing within this sector, according to a Colliers report on the IOS market.