Demand for the industrial outside storage asset class continues to grow and Tampa Bay is emerging as a key market.
A recent report from JLL took a look at some of the demand drivers and benefits of IOS. Particularly, the real estate firm listed East Tampa as the “most robust submarket” for storing business-related equipment and materials on the outside part of industrial properties.
“This area is particularly attractive due to its strategic location near the Port of Tampa and the intersection of two major highways, I-75 and I-4,” JLL wrote.
“Outside of East Tampa, there are scattered IOS pockets within the Tampa MSA. Each submarket offers unique advantages and opportunities.”
The increased need for e-commerce and disruptions in the supply chain has been driving the demand behind the $200 billion industry, according to JLL. In the past 18 months, the average cost per acre at IOS sites has shot up by 32 percent.
“This increase is driven by institutional players purchasing and renting at higher rates than traditional ‘mom and pop’ shops,” the Chicago-based firm said.
IOS makes a strong business case. For example, it can be used for vehicle storage and heavy materials. Also, this method is more environmentally friendly than a typical warehouse and saves money on upfront and ongoing costs. Taking advantage of IOS, can lead to more revenue streams, said JLL.
However, IOS does come with its flaws. For instance, it’s important to note that sites with structures usually cost more than ones without them. Also, building the correct infrastructure, which requires a sizeable investment, is essential such as lightning and draining systems and having secured fencing. Also, IOS areas are more exposed to erosion and natural wear, which require more maintenance. Some other concerns are related to limited supply and zoning, and a lack of data available to support market trends such as rental and vacancy rates.
It remains to be seen what the future of IOS looks like – but as e-commerce continues to grow, the space should follow with increased demand. In the past, IOS has been used as a surplus for goods or to supplement seasonal demand.