What Is Industrial Outdoor Storage (IOS) and Why It’s a Hot Asset
Industrial Outdoor Storage (IOS) has become a highly sought-after asset in Los Angeles, thanks to its critical role in logistics, transportation, and e-commerce growth. IOS properties are typically low-coverage industrial sites, used for storing equipment, vehicles, materials, and containers. These spaces support industries like construction, shipping, and last-mile delivery, which are essential in LA's robust economy.
The Growing Demand for IOS in Los Angeles
Los Angeles’ strategic position as a global trade hub, home to the Ports of LA and Long Beach, drives demand for IOS facilities. As one of the busiest ports in the world, the Port of Long Beach handled approximately 9.6 million twenty-foot equivalent units (TEUs) in 2024, a record-setting year surpassing the previous high in 2021, according to port data. This immense volume of imports creates a ripple effect throughout the logistics and supply chain industry, significantly increasing the need for storage and trucking facilities. Businesses require IOS properties to manage overflow inventory and efficiently handle cargo distribution.
As e-commerce expands, businesses are prioritizing efficient logistics operations, fueling a surge in outdoor storage needs. According to CBRE, e-commerce sales are projected to grow by over 50% in the next three years, further increasing the demand for industrial spaces. Additionally, industrial vacancy rates in Los Angeles hover around 1%, highlighting the intense competition for available properties.
The increasing focus on sustainability has also impacted IOS demand. Renewable energy firms and construction companies rely heavily on outdoor storage for equipment and materials, driving further competition. Los Angeles’ industrial market has seen a consistent rise in lease rates, with IOS properties now commanding a premium in areas near major transport hubs like the Alameda Corridor.
Why Investors Are Eyeing IOS Properties
Limited Supply: Zoning restrictions and high land costs limit new IOS developments in LA, making existing properties valuable.
High Returns: Competitive cap rates and stable tenant demand make IOS a lucrative investment.
Diverse Applications: Tenants from industries such as shipping, renewable energy, and construction require IOS for their operations.
Resilient Market: IOS properties often maintain their value even during economic downturns due to consistent demand from essential industries.
Covered Land Play: Low-coverage industrial sites provide immediate cash flow through leases while offering long-term appreciation potential. Investors can use the property’s interim income to fund entitlement and rezoning processes, ultimately preparing the site for higher-value development opportunities.
How to Capitalize on IOS Opportunities
Investors should consider location, proximity to transportation hubs, freeway accessibility and tenant needs when exploring IOS properties. Conducting a market analysis to identify underutilized properties or up-and-coming areas can give investors a competitive edge. Partnering with an experienced brokerage like Haymakers ensures access to exclusive off-market opportunities and expert market insights.
Haymakers specializes in identifying prime IOS opportunities in Los Angeles. Whether you’re looking to invest or lease, our team provides tailored insights to help you capitalize on this growing asset class.