With a $189 million loan from Blackstone Mortgage Trust, Alterra Property Group acquired 49 industrial outdoor storage (IOS) properties in 22 states.
“That’s when the floodgates opened,” said Justin Horowitz, senior managing director at Cooper-Horowitz, which brokered the February 2025 transaction. It “was a clear indication of the market’s legitimacy for a broader array of institutional investors.”
IOS is typically used for garbage trucks, construction equipment, building materials and other such physical components. Data for valuing IOS portfolios is sparse, even as these assets are increasingly being eyed by institutional investors. The market is fragmented, mainly comprising individual proprietors of the typically four- to 10-acre properties. Alterra and Realterm are among the few that have been building significant IOS portfolios for more than a decade.
A 2021 joint venture between private equity firm Stockbridge and Industrial Outdoor Ventures – which has invested exclusively in IOS since its start in 2017 – was an early sign of institutional interest in the sector. The COVID period and the rise of massive distribution warehouses with large vehicle fleets attracted more Wall Street attention.
J.P. Morgan, for example, has advised and jointly invested with IOS aggregators including Alterra, Realterm and Zenith, while TPG Angelo Gordon and Triton Real Estate Partners joined up in June 2024 to acquire more than $1 billion in IOS assets.
The Blackstone deal signaled a broadening set of institutions seeking IOS exposure that now include KeyBank and Bank of Montreal. Asset manager PGIM in March provided Alterra $103 million in acquisition financing secured by a portfolio of 23 IOS assets.
Justin Horowitz
Cooper-Horowitz closed $623 million in first-quarter IOS-related transactions. Justin Horowitz said It anticipates $1 billion in total IOS transactions by the end of June and $2.5 billion by year-end. That compares with $1.5 billion for all of last year.
The influx of lenders is reducing financing costs. Horowitz said that the winning bid among a dozen banks and insurance companies early this year to finance a portfolio of Class A IOS properties was 16% above a similar portfolio of traditional industrial properties. That was significantly below what would have been a 30% premium a year before.
“Lenders are really betting more on the jockeys” – meaning the portfolio managers – “and how they’ve handled the bumps and bruises over the years,” he said.
According to a September 2025 Newmark report, IOS has delivered “outsized rent growth” of 123% since 2020, outpacing, for example, bulk warehouse’s 58% over the same period. Newmark estimated there are 1.4 million acres of IOS across the U.S., roughly the size of Delaware. The market capitalization of readily tradeable IOS real estate in that footprint was conservatively estimated at $200 billion.
That figure could exceed $1 trillion when rarely traded rail yards, inland intermodals and sea- and airport-related land are included.
“While bulk warehouses have dominated industrial investor focus over the past five years, IOS has delivered twice the rent growth and has half the vacancy rate of the bulk warehouse sector,” Newmark noted.
Newmark’s 2025 report found the IOS market to be tighter than, and outperforming, bulk warehouse.
The commercial real estate advisory and services firm views IOS as early in its transition to institutional ownership, although acquisitions by major equity managers are increasing. It pointed to Alterra and J.P. Morgan’s $490 million sale in November 2024 of a 51-property portfolio to Peakstone Realty Trust, Realterm’s $277 million acquisition from Brookfield Asset Management in January 2025, and Catalyst IOS’s sale of 18 properties valued at $163.5 million to an unnamed state pension fund in March last year.
Vytas Norusis, head of Partner Valuation Advisors’ national IOS practice group, said that his conversations with potential new IOS market entrants, including large insurance companies and private equity firms, indicate plenty of interest from capital providers. But a few obstacles remain.
IOS aggregators anticipating property-value increases are hesitant to sell just yet, he said, and IOS aggregators are still accumulating relatively small holdings into large enough portfolios – typically upwards of at least $1 billion – to appeal to institutional investors.
Vytas Norusis
“There’s still a lack of data and transparency in the market, so it’s harder for some institutions to underwrite these deals compared to other property sectors with readily available data points,” Norusis said.
More deals will reduce those obstacles. Brookfield Asset Management announced in February a $1.2 billion deal to take Peakstone Realty Trust private. Eric Cox of CBRE said this will provide more, if imperfect, insight into how institutions value IOS properties, since Peakstone also holds industrial properties.
“This year and next I think we’ll start to see larger transactions, as some of these portfolios that have been consolidated will be looking for an exit,” said Cox, senior vice president in CBRE’s national partners group. said. He sees institutions “fine tuning” what they’re looking for in IOS properties; some type of structure on the site, such as a truck terminal or small maintenance facility, has become increasingly important over the last 18 months.
IOS properties are currently in demand to support the surge in data centers, but those supporting developments in more remote areas may have “less durable” property values than those near metropolitan centers, Norusis said. He pointed to Elk Grove Village, Illinois, outside Chicago, as a current data center hot spot while also hosting a range of industries, ensuring ongoing demand for nearby IOS.
“There are lots of positive factors for IOS in those locations,” he said.
Municipalities’ often restrictive zoning rules add value to IOS properties, since they limit competition, but IOS operators and investors also risk violating them. Norusis pointed to an ordinance in the Houston area that limits gravel lots, requiring IOS designed for vehicles to provide be constructed with more expensive concrete.
What’s more, such restrictions can suddenly change. “A big risk is having a municipality say, ‘We’re growing like crazy, and we don’t want to see a bunch of cranes and backhoes sitting off Main Street.’”