Industrial Outdoor Storage Market

For years, industrial real estate has been an attractive product type for investors throughout the U.S. Historically, Class A warehouses, large distribution centers, and flex spaces have dominated the space, until now. Over the past 18 to 24 months, industrial outdoor storage (IOS) has emerged as a front-runner in the market. Institutional and private capital have started investing into the asset class within top MSAs across the country. In demand from coast to coast and estimated as a $200 billion asset class, Industrial outdoor storage is proving it is here to stay.

What is Industrial Outdoor Storage (IOS) & Its Purpose?

Industrial outdoor storage properties, sometimes referred to as industrial service facilities (ISFs), are comprised of three main components: coverage ratio, zoning, and location.

You are watching: Industrial Outdoor Storage Market

IOS properties have a ceiling coverage ratio of 20 to 25 percent, meaning that a structure or warehouse covers less than 25 percent of the total property. In terms of zoning, every city has different requirements and regulations, but typically the occupying tenants of an IOS facility needs the location to be zoned for industrial use. Lastly, location is a driving factor for IOS properties. Several of the properties are used for transportation and logistic methods. Most of these assets are strategically located near a major highway, airport, or port terminal. Overall, IOS facilities have several uses, including storing and repairing rigs and trailers and housing bulk commodities such as roofing supplies, stone, and construction materials.

Three Types of Users

Read more : Our Top Tips On How To Clean Your Natural Stone Patio & Outdoor Tiles​

1.Transportation and Logistics

• • Notable Users: SAIA, Swift Logistics, Southeastern Freight Lines, CSX Transportation

2. Building Material and Construction Production

• • Notable Users: Vulcan Materials, Builders FirstSource, Beacon Roofing, Fortiline Waterworks

3. Equipment Rental

• • Notable Users: Sunbelt Rentals, United Rentals, Herc Rentals, H&E equipment

Port Markets Rise to Popularity

Read more : Types and Examples Of Outdoor Advertising

Port markets have emerged as one of the most sought-after locations for investors and users simply due to supply and demand. It is estimated that 90 percent of U.S. imports are shipped by sea, making the ports the first stop in the supply chain process. The increase in demand started 24 to 36 months ago when the supply chain was constrained due to COVID-19. Many ports received more inventory than space allowed, creating a snag in the supply chain. Some of the largest ports in the country are located throughout the Southeast region, including Charleston, Savannah, and Jacksonville. While industrial real estate has always had a large footprint in markets like Charleston and Savannah, the historical roots of the cities and the number of wetlands limit the availability of added industrial space. Thus, making IOS properties located within a few miles of the port strong prospects for many logistics companies.

Port Expansion

Due to past production, forecasted growth, and the historic real estate market conditions over the previous two years, southeastern port markets have seen tremendous growth on all fronts and show few signs of slowing down. In 2022, the Port of Jacksonville saw its strongest year post-COVID-19 in terms of twenty-foot equivalents (TEUs) moved through the port, while the Port of Savannah and the Port of Charleston attained their most successful year in history. All three ports reached the finish line on their respective harbor deepening projects last year, allowing each location to attract larger vessels. The Charleston Harbor is now the deepest harbor on the East Coast, sitting at 52 feet. The ports are continuing further development with several projects underway. The Port of Jacksonville recently completed a $100 million berth enhancement project at Blount Island to accommodate larger ships, while the Port of Charleston has been working on the new Navy Base intermodal facility and inner-harbor barge operation. The Port of Savannah currently has multiple developments underway, one of which is dock renovation at the Ocean Terminal. Savannah aims to increase the port’s current production by 60 percent by 2025.

What’s In Store for the Future?

Companies across the globe are beginning to divert a number of their U.S. shipments to the East Coast due to the potential rumors of dockworker strikes along the West Coast. Being codependent on multiple ports will help eliminate some of the associated risks of being dependent on one location and assist in delivering goods to all parts of the country in a timely manner. Southeast ports have benefited from the shift as they continue to see an increase in demand. With historically low vacancy rates in 2022 across many markets in the Southeast, alongside the forecasted growth of the ports, demand will continue to rise, meaning IOS development will follow. Submarkets like Pooler and Summerville have already begun to see new projects break ground, adding to the available inventory in the market. At this rate, industrial outdoor storage will continue to enlarge its footprint as one of the fastest-growing asset classes in commercial real estate.

Source: https://gardencourte.com
Categories: Outdoor