Inside The Institutionalization of Industrial Outdoor Storage

Appetite for outdoor storage product has soared, and institutional investors are behind the push in demand.

Industrial outdoor storage activity has soared in recent years. The product type has a limited supply, high-quality credit tenants and future development opportunities to a higher and better use. Plus, parking and truck storage has become an important node in an efficient supply chain, which will help ensure healthy demand.

Altogether, investors have found a lot to like about the asset class. In recent years, investment appetite has grown, and now, institutional investors are moving in, launching investment funds and strategies to increase exposure to the industrial outdoor storage market, according to Andrew Wiesemann, an associate VP at Matthews Real Estate Investment Services.

Just The Beginning of an Institutional Presence

Institutional investors are heating up an already competitive outdoor storage market. In the last three months, institutional funds—including TPG Angelo Gordon, JP Morgan and municipal pension funds—have raised $3 billion in capital for the industrial outdoor storage market and partnered with leading national operators like Altera, Zenith and Triton.

"I believe this is really just the start of the institutional presence in this asset class," says Wiesemann. "Even as demand has faded for other popular asset classes, like multifamily, office and retail, industrial outdoor storage demand has continued to climb."

There isn't a formal quality classification of industrial outdoor storage, but institutional players are looking for specific characteristics. In particular, this cohort of investors wants stabilized properties with a credit tenant in place.