JP Morgan Sector Spotlight: Truck Terminals & Industrial Outdoor Storage Stands Out as an extended Sector Opportunity

It’s no secret that the industrial property sector has benefitted greatly from the rise of online shopping in recent decades. Although fundamentals have moderated in recent quarters, over the past few years the sector saw record high rent growth and historically low vacancy as tenants raced to lease warehouse space to bolster their direct-to-consumer fulfillment networks.

What may be less appreciated is that this trend has also benefitted low coverage industrial uses like Truck Terminals and Industrial Outdoor Storage (“IOS”) sites. To briefly define each of these, Truck Terminals are high flow-through logistics facilities, where the main objective of the property is to facilitate the transfer of goods from one truck to another. This often involves a long narrow building with dock doors on either side.

An IOS property is land zoned for industrial use where the tenant can store things outside, most frequently vehicles. In our view, these two industrial subtypes have been among the most attractive alternative property sector investments.