Alterra IOS CEO: Real Estate Sector Outperforming
- Industrial Outdoor Storage (IOS) comprises paved or gravel land used for storing construction equipment, vehicles, containers, supplies - essentially anything that can be stored outside.
- The rapid expansion of Artificial Intelligence (AI) and quantum computing infrastructure is driving a surprising boom in the IOS sector.
- According to Alterra IOS, a leading player in the space with over 400 sites nationwide, the demand is significant.
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The Unexpected Real Estate Boom Fueled by AI: Industrial Outdoor Storage
Table of Contents
What is Industrial Outdoor Storage (IOS)?
Industrial Outdoor Storage (IOS) comprises paved or gravel land used for storing construction equipment, vehicles, containers, supplies – essentially anything that can be stored outside. It functions as crucial back-office support for the movement of goods, filling the gap between warehouses and factories. While structures can be present, they must constitute less than 25% of the total space to qualify as IOS.
The Rise of IOS: Driven by AI and data Centers
The rapid expansion of Artificial Intelligence (AI) and quantum computing infrastructure is driving a surprising boom in the IOS sector. Demand is surging while supply remains constrained,leading to significant rent growth. These sites are becoming essential staging grounds for data center construction, with developers utilizing them to park millions of dollars worth of generators, tractors, and other critical equipment.
According to Alterra IOS, a leading player in the space with over 400 sites nationwide, the demand is significant. “Its the real estate hiding in plain sight,” says Leo Addimando,CEO of Alterra IOS. “There is over a trillion dollars of IOS real estate in the U.S., but most of that is municipally, government-owned. It’s the shipyard, it’s the airport. There’s about $300 billion of it, which is owned by mostly small local owners that own businesses, not institutional, and that’s the addressable market.”
From Mom-and-Pop to Institutional Investment
Historically, IOS was a fragmented market dominated by small, local owners. However, the sector is now attracting significant investment from large institutional players. in August, Zenith IOS formed a $700 million joint venture with institutional investors advised by J.P. Morgan Asset Management. This venture boasts a gross asset value exceeding $1.5 billion, establishing one of the largest IOS portfolios in the United States.
Key Characteristics and Location Factors
Successful IOS sites share several key characteristics:
- Proximity to Infrastructure: Located near highways, ports, rail lines, and major transportation hubs.
- Zoning: Appropriate zoning regulations allowing for outdoor storage.
- Accessibility: Easy access for large vehicles and equipment.
- Security: Adequate security measures to protect stored assets.
Market Size and Potential
The total IOS market in the U.S.is estimated to be over $1 trillion, with a significant portion owned by government entities. The addressable market - the portion owned by private individuals and businesses – is estimated at $300 billion. This represents a substantial opportunity for institutional investors.
IOS Investment Trends: A Data Overview
| Metric | Value | Source |
|---|---|---|
| Total U.S. IOS Market | $1+ Trillion | Alterra IOS |
| Addressable Private Market | $300 Billion | Alterra IOS |