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ndustrial outdoor storage (IOS) in Elgin, Illinois, is experiencing a surge driven by the rapid expansion of AI and quantum infrastructure. IOS—paved or gravel sites where equipment, containers, and supplies can be parked—has become essential for moving goods nationwide, especially as data‑center construction requires staging areas for generators, tractors, and other heavy equipment. Alterra IOS, a leading operator, now owns more than 400 sites across the country.
Leo Addimando, Alterra’s CEO, notes that IOS represents “real estate hiding in plain sight.” While over a trillion dollars of IOS land is municipally or government‑owned, about $300 billion is privately held by small local owners, forming a sizable addressable market. The sector, once dominated by mom‑and‑pop businesses, is attracting institutional capital. In August, Zenith IOS partnered with J.P. Morgan‑advised investors to create a $700 million joint venture, targeting a portfolio valued over $1.5 billion—one of the largest IOS collections in the U.S. Blackstone has also committed $189 million in loans to Alterra for 49 sites and $231 million to Jadian Capital for 43 properties.
IOS fundamentals outperform bulk warehouses. Newmark reports that IOS rents have risen 123% since 2020, with Phoenix, Memphis, and Atlanta leading growth. Vacancy rates are roughly half those of bulk warehouses, and in some markets, IOS rents per acre rival warehouse rates. Addimando highlights that IOS is larger than self‑storage, manufactured housing, marinas, and RV parks, and that many institutional owners already hold other real‑estate categories.
Alterra recently closed a $150 million loan facility from Blue Owl Capital, collateralized by 21 properties in 12 states. Subsequent funding will support Alterra IOS Venture III, a closed‑end fund with $925 million in equity commitments. Blue Owl’s chief investment officer, Jesse Hom, praised Alterra’s leadership in a high‑growth, resilient sector, noting strong, sustained demand for IOS assets.
The U.S. hosts an estimated 1.4 million acres of IOS, but well‑located sites are scarce due to zoning constraints. Key users include FedEx, J.B. Hunt, Maersk, TruGreen, ABC Supply, and United Rentals, which operates around 1,400 locations nationwide. While data‑center demand remains robust, concerns arise over potential overheating, high interest rates, tariffs, and economic slowdown. Zoning remains the top risk; municipalities often deny variances for IOS, preferring to reduce acreage that does not generate significant jobs or tax revenue.
In summary, IOS is rapidly gaining traction as a critical component of the logistics and data‑center supply chain, attracting significant institutional investment and delivering strong rent growth and low vacancy rates. However, land‑constrained supply and regulatory hurdles pose ongoing challenges for the sector’s expansion.
