According to a recent report, IOS rents have surged by 123% since 2020, more than double the 58% increase seen in the bulk warehouse sector over the same period.
The IOS asset type is now reaching a stage of transition that is creating new opportunities to create value for existing owners and new market entrants. Owners can add benefits to their properties such as security, storage yards and other improvements.
There are emerging niches in the industrial real estate sector that are all primed as significant growth areas. The three most promising are outdoor storage, cold storage and facilities that support electric vehicles.
While outdoor storage has not been immune to headwinds facing commercial real estate of late, the IOS sector still boasts one of the lowest vacancy rates of any property type due to strong supply/demand fundamentals.
Although IOS is seeing growing demand in line with the broader industrial property boom, it is still a volatile market with demand and rents accelerating faster in upcycles but also performing worse during economic downturns. And one of the reasons IOS tends to suffer disproportionately is the overall weaker tenant profile.