Seven Stand-Out Features to Consider When Speculating on Your Next Industrial Outdoor Storage Development

May 2023 (HOUSTON) –

Industrial Outdoor Storage (IOS) has seen dramatic growth in the past three years and is now estimated to be a $200-billion asset class. Primarily used for truck terminals, trailer storage, container storage, pallet storage and construction or heavy equipment yards, the market saw a huge boom during the pandemic as e-commerce exploded. Even with the pandemic slowing down, e-commerce continues to grow. Here are seven features to consider before developing your next IOS project.

  1. Location, Location, Location: It’s all about location. Being port centric, the last mile near distribution and residential density, or being woven into the small zoning classifications of a municipality can swing your lease assumptions drastically.
  2. Access/Ingress/Egress: If my kid can’t drive it in there, you may not want it. Turning into a 12’ curb cut hauling a 53’ trailer just seems unfair. Widening your gates can make things easier. Recess your ingress gates deep enough that the driver isn’t sitting in the middle of the intersection typing on the access keypad. Safety should always be a priority.
  3. Security: Going along with safety is security. If you don’t want to be there at night your occupier may not want to In some cases, you may not have a choice. Do everything in your power to protect your people. Tall r-panel fencing, barbed wire, cameras, lots of light, gun turrets… well, maybe not gun turrets. (You get it.) Protecting your occupier means protecting your investment.
  4. Size/Configuration: This is a critical component. A person can buy a 10-acre bowling alley in a great location, but if the size or setup won’t allow for a good parking plan, the site might be a pass. Consult your commercial real estate broker to better understand the demand in the area as well as a planner to configure the site could work for the next potential user. As an example, a site will be configured differently for sprinter vans, pipe yards or tractor trailer storage. Can you justify adding a building to it?
  5. Amenities: Ever heard of a palapa? Down in the Valley, these are being speculated occasionally as part of industrial truck storage developments to serve the drivers parking at a site. These palapas come complete with a break room, shower and restroom area where road warriors can rest and network. Other considerations include building a small shop for an onsite mechanic and space for a consistent food truck to park. Fantastic internet access is another key amenity deemed essential. These features may not always come back in the rent, but they do make it harder to leave, resulting in renewals and rent increases. As this asset class becomes more competitive, these are key advantage to help your storage location stand out.
  6. Competition and Inventory: Find a way to stand out or get away. If your competition has been around the area for decades, has several yards in the area, or is incentivizing deals, you might need to think of a creative way to attract tenants.
  7. Determining Leasing and Sale Cost: This can be touchy, especially in the less established markets of IOS. Pricing can fluctuate significantly based upon old rent comps, or the basis in your land just might not line up with what you and the occupier can justify. Add in long-term landowners with second and third generation yards who might be a better fit for that specific market. If your market is accustomed to premium and newer developments, it will likely deliver more occupiers prepared to pay the freight for quality.

Lee & Associates – Houston Research