As the market waits (and waits) for rate cuts that keep getting pushed out, many real estate investors remain stuck in limbo. Deals don’t pencil. Sellers won’t adjust. And capital remains expensive and selective.
But not every asset class is frozen.
At Westlake Realty Group, we’re leaning into one of the few corners of commercial real estate where 7%+ stabilized yields are still achievable—Industrial Outdoor Storage (IOS).
In a world of compressed spreads, refinancing risk, and cautious lenders, here’s why IOS continues to stand out:
1. Yield Is King
I wrote a whole post on this earlier this year. When multifamily trades at 5 caps and borrowing costs exceed 6%, the math just doesn’t work. But IOS deals often deliver 7–8% unlevered stabilized yields, allowing for positive leverage.
2. Supply Constraints = Durable Pricing Power
You can’t just build more IOS in the markets we’re targeting. Cities are reluctant to approve new truck yards, contractor storage, or heavy equipment parking. Zoning restrictions, environmental hurdles, and NIMBY resistance limit new supply. That natural scarcity creates long-term pricing power and insulation in down markets.
3. Institutional Adoption Is Just Beginning
Most estimates put institutional ownership of IOS at under 10%. We believe we’re in the early innings of institutional capital entering the space. That creates a window of opportunity: aggregate a portfolio of sub-institutional assets ($5-15M) and add value through lease-up, expansion, and redevelopment.
In a market where “nothing pencils,” IOS still can.
We’re underwriting to defensible returns backed by scarcity, sticky tenants, and strategic flexibility. And for those willing to do the hard work (think cold calls, zoning research, and off-market deal sourcing), there’s still lots to gain.
If you’re active in IOS or interested in the space as a passive investment opportunity (we are currently raising capital for deals in California and Texas), please reach out. We’re always open to sharing insights.
#IndustrialOutdoorStorage #YieldMatters #RealEstateInvesting #IOS #NicheAssets #SeekingAlpha
In a Market Where Nothing Pencils, IOS Still Can
