The best trade in real estate right now isn't apartments or office. It's gravel lots. And the window won't stay open forever.
Most investors have never heard of Industrial Outdoor Storage (IOS). Institutions are just starting to touch it. 90% of the $200 billion market is still privately owned, half of it by the businesses operating on it.
That's not going to last.
Here's what makes right now the moment: almost every CRE asset class is dealing with negative leverage — cap rates below debt costs, meaning you're paying to own the asset. IOS is one of the only places where that math still works in your favor. We're stabilizing at 7.25%+ yields with debt in the mid-to-high 5s. Real positive leverage. In 2026. That's almost impossible to find anywhere else in real estate right now.
So what is IOS? IOS is exactly what it sounds like... properties where the building covers 25% or less of the land, with the majority of value in the outdoor space itself. Trucking companies parking fleets. Construction firms storing equipment. Utility contractors staging materials. Equipment rental yards. Recycling operations.
The fragmentation that keeps institutions away is the same reason returns are still this good. But the big boys are paying attention now. When institutional capital floods in (and it will) cap rates compress, competition spikes, and the window closes. That's exactly what happened to self storage, a comparable $200 billion market that's now fully institutionalized.
At Westlake Realty Group, we got in early. Built technology to source and operate at scale with a lean team. Net returns to our LPs are running in the high teens.
The opportunity is real. It just won't be quiet for much longer.
What's the most underpriced asset class you've found before the crowd showed up?
#industrialoutdoorstorage #IOS #realestate #commercialrealestate
The Best Real Estate Trade Right Now Might Be Gravel Lots
