Why Industrial Outdoor Storage Is Scarce Near Growing Metros, and How to Underwrite Land With Little Building on It
Drive the edge of any growing metro and you will see it. Fenced gravel lots full of pickups, trailers, excavators, pipe, pallets, and shipping containers. A small shop building in the corner, sometimes none at all.
It is easy to dismiss these sites as land waiting for a better use. For a large share of the regional economy, they already are the better use.
Industrial outdoor storage, or IOS, is real estate where the yard does the work and the building is secondary.
Who needs a yard
The users are the businesses that build and maintain everything else:
- Electrical, plumbing, HVAC, and utility contractors
- Equipment rental and repair companies
- Trucking, towing, and fleet operators
- Landscaping, paving, and site work crews
- Building material and pipe distributors
- Container, trailer, and chassis storage
- Contractors serving data centers, manufacturing plants, and energy projects
These businesses need somewhere secure to park, stage, load, and maintain equipment close to where the work is. A warehouse does not help them much. A fenced, stabilized, well located acre does.
Why well located yards are scarce
The demand is not new. What has changed is how hard it has become to find the right site.
Newmark reported in 2025 that IOS rents had increased 123 percent since 2020, more than twice the rate of bulk warehouses, and that well located sites remain scarce largely because of zoning. The same research found vacancy for outdoor storage running at roughly half that of traditional bulk warehouses.
Three forces keep supply tight:
- Zoning. Many cities discourage or prohibit new outdoor storage, especially near residential growth and along visible corridors.
- Redevelopment pressure. As metros expand, older yards are rezoned or sold for housing, retail, or larger industrial buildings.
- Entitlement friction. Stormwater, screening, paving, and access requirements can make a new yard expensive and slow to approve.
Existing, legally conforming yards in growing corridors become harder to replace every year.
How we underwrite land with little building on it
Traditional industrial underwriting starts with the building: square footage, clear height, docks, and rent per square foot. IOS turns that upside down. The questions start with the land.
- Usable acreage. Gross acres rarely equal usable acres. Easements, setbacks, detention ponds, and slopes reduce what a tenant can actually use.
- Surface. Compacted gravel, asphalt, or concrete, and how well it drains. A yard that turns to mud in spring is not the same asset.
- Access. Truck turning radius, gate location, curb cuts, and proximity to highways and job sites.
- Security. Fencing, lighting, cameras, and neighborhood context.
- Zoning and legal use. Is outdoor storage permitted by right, allowed by special use, or simply tolerated? This one question can decide the investment.
- Environmental history. Fuel, oil, and equipment storage leave traces. A Phase I is the minimum.
- Utilities and the building. Power, water, and a small shop or office add flexibility and tenant appeal, even when they are not the main event.
We then value the site two ways. First on its income as a yard, using rent per usable acre. Then on the land itself, assuming the yard use ended. The gap between the two tells us how much we are paying for the current income, and how much protection the dirt provides.
The risks worth naming
IOS is not a simple story of scarcity and rising rents.
- Tenant quality varies widely. A regional utility contractor and a month to month car storage user are very different credit risks.
- Improvements are light, so switching costs are low. Tenants can move more easily than a manufacturer with installed equipment.
- Code enforcement can change. A yard operating without proper approvals may face screening, paving, or use restrictions after a sale.
- Neighbors matter. Residential growth next to a yard brings noise, dust, and traffic complaints.
The best sites combine legal conformity, good access, multiple likely tenant types, and a land value that holds even if the yard use disappears.
Where we are looking
In the Texas Triangle, the Arizona Sun Corridor, and the Colorado Front Range, new manufacturing plants, data centers, and population growth are all creating demand for contractors and fleets. Those businesses need yards within a reasonable drive of the work, often in the smaller cities and fringe corridors around the anchor metros.
That is where we are focused: legally conforming yards and low coverage industrial sites that serve the people building the region.
Bring us the lot behind the fence
Draymoor Ventures is seeking fenced yard, contractor, equipment storage, truck parking, and low coverage industrial properties across our target regions. We are especially interested in long time owners, family held sites, and sale leasebacks from operating businesses that own their yard.
Share an opportunity: Steven@DraymoorVentures.com
Sources
- Newmark, Lots to Gain: Industrial Outdoor Storage Is Outperforming Bulk Warehouse, September 2025. Reports 123 percent IOS rent growth since 2020, zoning driven scarcity, and vacancy about half that of bulk warehouses. https://www.nmrk.com/insights/thought-leadership/lots-to-gain-industrial-outdoor-storage-is-outperforming-bulk-warehouse