TAG Industrial Watch: August 5, 2023

During the pandemic, the United States experienced an import boom that left the nation’s ports severely backlogged without sufficient storage space. This shortage ultimately led to the emergence of industrial outside storage (IOS) as an increasingly popular asset type within the industrial real estate sector. With IOS space accounting for only five percent of total industrial space as of March (Globest), and new IOS sites even harder to come by, demand for IOS has considerably outpaced supply. Although the niche property type has experienced extraordinary growth since the onset of COVID-19, certain economic headwinds could slow down seemingly insatiable demand.

The most recent data from the U.S. Census Bureau indicates that from February to May, U.S. imports declined year over year for four consecutive months. If this trend persists, it could result in a decline in demand for IOS. In addition, smaller businesses faced with higher borrowing and inventory costs make up a considerable portion of the IOS tenant pool. Sustained financial challenges could deter potential users from entering the space entirely.

Although there are headwinds that could potentially curb IOS demand, there are still attractive opportunities within the space. Location and zoning constraints keep the supply of available IOS space low, and being near major transportation routes or ports helps investors secure their investment. With consumers becoming more and more accustomed to same-day or next-day shipping, the long-term need for IOS space remains promising.

I N D U S T R I A L   N E W S

The Robust IOS Niche Is Facing Headwinds
GlobeSt. – July 18, 2023
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Industrial Outdoor Storage Rises In
Popularity Among Institutional Investors

WealthManagement.com – July 3, 2023
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Teamsters Say Trucking Giant Yellow Corp.
Is Ceasing Operations, Filing For Bankruptcy

APnews – August 1, 2023
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Investments In Nontraded REITs Up 39%
But Still Far Outpaced By Withdrawals

Bisnow – July 28, 2023
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Industrial Outdoor Storage Demand Gains
from Household Formation, E-Commerce

Connect CRE – July 21, 2023
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R E G I O N A L   N E W S

Industrial Sector Continues To Drive
Commercial Real Estate Growth

REJournals – July 26, 2023
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SoCal-Focused Rexford Industrial Reports
Income Up 40% Despite Market Cooldown

Bisnow – July 20, 2023
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Industrial’s Low Vacancy Rate
Best Among Asset Classes

GlobeSt. – July 31, 2023
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Birtcher Breaks Ground On Inland
Empire Industrial Project

Commercial Property Executive – July 20, 2023
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Kansas City Industrial Demand
Concentrated In Two Areas

CoStar – July 18, 2023
Read More