TAG Industrial Watch: March 4, 2023

America’s global shopping spree that took off in 2021 continued last year as total imports topped $3.2 trillion, increasing the trade deficit by 10% to a record high of $1.2 trillion. The massive influx of imports has been the driving force behind the boom in Industrial Outdoor Storage spaces (IOS) as shipping containers stack up near ports and railyards. In total, IOS properties are now valued at $200 billion across the U.S. and the segment has been outperforming the overall industrial market. According to a Marcus & Millichap report, the vacancy rate among IOS properties dropped below 3% in 2022, with rents spiking 30% since the end of 2019 (Bisnow). Unlike the big box warehouse segment, IOS properties (often regarded as an eyesore) have essentially no competition from new development given the difficulty in getting building permits. As the overall industrial market experiences lower absorption levels this year, the lack of new supply will help shelter IOS properties. While America’s global shopping spree continues, IOS landlords have a great opportunity to take advantage of unprecedented levels of equity.