Now’s the Time for the Evolution of IOS

JULY 2024

Traditional industrial outdoor storage has its merits. The typical IOS business, characterized by low ongoing capex, involves triple-net, multi-year leases to a single tenant. Given that much of the IOS space available today is dwindling and communities are not inclined to zone new sites for such land use, low supply and growing demand from the likes of logistics companies, construction firms, and others are expected to drive profitability in the sector for many years to come. Unfortunately, in most cases, this business model leaves potential dollars on the table for the owner or investor in the IOS property, and much to be desired when it comes to technology and efficiency. 

Underutilized assets in a fragmented marketed

Many sites are underutilized and, most likely, underpriced. The target tenant for most larger IOS owners remains limited to businesses with the resources to lease the entire site, whether or not they use all of the space. These tenants most often include enterprise fleets for local logistics firms or national trucking fleets for both cab and trailer storage. A fragmented market for parking and storage creates inefficiencies for large enterprise fleet owners who operate ever-changing routes across the country.

The model also leaves a vast swath of the IOS potential user base out of the picture—from single owner-operators to smaller businesses that may only require part of the lot but are willing to pay for storage. The challenge of meeting the micro-demand for IOS stems from the ability, or lack thereof, to properly parcel, price, and manage IOS assets in a way that maximizes every available square foot and ensures the provision of additional future services like EV charging. That is what Next-Gen IOS looks to address.

Today, most long-haul trucks in the U.S. are self-owned by operators that need to rent parking for their rig and trailer. The remaining are owned by mid-sized and enterprise carriers that manage more sophisticated networks of regional and national routes. These carriers require flexible asset storage models that can accommodate shifting customer demand. The enterprise trucking industry, meanwhile, continues to navigate its own transition, with many large carriers experiencing restructurings and seeking ways to better manage costs and demand. Growth trends in e-commerce and a shift to “hub and spoke” logistics models only point to increased trucking traffic but for shorter distances. More rapid inventory cycles result in higher trailer utilization with idle time at each stop, requiring storage. While only a part of the overall logistics equation, IOS is a critical component due for innovation.  

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ABOUT ACCORD CAPITAL PARTNERS LLC

Accord, through its affiliates, is a global capital advisor, principal investor and investment manager. With its headquarters in San Francisco and personnel in Chicago, London, Hong Kong and Seoul, Accord engages with a wide variety of participants in the real estate private equity industry. Accord Capital Partners, its broker/dealer affiliate, provides advisory and capital raising services in the United States. Accord Europe Limited, its broker/dealer affiliate, provides advisory and capital raising services in the United Kingdom and Europe. For further information on Accord, visit: www.accord-group.net.