The Rise of Industrial Outdoor Storage: Why IOS Is the CRE Opportunity Investors Can’t Afford to Ignore

The Rise of Industrial Outdoor Storage: Why IOS Is the CRE Opportunity Investors Can’t Afford to Ignore

Supply-constrained markets, fully-leased assets, and a premium rental advantage are putting IOS properties increasingly on institutional and private investors’ watchlists — especially in Colorado.

For years, Industrial Outdoor Storage (IOS) sat quietly at the edge of the commercial real estate conversation, overshadowed by trophy office buildings, big-box retail, and more recently – multi-tenant flex industrial complexes.

Not anymore. Across the country, capital is racing to acquire IOS assets, tenants are competing for limited supply, and savvy investors who got in early are sitting on a yield story that can be difficult for traditional industrial assets to match.
The data is no longer anecdotal. The capital flows, the lease-up speeds, and the rent premiums are real. Colorado is rapidly emerging as one of the most compelling IOS markets in the nation.

What this article covers:

• Industrial Outdoor Storage (IOS) has evolved from a niche real estate category into an increasingly institutional asset class, driven by durable tenant demand, limited supply, and strong investor interest.
• Colorado, particularly Denver and Colorado Springs, is emerging as a compelling IOS market due to scarce infill sites, highway and airport access, and recently documented fully leased acquisitions by major IOS investors.
• Functional IOS properties can command meaningful rent premiums over traditional industrial assets, with select Colorado Springs market observations showing a potential 20–25% premium for properties with usable outdoor storage.
• The article outlines why IOS is attractive for investors, including tenant stickiness, immediate cash flow from stabilized assets, and long-term rent growth potential. However, key due diligence considerations such as zoning, site improvements, and transportation access are critical

What Is IOS?
Industrial Outdoor Storage is characterized by properties with low building coverage coupled with large, improved yard space designed to accommodate vehicle fleets, heavy equipment, building materials, telecommunications infrastructure, and related outdoor storage uses.

Think stabilized, secured, fenced yards with a modest warehouse component. These are purpose-built for operators who need ground-level, functional real estate close to the infrastructure and major thoroughfares within a city.

Tenants include telecommunications carriers, equipment rental companies, contractors, fleet operators, logistics providers, renewable energy firms, and waste management companies – industries that are not going away, are hard to displace, and tend to sign long-term leases.

For investors, that translates to predictable, durable cash flow with built-in demand that is structurally resistant to economic downturns.

Why IOS Tenants Are Sticky
IOS users rely on ground-level access, proximity to highway infrastructure, and outdoor yard functionality that simply cannot be replicated in a standard warehouse.

Once a tenant builds operational processes around a site, relocation is expensive and disruptive, creating naturally high renewal rates and sustained occupancy.

Institutional Capital Is Taking Notice
The most telling signal of IOS’s maturation as an asset class is the influx of institutional investment now chasing it. Alterra IOS, one of the most prominent dedicated IOS platforms in the country, has assembled a portfolio of more than 450 sites across 38 states.

It continues to expand. Alterra’s Parker Pearson recently commented on the specific demands affecting Colorado’s IOS market.

“Denver and Colorado Springs continue to see strong demand for well-located, functional IOS properties. These markets remain highly supply-constrained, with tenant demand consistently outpacing available inventory.”

— Parker Pearson, Partner at Alterra IOS

That supply-demand imbalance is not a short-term anomaly. It is a structural feature of the IOS market: zoning restrictions, land scarcity near major transportation corridors, and neighborhood opposition to industrial uses mean that new supply is extraordinarily difficult to create.

This is true especially in infill locations, making the acquisition of well-located, existing IOS assets the primary path to market exposure.

Recent Colorado IOS Acquisitions
In May 2026, Alterra IOS announced the acquisition of five IOS properties totaling 36.4 usable acres and 128,200 square feet of accompanying warehouse space across Denver and Colorado Springs.

The move brought the firm’s total Colorado footprint to 14 properties spanning 134 usable acres – all strategically positioned near the state’s network of interstate highways, intermodal rail, and international airports.

Every single one of the newly acquired properties was fully leased at the time of acquisition, with tenants operating in telecommunications, building materials, and equipment rentals. The specific properties tell the story clearly:
• 2001 W 64th Lane (North Denver): 9.8 usable acres with 26,900 sq ft of warehouse space, leased to a building materials company for equipment storage and maintenance. Proximity to I-25, I-76, US-36, and US-287.

• 7200 Eagle Blvd (Longmont): 9 usable acres with 9,800 sq ft of warehouse space, leased to an equipment rental services company. Improved lot, fenced, with direct I-25 access via Highway 52.

• 955 N 5th Avenue (Brighton): 4.6 usable acres with 4,890 sq ft of warehouse space, leased to an equipment rental services company. Located within 25 miles of Denver International Airport and Downtown Denver.

• 3240 & 3250 Astrozon Blvd (Colorado Springs): 6.9 usable acres with 62,618 sq ft of warehouse space, leased to a building product distributor. Within 5 miles of Colorado Springs Airport with access to I-25, US-24, and Highway 85.

• 7925 & 7985 Industry Road (Colorado Springs): 6.1 usable acres with 24,000 sq ft of warehouse space, leased to a global telecommunications company near Colorado Springs Airport and Downtown Colorado Springs.

The thread connecting all five acquisitions is the same thesis that is driving IOS demand nationally: infill locations, proximity to critical logistics infrastructure, and tenants with core operational uses who have no motivation to relocate due to high cost barriers and very few comparable options.

Colorado Springs Rent Premium
For investors evaluating IOS opportunities in Colorado, one data point stands out with particular force: in the Colorado Springs market, IOS properties with functional outdoor storage capability have been observed to command base rental rates approximately 20 – 25% higher than comparable industrial properties with limited or no outdoor storage functionality.

That premium is not arbitrary. It reflects the fundamental scarcity of properly zoned, improved IOS sites near the transportation corridors that tenants demand.

When a company needs outdoor storage in Colorado Springs, its options are limited. Landlords with the right product in the right location hold significant pricing power.

Consider the math from an investor’s perspective: if a standard industrial property in the Colorado Springs market commands a $12.00 per square foot NNN base rate, an equivalent IOS property with outdoor storage capacity could reasonably support a $14.50 to $15.00 per square foot rate before accounting for any upside from lease escalations or renewals.

That spread, compounded across a multi-asset portfolio, is transformative for risk-adjusted returns.

Why IOS Belongs in Your Portfolio
Investors looking to build a resilient, income-generating commercial real estate portfolio should evaluate IOS seriously across several dimensions:

1. Structural Supply Constraint Creates Pricing Power
Unlike office or retail, where new supply can be delivered rapidly in response to demand, IOS faces extraordinary barriers to new supply creation.

Zoning for outdoor industrial uses is tightly restricted in urban and suburban markets. Land proximate to major highways and intermodal infrastructure is scarce and expensive. Community opposition to industrial development is widespread.
This means that existing, well-located IOS assets are genuinely irreplaceable and that landlords who own them can maintain pricing discipline even in softer economic environments. The supply constraint is not a cycle; it is a feature.

2. Tenant Demand Is Broad-Based and Growing
The list of industries that require IOS space is long and expanding. E-commerce fulfillment and last-mile logistics, telecommunications infrastructure buildout, renewable energy installation and storage, construction and contractor operations, fleet management and vehicle storage — all of these sectors are growing, and all require well-located outdoor storage capacity.

Alterra’s own leasing data illustrates this: in a single recent reporting period, the firm executed 30 new leases and renewals across logistics, equipment rental, renewable energy, waste management, automotive manufacturing, and specialty construction — a cross-sector diversity that insulates IOS investors from sector-specific downturns.

3. Fully-Leased Acquisitions Offer Immediate Cash Flow
One of the most investor-friendly characteristics of the current IOS market is the prevalence of fully stabilized assets. Alterra’s five Colorado acquisitions were 100% leased at closing. Investors are not being asked to take lease-up risk.

They are acquiring operating income streams backed by credit tenants in markets where replacement tenants are available if needed. That combination — immediate cash flow plus strong re-leasing probability — is difficult to find in other commercial real estate segments.

4. The Rent Premium Compounds Over Time
The 20–25% rental premium that IOS properties command over comparable non-storage industrial assets does not stay flat. It compounds. As leases mature and market rents escalate in supply-constrained markets, the base from which that premium is calculated grows.

Investors who acquire IOS assets at today’s market rents are positioned to benefit from multiple layers of rent growth: market-rate escalation, lease renewals at market, and the structural premium that IOS zoning and functionality commands over standard industrial.

5. Institutional Validation Is Accelerating
When Almanac — the private real estate arm of Neuberger Berman — made a minority investment in Alterra IOS’s management entity in early 2026, it sent a clear signal to the broader investment community.

Institutional capital does not make these moves speculatively; it moves on conviction backed by deep underwriting. The Almanac investment, framed explicitly around the long-term fundamentals of IOS as an institutional asset class, reflects a consensus among sophisticated investors that IOS is not a trend — it is a permanent fixture of the commercial real estate landscape.

“Our investment in Alterra reflects our conviction in the long-term fundamentals of IOS and our strategy to partner with best-in-class managers to build durable value on behalf of our investors.”
— Josh Overbay, Managing Director at Almanac (Neuberger Berman)

What to Look for When Evaluating IOS Assets

Not all IOS properties are created equal. For investors entering or expanding in this space, the following criteria should drive acquisition decisions:
• Location. Relative to interstate highways, intermodal rail, and major airports — the closer, the better. Tenants pay for proximity, and proximity is finite.

• Zoning clarity and defensibility. IOS zoning is hard to obtain and easy to lose. Properties with established, permitted IOS use are inherently more valuable than those relying on conditional or grandfathered approvals.

• Site improvement quality. Stabilized, fenced, improved yards with adequate power, lighting, and drainage command premium rents and attract institutional tenants.

• Tenant credit quality and lease duration. Long-term leases with national tenants in telecommunications, equipment rental, building materials, or logistics provide the most durable income streams.

• Market supply dynamics. In supply-constrained markets like Colorado Springs, even modest IOS assets benefit from landlord pricing power. In oversupplied markets, that dynamic reverses.

• Rent-to-replacement cost spread. In markets where new IOS development is economically viable, investors should underwrite rent growth conservatively. In markets where development is economically or practically impossible, rent growth assumptions can be more aggressive.

Colorado Investor Considerations

Colorado investors should pay close attention to zoning, site coverage, and jurisdictional differences before underwriting IOS assets. In Colorado Springs, industrial zoning districts such as BP, LI, and GI can have varying allowances and restrictions related to outdoor storage, screening requirements, and operational use intensity.

El Paso County’s I-3 zoning can also be particularly attractive for IOS because it may allow industrial uses with related outside storage of raw or finished materials. Verifying legal outdoor storage use and entitlement status should be considered a core part of IOS due diligence.

Investors should also separate the Denver and Colorado Springs market dynamics. Denver’s broader industrial market has experienced periods of elevated vacancy and softer rent growth in certain submarkets, while infill IOS product remains significantly supply constrained.

Colorado Springs continues to benefit from population growth, military and aerospace expansion, contractor demand, and industrial users seeking access to I-25, Highway 24, Powers Boulevard, and Colorado Springs Airport.

For many Colorado investors, the most attractive IOS opportunities are properties with strong transportation access, established outdoor storage entitlements, functional yard improvements, and long-term tenants operating in construction, telecommunications, utility infrastructure, equipment rental, or logistics-related industries.

The Bottom Line
The IOS sector is no longer a niche. It is a mature, institutionally validated commercial real estate asset class with structural supply constraints, broad-based tenant demand, and a rent premium story that compounds over time.

In Colorado — particularly in the Colorado Springs and Denver markets — the combination of supply scarcity, fully-leased acquisition opportunities, and an observed 20–25% IOS rent premium in select Colorado Springs transactions, subject to independent verification, creates a compelling risk-adjusted return profile for investors willing to move decisively.

The players who will define this market over the next decade are acquiring now. The question for investors is not whether IOS deserves a place in a diversified commercial real estate portfolio. The question is how quickly they can build a position before the window tightens further.

SOURCES & DISCLOSURES
Property and transaction data referenced in this article sourced from Connect CRE and GlobeNewswire reporting on Alterra IOS’s May 2026 Colorado acquisitions.

The 20–25% IOS rent premium figure reflects anecdotal market observations in the Colorado Springs MSA and is intended for illustrative purposes only. Investors should conduct independent due diligence and consult qualified advisors before making investment decisions.