Industrial Outdoor Storage Primed for Growth
Commercial Observer, Andrew Coen (February 14, 2022)
“Zenith IOS launched late last year as a platform that targets low-coverage industrial sites. The Brooklyn-based firm joined forces in early February with JPMorgan Chase to launch a new $700 million IOS joint venture that will look to acquire urban infill industrial locations in major cities.
Benjamin Atkins, the founder and CEO of Zenith IOS, said the impetus for targeting IOS derived from previously working in the self-storage business and noticing that many potential industrial sites were being taken offline for other uses like last-mile distribution centers. At the same time, demand for IOS was only growing from the tenant side.
‘When we became aware of the attractive metrics on IOS as an owner and rental strategy, it had another significant benefit in our mind, which is that it’s very industrial adjacent,” Atkins said. “These were not sites that were attracting a lot of institutional owners, both given the size and the fragmentation and the gross dollars involved in individual asset purchases, so it was also attractive from not just an operating perspective, but from an acquisition perspective.’
Atkins said there has been growing pressure on outdoor storage rents for the last three or four years, which the pandemic further exacerbated due to increasing e-commerce use and supply chain disruptions. The IOS sector has begun to take hold as a more serious CRE asset class in the brokerage community within the past six months, he said, and it will only increase as demand for outdoor industrial continues to soar with warehouse developers facing obstacles in designing structures that can still allow sufficient parking.”