top of page
  • Writer's pictureRealFacts Editorial Team

What is behind the rise in Industrial Open Storage, and will it continue?

Industrial open storage

Industrial open storage (IOS) is experiencing a renaissance, attracting newfound attention from investors seeking lucrative opportunities in the real estate market. While IOS is not a novel concept, its recent surge in popularity begs the question: What is driving this trend, and will it continue?

At its core, IOS refers to open plots of land utilized for storage purposes. These prime sites boast essential features such as B8 planning permission, fully paved surfaces, integrated drainage infrastructure, and security measures like palisade fencing and CCTV. Situated strategically near motorways or ports, these sites serve as vital hubs for various industries.

Traditionally the domain of private investors and owner-occupiers, IOS is now catching the eye of institutional investors. Major players like Mileway, NW1 Partners, and Tristan Capital Partners are making significant investments in this sector, signaling a shift in investor sentiment toward this asset class.

The COVID-19 pandemic acted as a catalyst for the increased demand for IOS. Supply chain disruptions and the exponential growth of e-commerce compelled businesses to seek additional storage space, leading to a surge in demand for IOS sites. Geopolitical events like the war in Ukraine and the Houthi rebel attacks in the Red Sea have further exacerbated supply chain pressures, fueling sustained demand for IOS.

Traditionally, IOS sites were primarily utilized by the construction industry for storing materials and equipment. However, there has been a noticeable shift towards leveraging these sites to support supply chain distribution networks. Additionally, the need for vehicle fleet storage, EV charging infrastructure, and welfare sites for drivers along key supply chain routes has surged, reflecting the evolving requirements of modern businesses.

Furthermore, constrained supply adds to the allure of IOS for investors. With longer-term aspirations for redevelopment, investors can generate income from the asset while planning future endeavors. Rental growth prospects remain robust, particularly in high-demand regions like the South East and Greater London. Moreover, IOS sites benefit from 100% rating relief when vacant, enhancing their appeal to investors.

One of the key advantages of IOS sites is their limited infrastructure requirements. While there may be an initial capital outlay for site development, ongoing maintenance costs are low compared to other real estate sectors. Additionally, the limited infrastructure translates to lower energy consumption, aligning with investors' sustainability goals.

2 views0 comments


bottom of page