What is Industrial Outdoor Storage and How Do Real Estate Investors Profit from This Unique Asset Class?
Most real estate investors have heard of industrial properties—big warehouses where Amazon and logistics companies operate. But there’s a lesser-known subset of industrial real estate that’s quietly generating impressive returns: industrial outdoor storage (iOS). This specialized asset class features smaller buildings with expansive yards where construction companies, equipment rental firms, and contractors store their heavy machinery and materials outdoors.
On this episode of The Real Estate Investing Club, host Gabe Petersen sits down with Blake Rogers, co-founder of Steel Peak Properties, to explore everything investors need to know about this emerging opportunity. Blake went from college football player to commercial real estate broker at JLL, eventually launching his own firm that’s acquired 10 industrial outdoor storage properties in just 18 months.
Featured Answer: What is Industrial Outdoor Storage?
Industrial outdoor storage (iOS) is commercial real estate featuring smaller warehouse buildings (typically 20-25% lot coverage) with large outdoor yards. Companies like United Rentals, construction contractors, and logistics firms rent these properties to store heavy equipment, vehicles, and materials outdoors. Unlike traditional warehouses with 35-50% building coverage, iOS properties maximize usable land for outdoor operations.
What Makes Industrial Outdoor Storage Different from Traditional Warehouses?
Understanding the fundamental difference between standard industrial properties and iOS is crucial for investors considering this asset class.
Traditional warehouse properties are designed with buildings that cover approximately 35-50% of the land, leaving the remainder for parking, landscaping, and stormwater requirements. Industrial outdoor storage flips this model entirely.
Blake Rogers explains the key distinction: “If your standard industrial is 35 to 50%, iOS is gonna be like sub 20% coverage, 20, 25% coverage, depending on the deal and how it’s configured. So basically it’s really just a smaller building. They can even still be big. They can even be like 50 to 100,000 feet, but imagine that building on like a 10 acre site.”
The value in iOS properties comes primarily from the land and the zoning. The zoning is what permits companies to store products, equipment, and materials outdoors legally. This is the critical component that makes these properties so valuable to the right tenants.
When you’re driving down the highway, those facilities with a United Rentals or Sunbelt Rentals sign—featuring a smaller building with a large yard full of construction equipment—that’s industrial outdoor storage. These properties serve construction companies, crane operators, equipment rental businesses, and logistics firms that need significant outdoor space for their operations.
Who Are the Ideal Tenants for Industrial Outdoor Storage Properties?
The tenant profile for iOS properties is more specialized than traditional industrial, which actually works in investors’ favor.
The primary tenant categories include construction equipment rental companies (United Rentals, Sunbelt Rentals), general contractors who need storage for materials and equipment, crane and heavy equipment operators, logistics companies parking truck fleets, and waste management firms storing containers and vehicles.
These tenants share common characteristics that make them excellent from an investment standpoint. They require heavy yard use for their core business operations, they typically sign longer-term leases because relocating is difficult and disruptive, and they often make improvements to the property that increase its value.
Blake notes that these businesses are highly dependent on the outdoor land component: “It’s that land component that’s the most critical to their business.” This creates strong tenant retention because finding alternative iOS space that meets their specific needs is challenging.
The barrier to entry for competitors is significant. You can’t just convert any industrial property into iOS—the zoning must permit outdoor storage, which many municipalities restrict to protect aesthetics and manage land use.
What Are the Key Investment Fundamentals for Industrial Outdoor Storage?
Successful iOS investing requires understanding several critical fundamentals that differ from other commercial real estate types.
Building Coverage Ratio: Look for properties where the building covers 20-25% or less of the total lot. This lower coverage maximizes the outdoor usable space that drives tenant demand and rental income.
Zoning Verification: The property must have proper zoning that explicitly permits outdoor storage. Blake emphasizes, “The values in the land and the values in the zoning, because the zoning is what allows you and allows these different companies and these uses to store product outdoors.”
Location and Access: iOS properties need excellent highway visibility and easy truck access. Tenants want their customers to easily find them, and they need convenient routes for large equipment and vehicles.
Market Selection: Choose markets with strong construction activity, population growth, and land constraints. Blake identifies San Diego as a top market, noting, “It’s land constrained is the best part about it. So supply is, you know, there’s barriers to entry and you can’t just build unlimited product.”
Physical Characteristics: The ideal property includes a functional shop building for maintenance and operations, a large paved or gravel yard area, secure fencing and gating, and adequate lighting for security and night operations.
Understanding these fundamentals allows investors to quickly evaluate whether a potential iOS acquisition aligns with proven success factors in the asset class.
How Do You Find Industrial Outdoor Storage Deals?
Deal sourcing for iOS properties follows a different playbook than residential or small commercial real estate investing.
Blake’s primary strategy centers on commercial real estate brokers who specialize in industrial properties. As he explains: “My favorite way is to find guys who were me before I came over to start this company. So I find the brokers at these shops that specialize in the product that we buy and guys that are doing, you know, the most deals in this space.”
The iOS market operates through broker relationships for several important reasons. First, commercial real estate brokers earn substantial commissions and take their client relationships seriously, making it difficult for outside investors to bypass them. Second, the universe of iOS properties is relatively small compared to residential or multifamily, so brokers maintain tight control over inventory. Third, many sellers prefer working with brokers who understand the specialized nature of these assets.
Steel Peak Properties maintains strong broker relationships by keeping brokers involved throughout the investment lifecycle. Blake notes: “We would love if brokers invested in our deals with us. We need them for off-market opportunities and then we use them to lease up our deals as well. The guys that usually help us buy it, we’ll keep them on for the leasing and hopefully they can help us sell it as well.”
This approach differs significantly from the direct-to-seller marketing common in residential investing. While mailers, cold calling, and digital marketing work well for single-family or small multifamily properties, industrial outdoor storage requires a broker-centric strategy.
Focus on building relationships with brokers at major firms (CBRE, JLL, Cushman & Wakefield, Colliers) who have active iOS listings and transactions in your target markets.
What Markets Offer the Best Opportunities for iOS Investing?
Market selection can make or break your success in industrial outdoor storage investing.
The strongest iOS markets share several characteristics: robust construction activity driving tenant demand, population growth creating ongoing development needs, land constraints limiting new supply, and favorable zoning policies that permit outdoor storage.
Blake Rogers identifies San Diego as his top market for multiple reasons. The city has strong population growth with people relocating from expensive areas like San Francisco and Los Angeles. San Diego’s land-constrained geography creates natural barriers to new supply. The market supports various commercial real estate types well, from multifamily to self-storage. The region’s year-round mild climate is ideal for outdoor storage operations.
Beyond San Diego, Steel Peak Properties operates throughout the Western United States, targeting markets with similar fundamentals. Look for metropolitan areas with active construction sectors, growing populations, and limited industrial land availability.
Markets to consider include secondary and tertiary cities experiencing growth, metros with expanding logistics and distribution networks, regions with strong manufacturing sectors, and areas where climate supports year-round outdoor operations.
Avoid markets with oversupply of industrial land, declining construction activity, or zoning policies that severely restrict outdoor storage uses. The sweet spot combines growing demand from construction and logistics tenants with constrained supply from limited land and zoning restrictions.
Research local industrial market reports, connect with commercial brokers in your target area, and analyze construction permit data to identify markets with the right fundamentals for iOS investing.
What Due Diligence is Critical for Industrial Outdoor Storage Properties?
Thorough due diligence separates successful iOS investors from those who get burned by unforeseen problems.
Blake Rogers learned this lesson through experience: “Don’t try to do everything yourself in due diligence. Hire professionals, spend the money. Like we use as many third parties as we can, like zoning reports, PCAs, inspections, environmental reports, like you gotta do it all, especially if you’re raising outside capital.”
Essential Due Diligence Components:
Zoning Verification: Obtain a professional zoning report confirming outdoor storage is a permitted use. Verify any restrictions on storage types, hours of operation, or screening requirements. This is non-negotiable—buying a property that can’t legally operate as iOS is a fatal mistake.
Environmental Assessment: Phase I Environmental Site Assessments are mandatory for industrial properties. Many iOS properties previously housed automotive, manufacturing, or other industrial uses that may have contaminated soil. Environmental remediation costs can destroy a deal’s economics.
Building Inspection and Code Compliance: Blake shared a cautionary tale: “We’re doing a deal right now where the city has just lost the certificate of occupancy for the building. So it’s just like, and the seller doesn’t have it, the city doesn’t have it.” Verify the building has proper certificates of occupancy and was built to code.
Property Condition Assessment (PCA): Professional engineers should evaluate the building’s structural integrity, roof condition, mechanical systems, electrical capacity, and parking lot/yard surface conditions. Deferred maintenance can require significant capital investment.
Title and Survey Review: Ensure clear title, verify property boundaries match what you expect, and identify any easements or encroachments. Survey discrepancies are common with older industrial properties.
Blake emphasizes the importance of comprehensive due diligence: “You have to know, like you need to make sure that the deal is de-risked and you got to protect your investors capital.” The cost of professional third-party reports is minimal compared to the potential downside of missed issues.
His team follows a principle: “If the deal doesn’t die at least twice, is it even a deal?” This reflects the reality that thorough due diligence always uncovers problems—the question is whether you identify them before closing or discover them afterward when it’s too late.
What Should Investors Know About Getting Started in Industrial Outdoor Storage?
Breaking into iOS investing requires a different approach than residential real estate, but the opportunity is significant for those willing to learn.
Blake Rogers recommends that aspiring investors consider starting as commercial real estate brokers: “Go become a commercial real estate broker. Like that is one of the best things you could ever do is start out as a broker and then do whatever you want to do after that.” This path provides invaluable education about deal structures, market dynamics, and relationship building.
For investors ready to pursue iOS opportunities, begin by educating yourself on commercial real estate fundamentals, including cap rate analysis, NOI calculations, and commercial lease structures. The metrics differ substantially from residential investing.
Connect with commercial brokers specializing in industrial properties in your target market. Build genuine relationships rather than simply asking for deals. Share your investment criteria clearly, demonstrate your financial capacity, and follow through on commitments.
Start by analyzing iOS properties currently on the market, even if you’re not ready to buy. Study the asking prices, rent per square foot (for both building and yard), lease terms, and tenant profiles. This market knowledge proves essential when opportunities arise.
Consider partnering with experienced operators for your first deal. Blake’s firm allows investors to participate in their acquisitions, providing both returns and education. This approach lets you learn while invested rather than learning from expensive mistakes.
Steel Peak Properties went from launch to 10 acquisitions in 18 months by leveraging Blake’s brokerage experience and relationships. While this trajectory is exceptional, it demonstrates what’s possible when you understand the market, maintain strong broker relationships, and execute thorough due diligence.
Blake emphasizes his willingness to help newcomers: “I love mentoring, like, guys and gals who are trying to get into the space and who want to learn commercial real estate brokerage or investing. So I’m always happy to chat.” Taking advantage of experienced investors’ knowledge accelerates your learning curve significantly.
The iOS market remains less competitive than traditional real estate sectors because fewer investors understand the asset class. This creates opportunity for those willing to develop specialized expertise in this growing niche.
How Blake Rogers Built Steel Peak Properties from Broker to Investor
Blake Rogers’ journey from college football player to successful iOS investor offers valuable lessons for aspiring commercial real estate entrepreneurs.
After his football career ended at San Diego State, Blake pivoted to commercial real estate brokerage based on advice from mentors. He started with internships while still in college and spent nine years as a broker before launching his own investment firm.
His breakthrough came after joining JLL, one of the world’s largest commercial real estate firms, right as industrial properties exploded during COVID in 2020-2021. While representing corporate tenants—primarily contractors needing yard space—Blake noticed a gap: “No one was specializing in it at the time. Kind of newer asset class has not really been institutionalized. There wasn’t as much money in the space yet.”
He made the strategic decision to become the specialist in his market: “I was like, I’m going to go full throttle into this. I’m going to become the guy in my market.” This specialization allowed him to dominate deal flow and develop deep expertise in iOS fundamentals.
As institutional capital flooded into the space (one client raised $750 million to deploy into iOS properties), Blake positioned himself as the connector between capital and deals. He tracked every iOS transaction, built relationships with major investors, and learned the underwriting criteria that made deals successful.
This brokerage experience provided several advantages when he launched Steel Peak Properties with a partner from the debt side in January 2024. He had established relationships with deal sources, he understood market pricing and fundamentals intimately, he knew the major capital providers and their investment criteria, and he had built a reputation for integrity and execution.
Within 18 months, Steel Peak closed 10 acquisitions across the Western United States while raising institutional capital. Blake’s path demonstrates how brokerage can serve as a paid education in commercial real estate before transitioning to principal investing.
His advice to spend time as a broker reflects a truth about commercial real estate: relationships and market knowledge matter more than capital. Investors with money but no expertise struggle to find good deals. Those with expertise and relationships can always find capital partners.
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