High Yield. Low Visibility. The Rise of Self-Storage & IOS.
The landscape of niche real estate sectors is shifting—and fast. The fall of commercial build-out spaces and brick & mortar retail needs have spurred our team to explore other options to improve pro forma projections for our projects. The spotlight has been on two asset classes poised for continued institutional traction: Industrial Outdoor Storage (IOS) and Self-Storage. Both sectors have matured significantly in recent years, but it's their contrasting trajectories and shared potential that has drawn our attention.
Self-Storage is no longer a “niche” play. Once dismissed as a fragmented, “mom-and-pop” industry, self-storage has emerged as a mainstream institutional asset class. The influx of capital from office and retail sectors is undeniable. With 10–11% of American households using self-storage annually, the demand profile is deeply embedded in life events—moving, marriage, divorce, and death.
Self-storage appears recession-resilient and performs well across market cycles. Even amid recent housing market headwinds, self-storage has demonstrated strong NOI growth and tenant stickiness, with the average stay now exceeding 12–14 months.
It’s no surprise that capital sources—from life companies to pension funds and credit unions—are actively competing for deals in this space. As design and management sophistication increase, including enhanced revenue management systems and attention to female decision-makers prioritizing convenience and security, self-storage continues to cement its place alongside traditional core asset classes.
If self-storage represents maturity, IOS represents momentum. IOS is still in its early institutional phase—but that’s exactly where the opportunity lies.
IOS typically includes low-coverage lots used for logistics, construction laydown, fleet storage, and service operations. These sites often range from 0% to 20% lot coverage, sometimes including a small service building or office, and are critical infrastructure for the supply chain and service economy.
What’s changed is the capital. Blackstone’s high-profile entry into IOS has helped catalyze a flood of institutional interest. Financing has evolved from regional banks to life insurance companies and pension funds, with compressed rates and expanded underwriting comfort driving increased acquisition volume.
Yet, the sector isn’t without complexity. Zoning regulations vary dramatically and land use approvals remain one of the most formidable challenges. For investors with patience, deep local expertise, and creative entitlement strategies – IOS represents a high-yield, underserved frontier.
So, what’s the beef? For capital investors, lenders, and developers, here are some key takeaways:
Self-Storage has matured into a stable, well-capitalized sector with robust occupancy, long tenant durations, and proven rent growth. Institutional-grade facilities with high visibility, security, and accessibility command premium performance.
IOS is emerging as a value-add opportunity in infill industrial markets where developable land is scarce. Demand is growing, driven by last-mile logistics, construction, and service industries—yet zoning remains the biggest bottleneck.
Both asset classes require operational expertise. Revenue management, security, user segmentation, and entitlement navigation are critical differentiators. Partnering with experienced operators can unlock meaningful upside.
The women are in charge. Female consumers are reshaping self-storage design—emphasizing visibility, lighting, and comfort. Safety is everything. New developments that address these needs often outperform legacy inventory.
Capital stack evolution is ongoing. IOS financing terms have improved significantly, but still require creativity and local insight. Self-storage financing is now on par with multifamily and traditional industrial in terms of structure and lender appetite.
These aren’t “alternative” assets anymore. For institutional capital, the message is clear: ignore these sectors at your own risk. While the headlines still favor multifamily and industrial, the alpha opportunities are increasingly found in the overlooked, operationally intensive niches. Self-storage is proven, IOS is primed, and both sectors are outperforming expectations.
At Integro, we’re actively tracking both trends, advising clients on development, acquisition, and capital strategies in these high-demand verticals. If you’re seeking exposure to these asset classes—or want a partner who understands the nuance—let’s talk.