Industrial Outdoor Storage | Here’s Why Investors Want IOS

Apr 11, 2025

Industrial-outdoor-storage

What Are People Seeing for the Industrial Outdoor Storage (IOS) Market in Dallas?

Not long ago, outdoor storage lots were seen as leftover land — dirt, fencing, and a place to stash trucks. Today, Industrial Outdoor Storage (IOS) has become one of the most sought-after asset classes in industrial real estate, and nowhere is this more apparent than in Dallas.

As land becomes scarce and traditional warehouse space reaches pricing ceilings, investors are shifting their focus. And what they’re seeing in the IOS market — especially in Dallas — is a unique mix of low supply, high demand, and long-term upside.

Let’s break down what’s fueling this momentum, who’s paying attention, and why property owners might be sitting on more value than they realize.

Why IOS Is Gaining Attention From Investors

Industrial Outdoor Storage refers to land-based properties — often 1 to 5 acres — that are used for storing equipment, vehicles, containers, or raw materials. These properties typically feature minimal building coverage (around 10%–20%) and are highly functional for logistics, fleet storage, construction, and service-based tenants.

What makes IOS so attractive today:

  • Limited supply: Zoning restrictions, environmental hurdles, and NIMBYism limit where IOS can be developed.

  • Tenant demand: Trucking companies, logistics operators, and construction services all need secure outdoor storage near highways and industrial corridors.

  • Low maintenance, high returns: With minimal improvements, these sites often outperform traditional warehouse assets on a cost-per-foot basis.

  • Market inefficiency: Institutional capital is just now waking up to the opportunity — and that lag creates an opening for local and mid-size investors.

Dallas: A Top Market for IOS Growth

Dallas is uniquely positioned for IOS growth for several reasons:

  • Strategic location: At the crossroads of I-20, I-30, I-35, and I-45, Dallas connects major distribution routes.

  • Intermodal access: Proximity to Union Pacific’s Dallas Intermodal Terminal and other rail yards is a key driver.

  • Strong industrial base: Dallas continues to attract distribution, construction, and transportation businesses — all of which rely on outdoor storage.

  • Zoning pockets: Certain areas in South, East, and West Dallas offer industrial zoning overlays that are still relatively underdeveloped — but not for long.

What Property Owners Need to Know

If you own 1 to 5 acres of industrial land — even if it’s partially improved or underutilized — your property is likely more valuable than you think.

Here’s what investors are looking for:

  • Stabilized ground: Crushed concrete or compacted gravel lots are highly desirable.

  • Fencing and gates: Secure, enclosed properties lease faster and at higher rates.

  • Utilities: Access to power and water can unlock additional tenant demand.

  • Truck maneuverability: Wide access points and minimal obstructions are a plus.

  • Zoning: Industrial or heavy commercial zoning is key. Some light industrial zones can also be reconfigured for IOS use.

In many cases, investors are willing to buy or lease properties with minimal improvements if the location fits their operational needs.

2025 Market Insights: IOS in Dallas

Here’s a look at how the IOS market is performing across key Dallas submarkets:

Sales Comps (Last 12 Months)

  • South Dallas – 4.2 acres with a 12,000 SF warehouse sold for $2.3M ($12.50/SF land)

  • West Dallas – 2.5 acres, no structure, crushed gravel yard: $1.5M ($13.75/SF land)

  • East Dallas – 3 acres with minor fencing and power: $1.9M ($14.50/SF land)

Rental Rates

  • Average: $0.20 – $0.35 per SF/month for IOS with basic improvements

  • Premium lots (paved, fenced, utility access): up to $0.45/SF/month

  • Most leases are NNN or modified gross, 1–3 year terms

Vacancy Rates

  • Estimated below 4% for stabilized IOS

  • Most new availability is off-market or gets absorbed quickly

  • “Shadow vacancy” (tenants outgrowing space but not moving) is growing

Cap Rates

  • IOS properties are trading between 6.5% to 8.5%, depending on tenant credit, lease term, and improvements

  • Ground lease deals and land-banked IOS are being underwritten aggressively

Hot Zones: Where Demand Is Heating Up

South Dallas

  • Near Union Pacific Intermodal

  • Larger parcels available but quickly shrinking

  • Demand from trucking firms, recyclers, and logistics operations

East Dallas

  • Older industrial corridors now attracting IOS conversions

  • Tenants seeking affordable alternatives to Mesquite and Garland

West Dallas

  • Underrated access to I-30 and I-35

  • Value-add IOS plays — especially for investors repositioning underutilized yards

The Bottom Line

Industrial Outdoor Storage is no longer an afterthought. It’s a specialized, high-demand asset class that offers flexibility, strong returns, and growing institutional interest. And in Dallas — where land is tightening, and logistics reign — the demand is only going up.

Whether you’re holding onto a piece of dirt or actively looking to invest, the IOS landscape in Dallas is one of the most dynamic corners of the industrial market right now.