Data Center Demand Drives Institutional Capital to 45% of IOS Investment
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A surge in demand from data center developers, combined with chronic undersupply, is transforming industrial outdoor storage (IOS) into a major institutional capital playground, according to a Bisnow article published on Yahoo Finance. A record $672 million deal between Realterm and Starwood Property Trust in August 2026 refinanced a 78-property portfolio across 33 U.S. markets, highlighting investor hunger for niche property types like truck yards and heavy equipment storage. Institutional capital now represents 45% of IOS investment, up from 30% four years ago, per Matthews data. IOS investment reached $14-16 billion in 2025, up 15% year-over-year, with 2026 projected to outpace that. Nationwide IOS rents hit $11.07 per square foot per month in Q2 2026, with vacancy at 3.6% versus 6.5% for industrial overall. Data center developers use IOS lots for construction staging and equipment storage, accounting for about 20% of new demand. Tech giants like Google, Microsoft, and Meta have invested in IOS sites for data center plans. This activity comes despite a prolonged contraction in the trucking sector, a traditional IOS demand driver, due to labor shortages and high diesel prices. Core-plus money has entered the space, with forecasts of twice as many portfolio sales in 2026 as in 2025.
Source report
Patrick Sisson Wed, September 9, 2026 at 6:29 PM PDT 4 min read
This story was originally published on Bisnow, the newsroom global commercial real estate reads first. To receive daily news and analysis, subscribe to Bisnow's free suite of newsletters.
Wall Street is deepening its involvement in industrial outdoor storage (IOS), pushing deal sizes to record highs even as the trucking sector — a traditional driver of IOS demand — endures a prolonged downturn.
The trucking industry is grappling with labor shortages and high diesel prices that are squeezing profit margins. However, a surge in demand from data center developers, combined with a chronic undersupply of IOS lots, has kept investors willing to pay a premium for these properties.
"It's just more institutionalization of the space in general as more people realize the investment thesis is sound," said Matt Hunsucker, founder of industrial outdoor storage newsletter IOS List.
Record Deal Highlights Investor Appetite
A record $672 million deal between Realterm and Starwood Property Trust in August underscored the hunger to invest in niche property types such as truck yards and heavy equipment storage depots. The companies refinanced a 78-property portfolio encompassing 830 acres across 33 U.S. markets.
More sources of capital have become comfortable with the IOS space, from small regional banks to CMBS lenders and private capital, according to Max Heiden, co-founder and partner of Catalyst Investment Partners.
Institutional Capital Share Growing
Institutional capital now represents 45% of investment in the space, up from 30% four years ago, according to Matthews' latest report.
- IOS investment reached $14 billion to $16 billion in 2025, an increase of 15% from the prior year.
- Deal activity in 2026 is projected to outpace 2025.
Nationwide IOS rents hit $11.07 per square foot per month in the second quarter, a 1.6% year-over-year rise, according to CBRE's Q2 IOS report. Vacancy remains low at 3.6% nationally, compared to 6.5% for industrial overall.
Portfolio Sales on the Rise
Heiden forecasts there will be twice as many portfolio sales this year as there were in 2025, with new records set in terms of deal size, driven by new players pursuing portfolios.
Core-plus money has begun to enter the space, according to Blake Rodgers, principal at Steel Peak, an investment firm that acquires and manages IOS property. Notable transactions over the past 18 months include:
- Clarion Partners funding a 2.3 million square foot IOS portfolio in March 2025
- Stockbridge Partners investing in a Texas portfolio in October
- Apex IOS, backed by Clarion, acquiring property in Jacksonville earlier this year
"There's been a ton of recent trades in the last year," Rodgers said. "That flywheel is moving faster."
Data Center Demand Driving Growth
As with so many aspects of commercial real estate, the country's insatiable appetite for data centers is driving demand for IOS. Data center developers use IOS lots for construction staging and to store heavy equipment and building materials. They now account for about 20% of new demand for IOS, Heiden said.
Tech giants like Google and Microsoft have invested in IOS sites to advance their data center plans. Meta recently opened a $1.2 billion data center project on an Idaho land assemblage that included IOS.
All of this activity comes as the trucking industry, which uses IOS for parking large fleets, suffers from an industry-level recession.
Source
Yahoo FinanceWestern