How Q4 might play out for IOS

A look at the forces shaping the IOS market—what’s pushing the sector forward, and what’s still holding it back.

TAILWINDS

1. Supply Is Still Structurally Constrained

Even with all the attention IOS is getting, the same issue persists: there simply aren’t enough sites with the right mix of industrial zoning, truck-friendly ingress/egress, and permissions for outdoor storage. In most major logistics markets, suitable land remains scarce. NorthMarq notes that zoning resistance—rather than raw land availability—is the core limiting factor. Many municipalities hesitate to approve IOS projects due to traffic concerns, perceived low tax yield, and neighborhood pushback.
That friction keeps new supply tight and reinforces the value of existing, grandfathered sites.

2. Freight Network Shifts Are Driving Demand

IOS continues to benefit from broader supply chain realignment. Nearshoring, e-commerce density, and same-day delivery expectations are pushing operators to secure closer-in yard space. What used to be viewed as “just parking” is evolving into mission-critical staging infrastructure between ports, rail/intermodal hubs, and distribution centers.
Kimley-Horn’s research highlights markets like DFW, Savannah, and Southern California as examples of how IOS functions as connective tissue in the freight network. These yards play an essential role in managing overflow, drop-trailer operations, and cross-docking logistics.

3. Institutional Capital Is Professionalizing the Sector

A once-fragmented niche is now attracting dedicated funds, roll-up strategies, and joint ventures. The inflow of institutional capital is improving transparency, liquidity, and management standards across the category.
The result: better financing terms, more reliable data, and clearer valuation benchmarks—all of which are helping the market mature.

HEADWINDS

1. Zoning & Permitting Remain the Biggest Bottlenecks

The same scarcity that supports pricing also limits development. Many cities continue to tighten rules on outdoor storage (even in industrial districts) adding screening, paving, and landscaping requirements that raise costs and extend timelines.
In most markets, the single largest hurdle isn’t finding land; it’s securing entitlements.

2. Rising Sitework and Operating Costs

Operators and tenants are expecting more fully improved yards: paving, drainage systems, lighting, fencing, utilities, and security infrastructure.
As environmental and stormwater requirements escalate, upfront capital can balloon quickly. Cost control and accurate sitework underwriting are now essential for competitive returns.

SUMMARY

IOS sits at the crossroads of three forces: land scarcity, logistics necessity, and regulatory friction. The fundamentals still lean positive - tight vacancy, reliable demand drivers, and increasing investor sophistication - but execution is everything.

Groups that can:

• navigate local zoning nuance,

• manage sitework and environmental costs, and

• underwrite using realistic market data

…will stand out as the sector continues to evolve.