Is IOS (Industrial Open Storage Sector) a new asset class, or just a new acronym?
Open storage within Class B8 (Storage & Distribution) is not new, but the level of demand now seen and the interest from larger corporate investors is. We are certainly seeing the emergence of this speciality area of the industrial property market on a more significant scale than ever before.
The age-old scruffy scrap yard or haulage yard, used to be limited to older sites, more secondary locations and former farms that have been diversified. We are now seeing better operational assets in more prime locations close to road and rail networks, as well as adjacent to airports and other transport hubs that are positioned to provide the returns required of corporate and private equity investors as well as serving the needs of a wide range of users.
New ways of living are fuelling the demand, some of which is coming from the growing home delivery sector, creating more demand for HGV, van and electric vehicle storage facilities.
New housing developments are removing some of the older sites previously in use and at the same time, limitations on caravans and motorhomes on these estates with limited space, are creating a sub sector for leisure vehicle storage close to large conurbations.
Self-storage operators have branched out and containerised storage facilities for both commercial and domestic markets have also been on the rise.
Other areas within this sector include infrastructure and construction projects, waste transfer and recycling, plant hire as well as many more.
The sector has seen a sharp rise in rental and capital values in recent years and this along with the low levels of obsolescence and limited capital expenditure and maintenance required will ensure it remains a popular and growing asset class for both private and institutional investors for years to come.
Constraints can come in the form of planning restrictions around hours of use, limitations on storage height, vehicle movements as well as other environmental factors to consider when located in the countryside or adjacent to wildlife and water courses. Another constraint on supply can be that sites will often have a higher use value for re-development, limiting the length of tenancies as options are maintained.
As a firm Primmer Olds BAS have sold, acquired, let and managed a number of sites within this popular sector and is well placed to assist both occupiers looking for space, owners on letting, management and disposal as well as the development of new facilities.
Some recent examples have included:
Crescent Industrial Estate, Nursling
This comprised a circa 5.5 acre multi let open storage site with further paddock land at the rear, providing asset management potential. The site had a mixture of uses including commercial vehicle storage, scaffolding yard, containerised storage for the public and shipping storage. The site was located within close proximity of the M27 and M271 in Hampshire a short distance from the city centre and Southampton Docks, therefore providing excellent growth potential within this constrained market.
“Holbury Cottage”, Holbury
This was not just a cottage. This was a mixed estate comprising residential dwellings requiring refurbishment and break-up, a waste transfer facility let to a strong operator on a long lease and further Industrial Open Storage previously used for a variety of uses, including scrap metal yard, builders’ yard and container storage, offering asset management potential for compartmentalising areas and letting as well as re-surfacing and site improvements.
How Park, Wiltshire
Our professional services team provided valuation advice to a pension scheme acquiring this former, aggregates yard used by an owner occupier at purchase. The buyers put in place an asset management plan to let various plots within the site and refurbish some minor buildings located within the demise as support buildings to the main use. The site was positioned in a semi-rural location but received interest from both national and local occupiers looking for a variety of storage uses.
If you are active in the IOS (Industrial Open Storage) market in the South of England, then don’t hesitate to contact the team for further advice.
Contact Director Duane Walker dwalker@primmeorldsbas.co.uk