If you had told me five years ago that Wall Street’s next billion-dollar bet would be… parking lots, I would’ve laughed. Yet here we are. The overlooked world of industrial outdoor storage (IOS) has suddenly become the darling of institutional investors, thanks to one unstoppable force: artificial intelligence.

Why It Matters

Data centers don’t just appear out of thin air. Building them takes fleets of heavy equipment, miles of cable, transformers, backup generators—you name it. All that gear needs somewhere to sit before installation. Enter IOS lots—patches of asphalt or gravel, usually near highways, ports, or industrial corridors. What was once a low-rent, forgotten asset class is now mission-critical infrastructure for the A.I. economy.

The Capital Flood

The numbers tell the story:

Institutional investors have poured $4.7 billion into IOS since 2021—a staggering leap from the $600 million committed in the five years prior. J.P. Morgan + Zenith IOS launched a $700M venture last year, with $150M in deals expected to close in 2025 alone. Blackstone partnered with Alterra Property Group on a $189M acquisition of 49 sites across 22 states. Alterra didn’t stop there—they raised $344M from Truist and Bank of Montreal to scoop up another 64 properties.

That’s not parking lot money. That’s real institutional firepower.

Rents on the Rise

According to Newmark, IOS rents have soared 123% since 2020, outpacing warehouse rents, which are up a still-impressive 58%. With vacancy hovering around 5%, and zoning barriers making new supply scarce, landlords now have pricing power like never before.

Beyond A.I.

This trend isn’t only about data centers. The e-commerce boom already turned IOS lots into critical staging grounds for trucks, containers, and last-mile delivery fleets. Now, with the A.I. buildout stacked on top, demand is hitting another gear. Investors are even packaging up old truck stops and repair yards into portfolios, betting on scarcity value as municipalities push back against new IOS developments.

The Catch

Local governments don’t love these sites. They’re not glamorous, they don’t generate sales tax, and they’re often labeled as “eyesores.” That pushback has only added to the scarcity factor, making existing IOS sites exponentially more valuable.

The Takeaway: Parking Power

The humble parking lot is now an unlikely winner of the A.I. revolution. What was once considered dead space has transformed into high-demand industrial real estate. Institutional capital knows it—and they’re moving fast.

Investment Opportunities: Where Savvy Investors Can Play

Here’s where I see the opportunity:

IOS Assemblage Strategies Aggregating smaller IOS sites into regional portfolios could generate outsized returns. This is the exact play Blackstone and Alterra are running, and there’s no reason smaller operators can’t replicate it at scale. Zoning Arbitrage Investors who understand local politics and zoning can unlock hidden value. A trucking yard today may become a premium IOS site tomorrow when data center contractors come knocking. Tie-Ins with Data Center Development IOS is not just an adjacency play—it’s a direct lever in the data center value chain. Owning IOS near new or expanding data center markets (Northern Virginia, Dallas, Phoenix, Columbus, Atlanta) positions investors as gatekeepers to essential staging ground. Yield vs. Risk Premium With IOS rents compounding faster than warehouses, landlords can push double-digit rent escalations in prime corridors. That creates a rare mix of income stability and growth that most industrial real estate simply can’t match right now. Exit to Institutions As funds continue to pour billions into IOS, smaller owners will have opportunities to roll up and sell into institutional platforms. The arbitrage between fragmented ownership and Wall Street’s appetite is wide open.

Final Thought

The A.I. revolution isn’t only about chips and servers—it’s about everything required to make those machines possible. Sometimes the smartest money is made in the least sexy corners of real estate. Parking lots may not shine on the surface, but in today’s market, they’re glittering with opportunity.

👉 If you’re interested in where Daniel Kaufman is pursuing IOS and related plays, reach out—I see this as one of the most overlooked growth avenues in the industrial and A.I. real estate cycle.