CHICAGO—Chicago-based industrial real estate veterans Tom Barbera, JD Salazar and Joe Voet, have just launched Industrial Outdoor Ventures, a real estate investment company that will acquire and develop industrial service facilities throughout the US. With the launch, IOV becomes first national real estate investor focused exclusively on outdoor storage facilities.
Industrial service facilities are mission critical facilities primarily used by the transportation, construction, construction material and utility industries to store, maintain and dispatch equipment and bulk material.
“This is a very well-occupied property type,” principal and chief executive officer Barbera tells GlobeSt.com. Using data from CoStar, IOV calculated that the vacancy rate for industrial service facilities in the nation’s top ten markets was less than three percent. Furthermore, the “tenants tend to be sticky; these are mature companies in core industries that have a good handle on their long-term space needs.”
“Our goal is to aggregate the product type into a national, investment grade portfolio and connect the dots across the various industries that use these kinds of properties,” he adds.
IOV’s seeks to acquire $100 million in assets over the next 12 to 24 months with a five-year plan to amass a portfolio worth more than $500 million.
Barbera says that margins in this specific property type tend to be high for several reasons. First, although the industrial market as a whole is in the midst of a construction boom, the large amount of land needed for new service facilities makes it difficult for developers to find sites, especially in tight infill markets.
And the national industrial players that build or invest in spec warehouses consider service facilities a niche market, one that many don’t understand, Barbera says. “REITs and other institutional investors have moved away from specialized properties and now aggregate class A or B+ properties. The opportunity to build a national portfolio in an environment where there is not a lot of competition is very attractive.”
The new venture will begin by acquiring sets of stabilized and value-add properties in the top industrial metro areas such as Chicago, Denver, Atlanta, New York and New Jersey, Dallas, Seattle and others. “We need to establish some cash flow first,” Barbera says, but if good opportunities arise, IOV will also launch new developments.
“We bring a unique understanding of both the physical facility and challenges that go along with placing equipment or material intensive operations within major population centers,” adds chief operating officer Salazar. “And our unique model grants us incredible flexibility and speed.”