Hardstand, or Industrial Outdoor Storage (IOS), is in the midst of increasing sophistication and investor demand, according to Knight Frank’s Australian Horizon 2025 report.

Long central to the movement of container freight and new car delivery, the shift to just-in-case inventory and supply chain resilience has seen demand overflow out of the traditional port and intermodal adjacent locations and into more traditional industrial precincts. 

Additionally, demand for outdoor storage has broadened with growing last-mile delivery fleet parking (and EV charging) requirements, recycling and waste management facilities, staging and storage for major construction and infrastructure projects, vehicle and heavy equipment sales/rental and even the increasingly ubiquitous pickle ball courts all competing for similar sites.

The construction surge of the past two to three years has also absorbed a number of hardstand sites, leading to greater competition for this type of space and a change from casual or handshake agreements to more formal and longer leases to secure tenure by occupiers.

IOS has traditionally been the saviour of land impacted by powerlines, easements, flood exposure, challenging geotechnical conditions or as a back-up plan while a site is being prepared for development.

However, as occupiers have become more sophisticated in their needs and willing to take on longer lease terms and amortise more landlord improvements, the standard and expectations for this type of space has shifted. 

Container rated hardstand, multiple crossovers, security fencing and CCTV, power, water and internet, industrial and preferably 24/7 zoning with B-double access to arterial roads are all considered to be central elements to IOS. Additionally, for car storage in NSW and Qld hail netting is also frequently used.

These more sophisticated improvements are becoming more permanent than in the past and are taking IOS out of the ‘short-term back-up plan’ style of investment and attracting institutional investors keen to secure the relatively higher yields available for this space.

IOS has been a recognised asset class in the US for some time and investor demand has been building in other markets, becoming in focus in Australia as the higher cost of debt since 2022 has seen investors seeking higher yielding assets.

Soaring construction costs and easing tenant demand for warehouse space has made development feasibility on new prime warehouse space more difficult. To date, although concrete costs have also had a large impact on the cost of IOS, the demand for this limited space has seen tenants accepting rents fully reflective of the cost of improvements. 

As the Australian investment market moves through the next stage of maturity, with strong offshore ownership now in place, IOS will continue to appeal to value-add investors with relatively high ongoing income yield (relative to investment) and greater institutional ownership over larger, potentially multi-user sites as they tap into economies of scale, rather than fragmented ownership.

Investors will see the exit strategy to take advantage of increasing land values and changing zoning to release the land value in a 5 to 10-year timeframe.

Knight Frank’s Horizon report can be found here: Horizon Report 2025 | Knight Frank