Industrial outdoor storage is a low-coverage site: trailer drops, equipment, or containers, sometimes with a small office. The income is the tenant's rent for the land. A lender who starts from building net operating income is using the wrong statement. Credit of the tenant, remaining term, surface condition, and what the land would be worth if the city will still allow the yard are the file. Phoenix Zoning Ordinance section 628, the A-2 industrial district, is one reason yards are scarce. The code sets large setbacks for open uses next to housing, keeps outdoor storage back from public streets, and requires screening. Those rules do not ban every yard. They make a conforming replacement site harder to permit than a warehouse on the same acreage.
National financing of this product has been reported apart from Phoenix. REBusiness Online described Clarion providing financing for a national industrial outdoor storage portfolio measured in millions of square feet. That portfolio is not a City of Phoenix closing and not ours. It only illustrates that lenders elsewhere already underwrite yards as land-and-credit, which is how a Phoenix yard should be introduced. Local industrial buildings, as opposed to yards, are Phoenix industrial and Arizona industrial.
A bank may hold a single-tenant yard with a strong operator. Life company and CMBS are less often the first call unless the credit and the term look like a bond. Bridge fits a vacant yard or a site whose entitlement is the business plan. We will not call raw desert, with no zoning path, a storage loan.
Entitlement before proceeds
Send the zoning district, any use permit, the coverage ratio, and photos of the surface. If the yard is legal nonconforming, say so. A buyer who assumes the next tenant can intensify the use may be buying a land play the lender will not finance as income property.
Environmental history matters on equipment yards. A phase I that is still outstanding should be named in the first note, not after a term sheet.
What this is not
Self-storage with buildings and unit income is a different product. A flex building with a few truck doors is not IOS. A cold box is not IOS. If most of the income is a building, leave this page.
No tombstone names a Phoenix outdoor storage yard.
How a Phoenix yard is actually capitalized
| Source | When it fits |
|---|---|
| Bank | A single-operator yard a portfolio lender will hold on tenant credit and land. |
| Bridge | A vacant or entitlement-driven yard before income is stable. |
| Life company | Only if the credit and term look core. Many yards never get there. |
| Phoenix industrial | Buildings, when the collateral is a warehouse rather than a yard. |