An East Bay market analysis anchored by a recent off-market sale at 3251 Jacuzzi Street, Richmond
For years, Industrial Outdoor Storage — IOS — was the overlooked stepchild of commercial real estate. No glossy lobbies, no LEED plaques, often just a paved yard with a modest metal building, a fence, and a gate. Brokers walked past it. Institutional capital ignored it. Local owners held them quietly for decades, leasing to contractors and trucking outfits at modest rents.
That era is over.
We recently closed an off-market sale at 3251 Jacuzzi Street in Richmond — a 17,840 SF building on 3.38 fully paved acres with rare frontage and visibility along the I-80/I-580 interchange. The property never hit the open market. There was no listing, no marketing flyer, no CoStar campaign. It sold quietly because that’s how the best IOS deals trade now. And it closed as the final leg of a reverse 1031 exchange — more on that in a moment.
Jacuzzi Street isn’t an outlier. It’s the new normal.
Industrial Outdoor Storage refers to industrial properties where the yard is the asset, not the building. Typical IOS sites have low building coverage — often 10% to 25% of the lot — with the balance paved, fenced, secured, and zoned for outdoor storage of equipment, vehicles, materials, or containers. Tenants include construction contractors, trucking and logistics operators, equipment rental companies, modular building suppliers, towing yards, and increasingly, last-mile delivery fleets.
It’s the kind of property a developer would never build today. And that’s exactly why it’s valuable.
Three forces are systematically shrinking the IOS supply across the East Bay.
Zoning attrition. Industrial land in cities like Richmond, Oakland, Emeryville, San Leandro, and Hayward is being rezoned for housing, mixed-use, and life sciences at a steady clip. Every general plan update tends to convert another swath of M-1 and M-2 land to something else. Once that land flips, it’s not coming back.
Entitlement friction. Even where industrial zoning remains, building a new IOS site is nearly impossible. Stormwater treatment requirements for paved acreage have become onerous, CEQA review adds years and six figures to any new yard project, and neighborhood opposition to truck-heavy uses kills proposals before they reach a planning commission. Try entitling a new 3-acre paved yard in the East Bay and you’ll understand quickly why nobody does it.
Higher-and-better-use pressure. When an IOS owner does decide to sell, the highest bid often comes from a developer planning to build vertical — warehouse, flex, multifamily, or self-storage. Each of those conversions removes another IOS site from the inventory permanently.
The result: a fixed and shrinking pool of yard sites in one of the most supply-constrained industrial markets in the country.
Tenant demand has been strong for years. East Bay contractors, fleet operators, and equipment rental companies need yard space, and they’ll pay for it. What’s new is the institutional capital chasing the same product.
Since 2021, dedicated IOS funds and platforms have raised billions of dollars to acquire exactly these kinds of sites. Groups like Zenith IOS (backed by J.P. Morgan), Alterra IOS, Outdoor Capital Partners, and others have made IOS a recognized institutional asset class. These groups underwrite to tighter cap rates than local buyers, move quickly, and target specific submarkets up and down the West Coast — including the East Bay.
When you combine institutional buyers paying institutional pricing with shrinking supply and rising tenant demand, the math gets interesting fast.
If demand is so strong, why don’t more of these deals get publicly listed? A few reasons.
First, the buyer pool — while well-capitalized — is small and known. Any broker active in this asset class can identify the ten to fifteen serious institutional and private buyers for a given site within a single phone call. There’s no need to launch a public marketing campaign to “discover” the market.
Second, sellers in this category often prioritize certainty over price discovery. Many are long-time owners with significant tax basis issues, and they value a clean transaction with a sophisticated buyer over the noise of a public listing.
Third, confidentiality matters. Tenants on yard leases get nervous when “for sale” signs go up. Off-market transactions protect the income stream during escrow and let the buyer step in without disruption.
3251 Jacuzzi Street ticked every one of those boxes.
If you own an IOS site in the East Bay — or an industrial property with significant yard — there are a few things worth understanding right now.
Your property is almost certainly worth more than you think. Cap rates for quality East Bay IOS have compressed meaningfully over the past three years, and pricing per land acre has climbed in step. Active buyers are real, well-funded, and patient. And there are creative deal structures available beyond the simple sale: 1031 exchanges, reverse 1031 exchanges, sale-leasebacks for owners who want to keep operating, and seller financing for owners who want to defer taxes and generate yield.
That last category is where Jacuzzi Street lived. The transaction closed as the final leg of a reverse 1031 exchange — meaning the buyer had already acquired their replacement property and was racing the clock on the IRS-mandated 180-day window to dispose of the relinquished asset. Reverse exchanges are mechanically complex, require a qualified intermediary acting as Exchange Accommodation Titleholder, and demand tight coordination between brokers, attorneys, lenders, and the IRS calendar. We’ll dig into the mechanics in a follow-up article.
If you own industrial or IOS property in the East Bay, Sacramento, Fairfield/Vacaville, or Reno/Sparks and you’re curious what it’s worth in today’s market — or whether a creative structure might unlock a sale you didn’t think was possible — reach out for a confidential conversation. The best deals in this asset class don’t ever hit the market. There’s a reason for that.
Industrial Real Estate Specialists | Lee & Associates
Specializing in industrial real estate across the East Bay and Greater Sacramento region, the Peck CRE Group brings deep submarket knowledge, data-driven analysis, and hands-on transaction experience to every deal. We help private investors, owner-users, and tenants identify and secure the right industrial properties across Contra Costa and Solano Counties and beyond.