When Diligence Comes Due: The Discipline to Walk Away

Industrial Outdoor Storage (IOS) has been gaining attention lately as investors hunt for yield in overlooked corners of the industrial sector. But despite the buzz, IOS is still far from institutionalized — and that has real implications for how deals get done, and how they can fall apart.

Unlike traditional industrial buildings or multifamily assets, IOS doesn’t have a clean pipeline of marketed deals through major brokerage firms. Many owners are small businesses or individuals who’ve held these properties for decades. As a result, the best opportunities are often off-market — and finding them takes persistence, cold-calling, and a willingness to dig.

That lack of institutionalization also shows up in diligence. Many sites have incomplete records, unconventional leases, zoning quirks, or environmental issues that don’t surface until you’re deep into the process. In one recent deal we pursued — a property we had under contract and expected to close this August — we uncovered a significant discrepancy late in diligence during our physical inspection. It was material enough that we had to make the hard choice to walk away.

Walking away is never easy. You’ve invested time, energy, and money, and you want to deliver for your investors. But it’s precisely in these moments that your integrity and discipline matter most. If you can’t execute on what you promised, the right thing to do — for you, your investors, and your reputation — is to step back.

IOS offers incredible potential, but it requires creativity to source deals and discipline to execute them. The market isn’t yet institutionalized — and that’s part of both the opportunity and the challenge.