In this episode of Adding Value, Shy Assar sits down with Steve Azar, Co-Founder and Principal at Ambient Capital Partners, to deep dive into the world of Industrial Outdoor Storage (IOS). Once an overlooked "mom-and-pop" niche, IOS has transformed into a high-demand institutional asset class that serves as the backbone of the global supply chain. Steve shares his expertise from his time at Stockbridge and XPO Logistics to explain what truly makes a site "institutional-grade"—from heavy industrial zoning and low FAR (Floor Area Ratio) to mission-critical improvements. We explore the current state of the industrial market, the "hit" taken by Southern California and the Inland Empire, and how Ambient Capital is navigating the shift from a value-add to a stabilized acquisition strategy.
Key Topics Covered: What defines a legitimate IOS asset? The role of heavy industrial zoning and high-flow-through site functionality. Why institutional capital (pension funds, insurance) has flooded the space. The impact of interest rates on portfolio aggregation and exit strategies. The 2026 outlook for Southern California vs. the National IOS market.
Connect with Shy Assar: 📺 YouTube: @AddingValueShyAssar 💼 LinkedIn: [https://www.linkedin.com/in/shy-assar-voit-res/] 📧 Email: SAssar@voitco.com Connect with Steve Azar: 🌐 Website: https://www.ambientcap.com
Timestamps & Chapters
[00:00] - Cold Open: The "Institutionalization of Dirt"
[01:09] - Introduction: Shy Assar welcomes Steve Azar (Ambient Capital Partners)
[01:35] - The State of the Market: Why the Inland Empire IOS market feels "soft" vs. the 2019 baseline
[04:16] - National Trends: Why IOS has half the vacancy and twice the rent growth of warehouses
[06:06] - Target Markets: Top 12 US markets for IOS (New Jersey, South Florida, Dallas, Atlanta)
[06:45] - Investment Rationale: Population density, transportation, and permanent barriers to entry
[08:54] - Defining IOS: Cutting through the "noise" and terminology confusion
[10:43] - Property Specifications: The importance of functional maintenance facilities and yard geometry
[12:45] - Zoning & Land Use: Why grandfathered uses are a major risk for IOS investors
[15:15] - Tenant Profiles: Construction, equipment rental (United Rents), and the AI data center boom
[16:43] - Steve’s Background: Transitioning from XPO Logistics and tenant psychology to investing
[18:47] - Infrastructure Mindset: Why IOS facilities are "sticky" and mission-critical for users
[21:11] - The Founding of Ambient: Why focus and a niche broker network are required for IOS success
[25:22] - Broker Relationships: Shy's perspective on working with disciplined institutional pros
[27:49] - The Evolution of Capital: How institutional appetite has matured since 2020
[30:36] - Supply vs. Demand: Why IOS fundamentals remain stronger than big-box industrial
[33:07] - The Vision for Ambient: Maintaining discipline and serving as a reliable capital source
[37:37] - Case Study: The acquisition and leasing of 13866 Slover Ave in Fontana
[40:15] - Advice for Brokers: How to build long-term partnerships in the IOS space
[42:09] - Closing: Final thoughts and how to connect with Shy and Steve