Atkins Diet: Zenith IOS’s CEO On Industrial’s Hottest Niche

Ben Atkins is the co-founder and CEO of Zenith IOS, a vertically integrated industrial outdoor storage management and investment platform with more than 100 properties across the U.S. and an asset value of $1.2 billion — despite being founded just six years ago. 

Atkins is an early disruptor in the IOS space, which he sniffed out half a decade ago as being ripe for institutional investment. To this end, Atkins has directed the firm into lucrative joint venture deals with J.P. Morgan Asset Management that has led to more than $180 million in deals. Zenith IOS also has a $700 million equity partnership in place to buy and develop IOS assets across the country. 

Atkins sat down with Commercial Observer to discuss his unconventional path into commercial real estate finance, how he discovered the IOS sector, why he sought to work with J.P. Morgan, and what his past life as a national champion fencer has taught him about business. 

This conversation has been edited for length and clarity.

Commercial Observer: How did you get into commercial real estate?

Ben Atkins: I made a decision to get into commercial real estate during law school. I had gone to law school to do work in the public sector, probably on the federal prosecutorial side. All my internships were with the attorney general and U.S. attorney’s office, the district attorney’s office, but toward the end of law school, I realized that wasn’t going to be a good path for me. 

My father was a psychiatrist and sculptor who, in the late 1980s, started investing in real estate in New York City with a business partner of his. And, so, I had seen him kind of transition from being very much not a businessman into working in real estate investments. I had spent a couple summers working with him, and realized I really liked that space. So I started looking for opportunities to join a legal practice that had a strong real estate practice. 

I went to work at Simpson Thacher & Bartlett. This was in the mid-1990s, and they were in the early innings of doing Carlyle and Blackstone’s fund work. I was fortunate enough to work directly under the partners that were handling those accounts, and was really off to the races doing interesting structural stuff on both the acquisitions and operation sides. 

But my instincts had always been more entrepreneurial, and I didn’t think that I was best suited to work in law, and so I made the decision to try to pivot to the business side, and looked around, and was fortunate enough to be put in touch with David Greenbaum, who, at the time, was the president of the New York City office at Vornado, and he was amenable to hiring a young attorney who wanted to break into the business.  

I joined Vornado in 1999, as essentially David’s mini-me, helping him run the firm’s New York office portfolio and doing everything that he needed me to do, from dispositions, sales, leasing, operations, and kind of interfacing with all the other verticals in the company, which was an amazing experience for me. The team at Vornado were among the smartest people I’ve ever worked with. It was a trial by fire, but I learned an incredible amount. 

But then you launched your own business. Could you walk us through that? 

So the last major deal I worked on at Vornado was the acquisition of the original World Trade Center lease. We went through a multi-month due diligence period. I worked on the 88th floor of the North Tower, with the entire Port Authority team, working probably 16 hours a day until April 2001. Many of the people on the Port Authority side were tragically killed in 9/11. 

Ultimately, prior to the attacks, Steven Roth, the chairman of Vornado, made the decision to back out of the deal. That’s when Larry Silverstein stepped in, closed the transaction, and then 9/11 happened about three months later. At that point, quite frankly, I was a little burned out. I’d been at Vornado for about three years, and was realizing that while I’d learned an incredible amount, I was itching to be a little bit more of an entrepreneur myself. 

And so I left and joined my father and his business partner, Steve Breskin, who by that point had built a nice-size portfolio of mixed-use properties around the city. Even though they started out as two doctors, they were very, very smart and shrewd guys who had a great instinct for emerging areas in New York City at the time. They had built their portfolio in the Lower East Side, the East Village, Brooklyn, and east and west of Harlem, mostly centered around residential assets. My background was largely commercial, so it made sense for me to work with them. 

What was it like working with your father? 

Working with family is a notoriously complicated thing to do, but it was great that I joined him with many years of experience already behind me, so I was bringing a lot to the table. It wasn’t like I went to work with him right out of school. 

And I’d say that my father’s one of the smartest guys I know, so it was a really unique opportunity to collaborate together. His business experience was very much boots on the ground. He and his partner had started out buying small assets, and adding a lot of value, overseeing a lot of the construction work themselves. My experience was very institutional, working on large multimillion-dollar transactions, but as a service provider, as an attorney. 

So it gave me the opportunity to learn the nuts and bolts of real estate. 

How did you transfer from being this three-person unit with your dad into Abington Square Partners, which was a big player in Brooklyn? 

Around the time of the Global Financial Crisis, I started seeing that there were gonna be a lot of interesting opportunities outside of New York City, and I became interested in expanding out of New York. My father and Steve were not, so I decided that it was a good time for me to go out on my own and build a business from the beginning. 

I rented a 500-square-foot office in Dumbo at a Two Trees building. I had a desk and a phone. And I sat down and really kind of dived in, jumped out of the plane without a parachute, so to speak, and started scratching and clawing to put small deals together, syndicating, dialing for dollars, calling up all the people that I knew who might be interested in investing, and slowly over a number of years was able to get some traction and do some deals and put a business together. 

What transactions and asset classes helped you go from being a guy with a 500-square-foot office and a telephone to $300 million in deal flow?

I realized that I enjoy the business-to-business relationships in commercial real estate, between landlords and tenants, better than I do the residential side, which very often deals with people and families. It suits my personality better. And, so, I started concentrating more on industrial, and conversions from industrial to office and retail. 

The common theme was value-add. I was looking for opportunities where I could find something that had attractive pricing based on the metrics of what I was buying it at, and what I could ultimately bring it to in terms of generating rent. That led me eventually into larger industrial warehousing, and then also into self-storage, where I spent a number of years building ground-up self-storage projects. 

Walk us through the genesis of Zenith IOS

By 2017, I was doing a lot of industrial and self-storage in New York and Florida. I had also moved into Texas, primarily Dallas. So I was active in all of those markets. I had built up a team — still a small team, probably seven or eight people — and we were looking at a lot of development-type deals that involved industrial land. Increasingly, people were talking about truck parking, and a shortage of truck parking across the country. There had been some legislation that municipalities had adopted to deal with some accidents that had happened for truckers driving overnight and falling asleep at the wheel. 

What I started noticing was an interesting disaggregation between industrial land pricing and land rents. And while industrial land pricing had gone up a lot, largely because big-box development was in full swing, land rents had actually outpaced it. I saw a couple sites where you could buy the land and lease it out with really minimal improvements at a very attractive return on cost, somewhere between 8 percent and 10 percent. 

There were a couple instances where I told my business partner, Daniel Laub, about this, and he said, “Is this just a one-off, or is there something going on here? What’s happening with this truck parking thing that people aren’t talking about?” And so I did a deep dive in my office, and spent about six months looking at multiple markets, and seeing what was happening around the country, and had sort of this “Aha!” moment, where one day the clouds parted and I saw IOS. 

So what is IOS for our readers who might not know? What makes it so valuable? 

IOS stands for industrial outdoor storage. They are, fundamentally, industrial zoned sites, oftentimes in close proximity to major metro areas. They usually have some building components, but they’re very low coverage, usually less than 20 or 25 percent of the lot is covered. They provide a large swath of users, both owner-occupiers and tenants, with a critical part of their business being logistics strategy and the overall U.S. supply chain. 

So you’re talking about industrial yards, but you have trucking companies, auto companies, construction services companies, construction equipment companies, equipment rental companies, school buses, ambulances, municipal users, anyone who has a need for a lot of outdoor space, but they don’t want to pay to put that under a roof. Those are IOS tenants, and that is essentially what IOS is. And I’d say your standard IOS-sized parcel probably runs between 5 and 15 acres. 

Your standard building might be somewhere between 10,000 square feet and 25,000 square feet, but you have bigger and smaller sites as well, depending on the municipality. 

You guys have a major partnership with J.P. Morgan. How did that come about?

When I saw the IOS opportunity, I realized that this was a multi-hundred-billion-dollar asset class that no one was focusing on as an institutional investment. 

A classic aggregation strategy was available, which I thought was a once-in-a-generation opportunity, where if you did the legwork to acquire a large portfolio, if you could build something that was driven by cash flow, with attractive yield on cost, you would create a lot of value that would have something for a larger institutional player, who wasn’t equipped to do that type of aggregation, but would be willing to pay for it. 

Our goal was we wanted to build a long-term business that could operate on a national scale. That was our goal from day one. It remains our goal, and we want it to be fully vertically integrated. 

We were fortunate that J.P. Morgan had been coming off a joint venture with one of our early competitors, and competitors to this day, a group that I have tremendous respect for, which is Alterra IOS. J.P. Morgan didn’t have a partner to be kind of the day-to-day operator and acquirer. We showed up with a great IOS portfolio in multiple markets, and a lot of ambition to scale. So we were able to come together and enter into our first joint venture at the end of 2021. 

You were a national champion fencer. How has that influenced you as a real estate investor and businessman? 

Fencing was actually a big part of my life. I won two NCAA championships and two national championships. At one point, I was the No. 1-ranked fencer in the country in the early 1990s. I’m a big believer in the benefits of athletics. When I look to hire, I would say people who have military backgrounds and athletic backgrounds are oftentimes high-conviction candidates, because I know that to succeed in athletics, it requires a lot of resilience. You have to overcome a lot of adversity, you have to deal with a lot of setbacks, and you have to be goal-oriented without immediate gratification. You have to set a goal for yourself, and it may take years to achieve it, not knowing what the ultimate end game will be, and whether you’ll achieve the success that you want.

 And I think that business is the same. It’s very similar.

So I take my setbacks in stride. I don’t dwell on the past. I don’t dwell on my errors. I try to learn from them. My old coach was a legendary Hungarian fencing master, who used to say, “It’s only a loss if you don’t learn anything from it.” And I try to take that approach to what I do. 

Brian Pascus can be reached at bpascus@commercialobserver.com.