As IOS Becomes Increasingly Institutionalized, Justin Horowitz Has You Covered

Plenty of trends that gained momentum during the pandemic have since fallen squarely by the wayside: zany Zoom backgrounds, sourdough starters, Tiger King. 

Contrarily, some of the newer asset types that piqued investors’ attention through that period have not merely survived it, but are more in demand today than they’ve ever been.

SEE ALSO: Fed Pauses Interest Rates Cuts, but CRE Deal Flow Projected to Forge Ahead

Take industrial outdoor storage (IOS) — land zoned for industrial use and typically utilized to store equipment, trucks or building materials. Colloquially, it’s where trucks go to sleep at night. 

IOS is a subset of the industrial sector, a longtime darling of the investment and financing world. As such, IOS carries much of the virtues of its parent, but less of its flash — perhaps until now. 

IOS got off to a slow start as small transactions are at the heart of the burgeoning sector and, in an industry where bigger is deemed better, sizeism prevailed. That changed when some of the largest institutional players began eyeing the space with aggregation and portfolio-level deals in mind. 

As such, IOS is becoming increasingly institutionalized, and one young broker found himself squarely in the middle of the wave (with an expanding reputation for surfing it, artfully). 

Into the outdoor

At the beginning of the COVID pandemic, as e-commerce was exploding, Justin Horowitz, a debt and equity adviser at Cooper Horowitz, 33, started getting calls from industry friends who were leaving other companies to start their own IOS companies. 

“At first I said, ‘Oh, the covered land play?’ But once I started to get into the weeds of what IOS actually is, who was buying these deals and the really smart, institutional players that were leaving these big institutions to start their own firms for an asset class where the average deal size was only $7 million, I was really intrigued,” Horowitz said. “These deals weren’t really being looked at at the beginning of COVID, whereas there’s a huge aggregation play today.” 

Horowitz’s very first client in the space was Catalyst Investment Partners, led by Dan Haroun and Max Heiden.

Haroun had worked on a few IOS transactions at his previous company, Meadow Partners, and found the space compelling, in part because the transaction sizes were so much smaller than traditional institutional deals. 

“Max and I put our heads together and said, ‘We need to build a dedicated platform that specializes in these funky, niche, under-the-radar IOS transactions that are really tough to do as part of a much larger investment platform,’” Haroun said. “Our vision was to put together a vertically integrated fund manager that had discretionary capital to go out and acquire all these small transactions that we thought would produce outsized returns for our investors.” 

Today, Catalyst is the second-largest IOS team in the country with 25 people, and manages two fully discretionary funds and separately managed accounts. But one of their first calls to Horowitz was for help with a $500,000 loan to acquire an IOS property in Memphis, Tenn. 

“It was so small that almost no other debt broker wanted to take it on,” Heiden said. “Justin was so persistent and determined to break into this new sector that he was willing to work with us on it.” 

While that first deal ultimately didn’t close, Horowitz managed to get term sheets for Catalyst from local Memphis banks and from other lenders with whom he’d garnered relationships over the years. He also got some heat from his grandfather, Barry Horowitz, a co-founder of Cooper Horowitz. 

“He said, ‘Why the heck are you doing this small deal?!’” Horowitz recalls, laughing. 

The younger Horowitz pushed back. “These were smart guys with institutional backgrounds, and I had a gut feeling that it made sense to get into this and follow the trend,” he said. 

The first loan Horowitz closed with Catalyst was a little bigger in size at $1 million — but today he’s closed close to $1 billion with the firm in just four years, including two credit facilities that give Catalyst the capacity to borrow up to $260 million across two banks. 

“Justin has been a part of every step of our journey,” Heiden said. 

Haroun puts some of Horowitz’s success down to “some kind of broker superpower when it comes to persistence and speed of follow-up,” likening Horowitz to Harry Potter character Hermione Granger’s ability to go back in time and take five times more classes than anyone else. 

“He picks up the phone within one second every time you call him,” Haroun said. “He’s working on lots of different things at any given time, but he makes every client feel like they’re top priority and works around the clock.”  

“Beyond that, one of his other traits that makes him really successful is I’ve never met a single person who dislikes him,” Heiden said. “Everyone loves Justin, and that goes a really long way in a space that has a lot of competitive, sharp-elbowed people.” 

Ready, set, IOS

Once Horowitz closed his first deal with Catalyst in 2021, he started cold calling “anyone and everyone” he could find in the IOS space, putting his name out there. 

“It was such a young asset class at the time that people in the brokerage community weren’t focusing on it because IOS deals are smaller,” Horowitz said. Since then, a wider gravitation toward IOS has taken place. 

“Two years ago, if we had this conversation, there’d have been a very finite amount of lenders doing IOS. Now, everybody wants to get into it, and my phone is ringing off the hook with new, prospective clients and existing clients,” Horowitz said. “When we hit the market with a new package [and] award it to another lender, those who lost are often like ‘Wow, we didn’t win this one? OK, let’s look at the next deal,’ And that’s the major credit funds, banks and life insurance companies.”

Catalyst has also witnessed a significant evolution in the availability of debt.

“Lenders didn’t really understand what this product was and why it was so special,” Heiden said of IOS’s early days. “Today, every large lender in commercial real estate is actively lending, or looking to lend, on this asset class. Having the ability to place $260 million of bank financing across this asset class is something we would have never dreamed of three or four years ago. It’s a 180-degree change.” 

Horowitz’s paperwork and carbon footprint are also significantly reduced these days. “Two years ago we’d go to market with a presentation and the first three pages were a primer, so ‘What is IOS?’ Now, there’s no need,” Horowitz said. 

As institutional interest has picked up, Horowitz describes 2024 as the year of the portfolio for IOS. He typically worked on deals anywhere from $10 million to $200 million (but also did some $1 million deals). 

Scale — achieved through aggregating smaller IOS deals into big portfolios — is what the larger institutions want today. And when it’s time to monetize it, Horowitz is at the center of helping put three-year or five-year financing on those deals, taking cash out and returning money to investors, or recapping the portfolio and bringing in a new institutional partner. 

Today, IOS has caught the attention of several heavy hitters, including J.P. Morgan Asset Management and Zenith IOS. The two formed a joint venture in February 2024 to buy IOS properties, doubling down in August with a second partnership focused on the sector. 

Ben Atkins, CEO and co-founder of Zenith, met Horowitz two years ago after learning of Horowitz’s expertise in the space. 

Zenith was looking for a portfolio loan during a time when the market was very choppy and certainty of execution was everything. “We heard Justin was active in IOS, and we were very impressed with his knowledge of the space,” Atkins said. “He helped us get comfortable that we were going to be able to execute, so we gave him a shot — having not worked with him before — and were very impressed with the outcome.” 

Horowitz’s professionalism and attention to detail stood out to Atkins, as did his real-time market intel. “He has really great ear-to-the-ground information on what’s happening,” Atkins said. “He has a deep bench of lender relationships, and he’s a deal-maker. He understands the real estate as well as the needs and requirements of both the borrower and the lender. He’s established himself as a leader in the IOS space, and very deservedly so.” 

Part of that power lies in Horowitz’s deep connections and relationships, said Michael Rabin, CEO of Bethesda, Md.-based Open Industrial. 

“Justin is tapped into the universe of lenders that are actively lending in the IOS space,” Rabin said. “It’s a growing universe of lenders, but it’s still relatively small compared to most other commercial property types. So that, in itself, is a tremendous value-add in being able to create a competitive process in this niche and nascent class within commercial real estate.”

After all, the very nature of IOS is small deals, Rabin said, and if you’re aggregating portfolios, that’s a lot of moving pieces. 

“It’s a high-volume proposition,” he said. “We don’t want to get distracted and bogged down with financing transactions. We need to be able to operate it in as smooth a way as possible with the least amount of friction. Justin is able to provide that because he is bringing his relationship lenders to the table, and he’s already solved for the least amount of friction by doing that. Every transaction we’ve done with him has gone off without a hitch.” 

Open Industrial was an early mover in the IOS space, forming in 2020. Since then, Rabin has witnessed more capital formation around IOS investment strategies, and the introduction of new sponsors into the space. The number of sponsors aggregating on a national scale like Open Industrial, however, is still relatively small, he said.

“It’s getting more competitive relative to other property types, but there’s still very little competition,” Rabin said. “We have a bit of a differentiated approach in that we developed a proprietary software platform to allow us to source off-market deals. So, we refer to our investment strategy as an outbound one. We still buy deals from brokers and we have broker relationships throughout the country to help build our pipeline, but the majority of our assets are acquired off market.” 

And Horowitz has played a key role in negotiating many of those acquisition financings, including a $10 million portfolio loan for four assets in Virginia last August. 

”There’s not a selfish bone in his body,” Rabin said. “Justin is all about what’s best for the client, and will step aside if that’s what’s best for the transaction. He’s all about client service.” 

That client service includes bringing some creativity to deals, and there’s no problem Horowitz won’t tackle. Case in point: a recent New Jersey deal where the lender didn’t believe a truck could successfully turn off the highway exit. 

“We had the idea to get a friend to drive a big-box truck, to make that turn radius,” Horowitz said. ”Once they did and proved it, the lender felt comfortable with that.”  

Truck tales 

Although the institutional buyer appetite for IOS is picking up, the majority of sellers are still mom-and-pop owners. 

“So, sixth-generation, for example, ‘Cunningham Trucking Company’ owners who don’t want to be in that business anymore so they sell to someone like Catalyst, who then maybe does a few months of sale-leaseback with you until you unwind your business,” Horowitz said.

More recently, however, he’s seen IOS companies selling to other IOS companies. 

“It happened with self-storage and with manufactured housing, too,” Horowitz said. “While the mom-and-pop sellers are very much involved in the selling community, it’s evolving every day.” 

As with industrial opportunities, tenancy is everything in IOS. Amazon might have a 2 million-square-foot distribution center that services all of Interstate 95 but no space for their trucks. So, Amazon now needs 6 acres of land nearby and, hey, presto, an IOS deal is born. 

“Our clients are ecstatic about that scenario, because now they have Amazon credit and it’s triple-net lease,” Horowitz said. “That said, years ago everyone was fixated on Amazon, but you look today and there’s often a gardening company that’s backed by a billion-dollar private equity firm, and so it doesn’t necessarily need to be these super-high-credit tenancies to get lenders comfortable.”

A big pull to IOS today is its barriers to entry with limited land plays. If United Rentals has occupied a site in Maryland for a decade and pays X amount in rent, the next owner of that site that comes in can charge market rent, which might be 40 or 50 percent more than what they are paying, Horowitz said. “United Rentals is a conglomerate, a credit tenancy, and can afford that rent, and there’s no reason for them to leave. They’ve been servicing that market for a decade, or a couple decades, and there’s nowhere to go. I think new entrants in the space see that logic.”  

So does his grandfather. 

“We talk every single morning, and he’s like, ‘Hey, Justin, how you doing? How are the twins and how is [Horowitz’s wife] Shana?’ then, the next question is, ‘What IOS deal are we closing this week?’ Horowitz said and laughed. ”Once we started doing $10 million, $20 million, $100 million deals, he got on board. He’s 88 and still gets excited about the business.” 

Parking in IOS

Horowitz’s IOS client Rolodex has expanded significantly over the years, as has his lender roster. Initially, debt funds were most prolific in deals because IOS firms didn’t yet have a track record built up in the sector. Today he’s added banks, debt funds and life companies to his repertoire, and his next big push is CMBS. 

“I​​ have done CMBS deals but I think there needs to be an education process in the B-piece buyer market,” Horowitz said. “As more deals trade and more 1031 buyers come into the space I think that will be the next step.” (Investors can defer capital gains taxes in a 1031 exchange sale of one investment property for another.)

“There was one large CMBS IOS transaction that happened over the summer, which was a good moment for the sector,” Catalyst’s Haroun said. “CMBS is one of a few remaining buckets of debt capital that I think will become more and more active over the next few years and continue to grind down the cost of financing. I think there are plenty of other levers that Justin will be able to pull as the sector continues to mature.”

Raising joint-venture equity is another area Horowitz has his eyes on — something he’s done here and there but wants to lean into more aggressively this year. 

“He’s doing work on behalf of a lot of the larger sponsors in the space. So it would make sense, just given his connections both in the IOS space and in the capital markets, for him to transition into placing equity for joint ventures as well,” Rabin said. 

“The IOS space is continuing to rapidly institutionalize,” Atkins said. “You’re seeing many of the largest institutional players in the space, entering the space or looking at the space, and I think that institutionalization is going to continue. With that, you’re going to see larger transactions being done, both on the equity side and on the debt side. As you start seeing portfolio transactions being done, I think there’s actually going to be a very robust capital markets environment in the IOS space over the next year.” 

Lastly, Horowitz has plans to take his expertise overseas soon, he said. 

Family guy

As Horowitz’s niche continues to gain traction nationally, for now, he’s accumulating plenty of air miles as he prioritizes face time with clients and seeing sites with his own eyes. 

“I recently flew to see a client on the West Coast, landed at 12, had lender meetings, had dinner, and then got on a 10 o’clock flight that night. I’ve been on a plane a tremendous amount the past few years,” Horowitz said. “But the reason why I do things like that eight-hour trip to L.A. is now, with the twins, I want to be home as much as possible.” 

He also takes trains. Scott Whittle joined Alterra IOS as the firm’s CFO in March 2024. “Not too long after I joined, Justin took the train down to Philadelphia to make sure to meet in person,” Whittle said. “He’s very good at communicating, and being on top of reaching out to people.” 

Alterra engaged Justin to work on a financing for one of its investment funds.  

“He did a really good job on that deal,” Whittle said. “What we want out of our broker relationships is that we want more people talking about [IOS], and more people to see what we’re doing. We want more people to generate ideas and really understand and learn the space. I told Justin upfront, ‘This is what we want out of this relationship, not necessarily the last five basis points on a deal.’” 

Justin helped create a competitive market, and helped to expand interest in Alterra’s deal, IOS and in the company itself, Whittle said.

When asked to describe Horowitz in one word, Whittle said: “Honest, maybe to a fault. He’s not trying to play games to get the last dollar of commission. He’s going to give you thoughtful feedback, whether it means dollars in his pocket or not, and that’s really valuable.”

Horowitz has a key family role model to seek counsel from when and as he needs it. 

As the son of Richard “Richie” Horowitz, a principal at Cooper Horowitz, Horowitz remembers his father taking him and his brother to visit clients on the weekends. Horowitz’s brother, Jason, works for GBT Realty, a developer in Nashville. 

“We would hang out with the client’s children while they talked business, and so real estate and strong client relationships have been ingrained in me my whole life,” Horowitz said. 

Richie Horowitz remembers his young son as a hard worker in everything he put his mind to. “He had perseverance and, even at a young age, tremendous drive,” he said. 

When Horowitz brought the concept of IOS deals to his father, Richie Horowitz also shared some of Barry Horowitz’s concerns. (Barry is Justin’s grandfather, and the co-founder of Cooper Horowitz.)

“I said, ‘Why are you spending the time on this? You’re wasting your energy,’” Richie Horowitz said. “He told me, ‘Dad, I’m going to grow something in this space,’ and that’s where the hard work, perseverance and drive came in. He found a niche, and people like and trust him. And what can I say? I’m a proud father.” 

At Syracuse University, Horowitz was a real estate and finance major. He wanted to be in real estate, but also didn’t want to jump right into the family business, and his father agreed with his choice. So, he went to the Cooper Horowitz holiday party, gave his resume out to “like 1,000 people,” met Kathy Corton from Brickman Associates, and that started his career. He spent two years at Brickman, two at Savills, and then joined Cooper Horowitz eight years ago. 

In addition to real estate, Horowitz has a penchant for Air Jordans. He has more than 100 pairs, and his interest in the footwear perhaps honed the New Yorker’s ability to hustle during high school. 

“When we were done with school on Fridays, a bunch of us would go down to SoHo and buy two pairs of the latest limited-edition Air Jordan sneakers, sell one, and get the other for free,” he said. 

His most treasured pair are LeBron James’ New York City Edition sneakers from 2006, but Jordans have become something of a trademark accessory. “I’ve moderated close to 10 panels, and I’ll often wear a suit and Air Jordans,” he said. “When I don’t wear Air Jordans, people are like, ‘What are you doing?!’” 

James once famously said, “I’m chasing perfection. I’m chasing greatness.” And with Jordan kicks on his feet and a handle on one of the industry’s most coveted asset classes, so is Horowitz. 

Cathy Cunningham can be reached at ccunningham@commercialobserver.com.