There are four resource-producers in the game: Lumber Yard, Cement Yard, Brick Yard, Steel Yard.
To be able to upgrade, you need to have built the Cement Yard and have some stock on hand (I believe 10 of both Lumber and Cement). Further upgrading can be done any time.
Progressing is done by building each of the 3 different houses in each tier. So, to be able to build the Cement Yard, you must build the 3 different Tier 1 houses that only require Lumber.
To actually upgrade, select the yard and there is an icon in the bottom-right. It costs money and will require a work team to do the upgrade. The yards capacity will increase from 25 to 50 once upgraded.
The first yard you upgrade (likely the Lumber Yard) unlocks:
When everything is upgraded and you get 50 stock in each yard, you will unlock:
*This may be buggy, in a good way, and unlock early!