Jones Lang LaSalle: Port, Airport and Global Infrastructure Outlook
The recession has taken its toll on global ports and surrounding real estate, but Jones Lang LaSalle predicts industry growth in the coming years.
"Between 2007 and 2009 the nation's top 13 ports witnessed an 18.5 percent decline in total volume as both domestic and foreign consumption waned," said John Carver, head of the Ports Airports and Global Infrastructure group at Jones Lang LaSalle. "Fortunately, transpacific U.S. bound trade from Asia started to recover in the second half of 2009 and has started to show a positive impact on West Coast ports, with traffic up 14.8 percent year-over-year."
The report also includes Jones Lang LaSalle's new Port Index, which judges American port markets on performance of both the port and its effect on the surrounding real estate market. Los Angeles and Long Beach lead the Index, followed by New York and New Jersey and Savannah.
World container port handling is predicted to expand 6 percent annually beginning in 2011, according to a report by Drewry Shipping Consultants. Brazil is banking on its ports with its Pac 2 Program, a $526 billion government investment. Southeast Asia will also spend more on infrastructure, likely investing approximately $32 billion over the next four years, according to KPMG.
Port-area real estate demand in the United States has not yet recovered, the report finds.
"Asking rents declined by an average 7.1 percent with the largest losses in the markets surrounding the ports of Los Angeles, Long Beach, and Charleston," said Craig Meyer, managing director and head of Jones Lang LaSalle's Americas Industrial Services team. "It's no surprise that these three ports, along with Virginia and Tacoma, posted the highest year-over-year losses from 2008 in total container volumes, demonstrating the integral relationship between port through traffic and industrial vacancy rates."
But the expansion of the Panama Canal is bringing optimism to the sector. Los Angeles-Long Beach has begun a $40 million dredging project to accommodate post-Panamax ships. Meyer expects smaller ports to benefit, too, such as Gulfport, Mobile, Port Manatee, and Philadelphia.
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