This third annual index provides a distinctive analysis of seaport- and airport-centric industrial space in gateway U.S. real estate markets by providing detailed information on 24 major seaports and airports plus a macro overview of current trends impacting the domestic sector. It also explores warehouse property fundamentals in the areas surrounding these locations.
"Even with a myriad of global economic challenges, seaport industrial real estate has continued to retain its premium value over inland industrial locations," said John Carver, head of Jones Lang LaSalle's PAGI team. "Rising leasing volumes and demand for warehouse space at these gateway logistics hubs is driving this continued `coast inward' recovery. In the last year, millions of square feet of space have been taken in and around our busiest ports, bringing vacancy rates down."
Highlights from the report include:
- Top 5 of 12 port markets: The Queen of the ports this year is the Port of Los Angeles, thanks to its "high container volumes, market share of trans-pacific cargo traffic, its stable real estate market and the $1billion earmarked to capital improvements in the next five years." The other ports in the top five positions, in order, are: Long Beach (#2), Houston (#3), New York/NJ (#4), and Virginia (#5). The largest gains were seen in Baltimore, followed by Charleston and Houston, noted Carver.
- Cargo volumes up substantially: $316 billion worth of U.S. international imports and exports were recorded in May, just under the all-time high recorded in July 2008, while U.S. exports rose 16.7 percent to $1,837 billion last year, the second-highest level reported.
- Increased port growth and investment: While global trade has accelerated, U.S. ports have been in investment mode. Capital investment projects including the increase in public private partnerships (P3s) are emerging across the country as ports battle for market share. Rail freight operators are also investing in intermodal facilities and double-stack capabilities to improve efficiencies and speed of goods-to-market.
- The Panama Effect: U.S. ports are mindful of the impending completion of Panama Canal expansion project and they have long been preparing to compete for the large "post-panamax" ships, said Carver. "But it will be the ports with an efficient and holistic approach to moving goods as quickly and as cost effectively as possible that will triumph."
- Outlook: The future for U.S. seaport real estate is positive and the sector will continue to outperform the general industrial real estate market. The Panama Canal expansion bringing larger ships to U.S. shores, and free-trade agreements, all serve to increase trade and increase the demand for port-side warehouse space.