The commercial real estate firm Jones Lang LaSalle (JLL) said property near major U.S. seaports "continues to outperform the broader industrial market. Additionally, the tightness of these markets is funneling demand to inland distribution hubs with strong trucking and rail connections."
The firm's U.S. Seaport Outlook 2012
reported competition among U.S. seaports continues to increase for inbound containers as the Panama Canal expands and larger ships are call U.S. ports.
"The increasing flow of containers is providing opportunities by matching empty boxes with export users," the firm said. "Now at an all-time high for the United States, exports have become an increasingly important driver of activity at domestic ports and their surrounding real estate markets."
JLL said investment is continuing to pour into ports and "despite the uncertain macro environment, ports have continued to invest heavily in infrastructure improvements. At least $13 billion of public investment is flowing into ports over the next decade and it says those improvements will expand capacity and increase efficiency."
The firm added that large blocks of space are disappearing from port markets. A mere nine spaces can house a tenant of greater than 500,000 square feet within 15 miles of any major seaport. Only 20 blocks are available for tenants needing at least 250,000 square feet within five miles of a major port.
"Many cities have built up around their ports, leaving less developable land for large-footprint warehouses or distribution centers, constricting the flow of transportation infrastructure and making redevelopment more costly. Yet the strongest port-centric markets in the United States in 2012 also profit from a connection to a region that facilitates ‘big-box’ logistics real estate. The Ports of Los Angeles and Long Beach have the Inland Empire; New York/New Jersey has the Exit 8A & 7A submarkets; and Seattle and Tacoma have the Kent Valley - all of these have tight vacancy, generally under 5.0 percent," report said.
JLL noted "vacancy remains higher in port submarkets that overbuilt before the recession. Many port markets that experienced significant ‘big box’ development prior to the downturn have not yet been able to burn off much of their excess construction. Houston, Charleston, Savannah and Jacksonville all have double-digit vacancy." - Chris Dupin