Logistics/real estate: Jones Lang LaSalle report points to trade rebound as driver for port growth
With global trade slowly gaining traction, United States-based ports are taking steps to expand capacity in preparation for an uptick in demand along with focusing on capital development to meet infrastructure needs, according to the new Ports, Airports and Global Infrastructure report from global real estate firm Jones Lang LaSalle.
A detailed analysis of the current and future impact of economic development initiatives, cargo volumes, trade flows and shipping patterns on industrial real estate surrounding the nation’s top seaports and airports.
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With global trade slowly gaining traction, United States-based ports are taking steps to expand capacity in preparation for an uptick in demand along with focusing on capital development to meet infrastructure needs, according to the new Ports, Airports and Global Infrastructure report from global real estate firm Jones Lang LaSalle (JLL).
The wide-ranging report examines various aspects of the relationship between real estate and port activity. It does this by looking at port and maritime-related metrics like TEU (Twenty-foot equivalent unit) along with things like land values, lease rates, environmental issues, congestion, and land availability.
Among its findings is the fact that port-centric markets across the U.S. are showing signs that vacancy rates may be near peaking. And demand for warehouse and distribution space remains critically low, but market leasing activity is beginning to pick back up in many geographies, which JLL said is leading to cautious optimism although not yet at levels which support organic growth.
“It is all about adding more capacity, adding more berths, dredging…but as these ports reached their capacity level the topic changed to throughput and moving containers to get ready for the next incoming vessel. Every piece of cargo ends up in a building somewhere and there began to be an understanding in how real estate plays into this throughput.”
A major driver of this report, according to Carver, is to connect the dots between the real estate world and the maritime world and airports to some degree. Part of this connecting centered on leveraging how port systems and port-centric areas are bellwethers for industrial regions and markets.
“You can look at ports and see when ports start to turn for the better then you can see things are improving,” said Carver. “When volumes start to rise, the real estate market usually follows 12 months later. We are starting to see signs that volumes are ticking up again and are looking at port market activity as an indicator for when things start to improve.
And the JLL report points out that the top 13 U.S. ports saw cumulative volumes dip by 18.5 percent between 2007 and 2009, there has been some improvement since the second half of 2009 in the form of transpacific U.S. bound trade from Asia as traffic at West Coast ports is up 14.8 percent year-over-year.
But even though the economy is showing signs of life, the report points out that the recession put a major dent in demand for warehouse and distribution space around ports, as potential vacancy went up 1.6 percent to 9.0 percent. And net absorption increased by a negative 2 million square feet for a total negative 3.9 million square feet in 2010. JLL said that even with inventory replenishment occurring, it has not increased demand at most major port markets. And while vacancy is low, it is below the national average vacancy rate of 10.6 percent
Also included in the report is JLL’s new Port Index that rates U.S. ports on port performance and their impact to the surrounding real estate economy through a set of measureable criteria, including: land value-to-lease ratio; local vacancy rates; labor costs; on or near dock service by railroads; and planned infrastructure investment.
The top five ports in the index were the Port of Los Angeles, Port of Long Beach, Port of New York/New Jersey, Port of Savannah, and Port of Oakland.
About the AuthorJeff Berman, Group News Editor Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman
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