Subscribe to our free, weekly email newsletter!


Logistics/real estate: Jones Lang LaSalle report points to trade rebound as driver for port growth

image

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.

By Jeff Berman, Group News Editor
June 30, 2010

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.

“Up until the last few years port systems did not really understand the real estate part of it,” said John Carver, executive vice president, Port, Airport & Global Infrastructure at JLL.

“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 Author

Jeff Berman headshot
Jeff 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. .(JavaScript must be enabled to view this email address).


Subscribe to Logistics Management magazine

Subscribe today. It's FREE!
Get timely insider information that you can use to better manage your
entire logistics operation.
Start your FREE subscription today!

Recent Entries

Following the lead of its Congressional Colleagues in the House of Representatives, the United States Senate yesterday approved a measure geared to keep federal surface transportation funding intact through the end of December with a nearly $11 billion stopgap fix.

XPO Logistics announced second quarter earnings and the acquisition of two companies, New Breed Logistics, a non asset-based 3PL focusing in contract logistics services, for roughly $615 million, and Atlantic Central Logistics, a 3PL provider of last-mile logistics services, for roughly $36.5 million.

The report, entitled “Outlook for the Domestic Transport and Logistics Market in 2H14 and Beyond,” takes the view that strong freight levels in the second quarter have left trucking companies in a good position: one in which they need to come up with new plans to handle rising demand. But even with that positive momentum afloat, the report observes that there are some familiar challenges intact, such as a lack of qualified drivers and the regulatory drag from the new hours-of-service rules that took effect in July 2013.

Flags of Convenience are a fact of life in the commercial maritime trade, but several European political action groups are worried that they will pose a threat to the Continent’s air cargo industry.

For May, which is the most recent month for which data is available, the SCI is -7.5, following April’s -7.5. FTR said this reading represents a still-tight capacity environment, as utilization rates hover between 98 percent and 99 percent.

Article Topics

News · All topics

Comments

Post a comment
Commenting is not available in this channel entry.


© Copyright 2013 Peerless Media LLC, a division of EH Publishing, Inc • 111 Speen Street, Ste 200, Framingham, MA 01701 USA