We use cookies to provide you with a better experience. By continuing to browse the site you are agreeing to our use of cookies in accordance with our Cookie Policy.
  • INDUSTRY PRESS ROOM
  • ABOUT
  • CONTACT
  • MEDIA FILE
  • Create Account
  • Sign In
  • Sign Out
  • My Account
Free Newsletters
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
  • MAGAZINE
    • Current Issue
    • Archives
    • Digital Edition
    • Subscribe
    • Newsletters
    • Mobile Apps
  • TRANSPORTATION
  • MATERIAL HANDLING
  • TECHNOLOGY
  • LIFT TRUCKS
  • PODCAST ETC
    • Podcast
    • Webcasts
    • Blogs
      • One-Off Sound Off
      • Global Logistics and Risk
      • Empowering Your Performance Edge
      • Analytics & Big Data
      • Submit your blog post
    • Events
    • White Papers
    • Industry Press Room
      • Upload Your News
    • New Products
      • Upload Your Product News
    • Conference Guides
    • Conference Reports
    • Newsletters
    • Mobile Apps
  • DCV-TV
    • DCV-TV 1: News
    • DCV-TV 2: Case Studies
    • DCV-TV 3: Webcasts
    • DCV-TV 4: Viewer Contributed
    • DCV-TV 5: Solution Profiles
    • Parcel Forum 2022
    • MODEX 2022
    • Upload Your Video
Home » DC space tightens at U.S. seaports
newsworthy

DC space tightens at U.S. seaports

October 5, 2012
Mark B. Solomon
No Comments

It's not like the heady days of the early 21st century, but after a historically subpar performance for the last four years, the U.S. industrial property market is showing signs of tightening.

The strongest evidence of that is at U.S. seaports, where space is becoming mighty scarce, according to a study released Tuesday by Chicago-based real estate and logistics giant Jones Lang LaSalle. The annual "U.S. Seaport Outlook" analyzes the industrial markets surrounding the nation's major container ports. According to the report, only 20 parcels of space remain available for those who need at least 250,000 square feet of warehouse and distribution center (DC) space within five miles of a major U.S. port.

Vacancies do increase farther away from the ports, according to the study. There are about 60 available parcels of more than 250,000 square feet within a 15-mile radius around the nation's ports, the report says.

Supply is even tighter for "big box" DCs sized at 500,000 square feet or more. There is only nine ready-to-occupy big box facilities within a 15-mile radius of a port anywhere in the country, says the report.

This scarcity of space means that large-scale users in big markets, like Southern California or the New York-New Jersey-Central Pennsylvania region, will either have to outbid other prospective tenants for prime locations near seaports or be willing to ship more goods to inland port destinations, according to the report. The prototype for these inland distribution center models is the Inland Empire east of Los Angeles. But even there, occupancies and speculative development have hit their highest levels since before the worst of the financial crisis in the third quarter of 2008.

Not only is space tight at the ports but it's also going fast, according to Steven J. Callaway, senior vice president and head of global customer solutions for San Francisco-based ProLogis, the world's largest industrial property developer. According to Calloway, this holds true not just for the large "Class A" facilities but also for the smaller, perhaps less desirable, "Class B" facilities at or near seaports.

Speculative (or "spec") development—a build-it-and-they-will-come model of development—is also on the rise at many ports, according to Callaway. Spec development had ground to a halt in late 2008 and early 2009 as the global financial crisis and recession coincided with huge amounts of space becoming available from building projects that had been in the pipeline for several years. But rents have now risen high enough in the Southern California region, home to the ports of Los Angeles and Long Beach, that they have once again sparked spec development—at least where land is available to build on. "This has been the case for the past 12 months," Callaway says.

Spec development has also returned to markets like Houston, Dallas, Miami, and the New York/New Jersey area, according to Callaway.

Jones Lang LaSalle says industrial property demand at seaports is being driven in part by the lack of available land. Another factor is the growth of U.S. exports, which are turning ports into two-way trading mechanisms and further increasing the supply chain's appetite for space surrounding them, the report said. Demand is also high for facilities that have access to large population centers and those that have strong connections to inland distribution facilities.

But a rising tide isn't lifting all ports. The Jones Lang LaSalle report shows that Houston; Charleston, S.C.; Jacksonville, Fla.; and Baltimore are still struggling with double-digit vacancy rates. High vacancy rates persist at these locations even though all but Houston have experienced the fastest growth in industrial occupancies over the past 18 months. "We expect development to remain cautious as these markets continue to strengthen over the coming quarters," Aaron Ahlburn, the firm's head of industrial research, said in a statement.

Although rising demand is driving up industrial rents in many markets, data from the real estate brokerage firm CBRE Group shows that nationwide rents remain about 25 percent below the all-time peak—not adjusted for inflation—set around 2001, according to Callaway.

Callaway says the overall market is now in equilibrium. The buyer's market that had persisted since the downturn has now abated as demand has picked up but the amount of annual new-build square footage remains about 50 percent below its 150 million square-foot historical average.

Companies looking for space can still strike attractive deals, but they shouldn't sit on the sidelines for too long, Callaway says. "They could be looking at rents 25 percent higher than they are now over the next few years," he says.

Transportation Maritime & Ocean Logistics Network Design
KEYWORDS JLL ProLogis
  • Related Articles

    Pre-commitments for warehouse, DC space at highest level since 2000, report says

    Development at nation's seaports projected to boom

    U.S. tightens restrictions on air cargo entering country

Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

Recent Articles by Mark Solomon

Coming together for road safety: interview with Joshua Girard

Off the rails

Freight rate spikes shaking up the C-suite

You must login or register in order to post a comment.

Report Abusive Comment

Most Popular Articles

  • Schneider welcomes first battery-electric truck

  • Fred Smith is not worried about Amazon

  • RJW LOGISTICS GROUP EXPANDS RETAIL LOGISTICS OPERATION TO DALLAS

  • Maersk deploys indoor drones for warehouse inventory counts

  • Outlook 2023: What’s in store for logistics/supply chain?

Now Playing on DCV-TV

5afe63a5 7125 4318 b851 1e5738df1c91

Patterson Fan Co. | HVLS V-Series Ceiling Fan | Staging Area Air Movement

DCV-TV 4: Viewer Contributed
The Patterson V-Series is a high-volume, low-speed industrial ceiling fan that is designed to circulate a lot of air at a very low speed. These fans, ranging in diameters of 8’ all the way to 24’, are perfect for large, open spaces such as staging and shipping areas. One 24’ fan can generate a cooling effect of 6 –...

FEATURED WHITE PAPERS

  • The five best applications for robotic lift trucks in warehouse environments

  • Fulfillment Facility Improved Efficiencies by 4x

  • 3PLs: Complete Orders Faster with Flexible Automation

  • Reusable Packaging for the New Wave of Supply Chain Automation

View More

Subscribe to DC Velocity Magazine

GET YOUR FREE SUBSCRIPTION
  • SUBSCRIBE
  • NEWSLETTERS
  • ADVERTISING
  • CUSTOMER CARE
  • CONTACT
  • ABOUT
  • STAFF
  • PRIVACY POLICY

Copyright ©2023. All Rights ReservedDesign, CMS, Hosting & Web Development :: ePublishing