Warehouse space is tight nearly everywhere, but logistics space near seaports is in particularly high demand thanks to continued e-commerce sales growth and companies holding increased inventory to guard against supply chain disruptions, the real estate firm CBRE said Tuesday.
Since those twin trends fall on top of a 36.5% jump in international shipping container volumes over the past decade, the result is a boom in demand for industrial real estate in and around major seaports, according to the recent CBRE Global Seaport Review.
Companies also try to locate their distribution facilities near seaports in an effort to control transportation costs, which account for an estimated 45% to 70% of total logistics costs, CBRE’s Supply Chain Advisory group says.
CBRE also forecasts that the high demand is expected to continue far beyond the holiday peak. Companies are currently scrambling to expand their real estate footprints to keep up with e-commerce sales that have increased 133% over the last five years. And CBRE predicts that between 1.7 and 2.2 billion square feet of additional e-commerce-dedicated logistics space will be required by 2026 to support internet sales.
“A greater number of companies today are facing the enormous supply chain pressures generated by changing consumer behavior, economic uncertainty, and a need to better insulate their manufacturing and distribution processes from interruptions,” John Morris, CBRE President of Industrial & Logistics in the Americas, said in a release. “As container shipping increases, so does the need for more logistics real estate, especially within seaport markets.”
CBRE’s analysis showed that the impact of these trends hit worldwide, with a focus on the top 10 ports ranked by container volume in twenty foot equivalent units (TEUs):