U.S. seaports help deliver vital goods to consumers, ship exports overseas and support millions of jobs. In fact, seaports are a vital economic engine for the U.S., and the nation’s import and export volumes are one of the top demand drivers for industrial real estate.
Over the past few years, U.S. ports have undergone significant change as the global shipping industry has rapidly evolved. To get products to consumers quicker and more efficiently, ship sizes are growing at a faster rate than ever before. These shifts have put ports in catch-up mode, with capital improvement projects underway or recently completed at nearly all locations to better service larger vessels. While West Coast ports are naturally better suited for this trend thanks to deeper harbors, the recent expansion of the Panama Canal has created an opportunity for more cargo to shift to ports along the East Coast and the Gulf Coast.
As we look ahead, a thriving U.S. economy should keep import volumes booming on both coasts in the short term. However, exports could be impacted by a strong U.S. dollar, and it remains to be seen how possible shifts in U.S. trade policy could affect imports in the long term. While the long-term effects of the Panama Canal expansion on East Coast/West Coast port market share won’t be seen until improvements are completed along East Coast ports, a major trend to watch in the coming year will be the effects of new shipping alliances on global trade and the ports themselves.
The new shipping partnerships reorganize the four main alliances (2M Alliance, Ocean Three Alliance, G6 Alliance and CKYHE Alliance) into three (2M Alliance, THE Alliance and the Ocean Alliance). These three alliances cover more than 77% of global container capacity and can have a major impact on shipping costs and terminal occupancy. Already, two major ports (the Port of Savannah and the Port of Virginia) have forged an alliance of their own to counter this wave of consolidations.
In this Industrial U.S. Seaport Outlook, we will explore these trends and their effect on ports throughout the country, providing insight into port capabilities and fundamentals and how they will affect the surrounding industrial real estate markets in the coming years.
INDUSTRIAL SERVICES CONTACT:
Pete Quinn, SIOR
National Director, Industrial Services | USA
+1 317 713 2107
pete.quinn@colliers.com
RESEARCH CONTACT:
James Breeze
National Director of Industrial Research | USA
+1 909 937 6365
Los Angeles, CA
#1 U.S. port for loaded inbound container volume in 2016 (4.5 million TEUs)
Overview: Dubbed “America’s Port,” the Port of Los Angeles encompasses 7,500 acres of land and water along 43 miles of waterfront. As the largest port in the U.S. in terms of container traffic, the port handled 8.8 million units of cargo in 2016 — setting an all-time record for ports in the Western Hemisphere. The reason for the port’s success is its deep natural harbors, its proximity to Asia and its large and growing population — 28.3 million people live within 250 miles of the port.
The Port of Los Angeles has more than $2.6 billion of capital improvements planned for the next decade to modernize and improve its terminals and rail and warehouse infrastructure. The port is also committed to the environment, including efforts such as a clean truck program, reducing emissions of ocean-going vessel operations, improving water quality and significantly increasing the use of solar power. Despite the expansion of the Panama Canal and related improvements along East Coast ports, the Port of Los Angeles is expected to remain the top port in the U.S. in terms of cargo volume for the foreseeable future.
Capabilities: The Port of Los Angeles has one of the deepest harbors in the U.S. at 53 feet, deep enough to handle vessels capable of holding up to 15,000 TEU’s — a significant advantage over ports along the East Coast. The port contains 9 container terminals, 15 marinas and 30 berths equipped with Alternative Maritime Power®. There are 86 total cranes at the port, with 72 able to handle Post Panamax vessels (6,000 TEUs).
Trade: A majority of the total containerized volume coming through the Port of Los Angeles is from imports. At the end of 2016, 71.4% of loaded containers handled at the port were from imports. Top trading partner countries in 2016 were: China/Hong Kong , Japan , Vietnam , South Korea and Taiwan . Furniture, auto parts and apparel are the top imported items while paper, animal feed and scrap metal were the top exports in 2016.
Intermodal: There are two Class I rail operators at the Port of Los Angeles: Union Pacific and BNSF. The Intermodal Container Transfer Facility (ICTF), operated by Union Pacific, is a large near-dock railyard located approximately five miles from the Port of Los Angeles. Since opening in 1986, the ICTF has greatly enhanced transcontinental rail service as well as the relay of marine cargo containers between both the ports of Los Angeles and Long Beach and major railyards near downtown Los Angeles.
Real Estate Impact: The largest industrial combined market in the U.S. surrounds the Port of Los Angeles. Greater Los Angeles — which includes Los Angeles County, Orange County and the Inland Empire — totaled 1.6 billion square feet of existing industrial inventory at the end of 2016. Demand for industrial real estate in all markets are robust, with the surrounding ports remaining one of the top drivers. In 2016, Los Angeles County posted the lowest vacancy rate in the U.S. at 1.3%. Located approximately 50 miles east of the Port of Los Angeles, the Inland Empire has become one of the most dynamic markets in the U.S., constantly finishing in the top five in terms of U.S. activity and development. The Inland Empire has also become an e-commerce hub for the western U.S. with Amazon.com alone currently occupying more than 7 million square feet — its largest footprint in the U.S.
Outlook:
The port has over $2.6 billion of capital improvements planned for the next decade to modernize and improve its terminals, and rail and warehouse infrastructure. One of the port’s top goals for the coming years is its continued commitment to the environment. This includes a clean truck program, reducing emissions of oceangoing vessel operations, improving water quality and significantly increasing the use of solar power. Despite the expansion of the Panama Canal and related improvements along east coast ports, the Port of Los Angeles will remain the top port in the U.S. for cargo volume for the foreseeable future.
Market Leader Quote:
“The Port of Los Angeles is America’s premier port and a gateway of international commerce. This thriving seaport not only sustains its competitive edge with record-setting cargo operations, but is also known for groundbreaking environmental initiatives, progressive security measures, diverse recreational and educational facilities, and LA’s emerging waterfront destination. The port has been and remains one of the top demand drivers for the surrounding industrial markets which continues to lead the country in activity, investor demand, rent growth, and development.”
- John Hollingsworth,
Executive Managing Director
Port of Charleston
Achieved new port record in March 2017 for loaded containers handled (151,484)
“One of the fastest-growing ports in the nation, the Port of Charleston is the sixth-largest port in the United States in terms of dollar volume for goods handled. It is also one of the first ports in the Southeast U.S. to accept Post-Panamax ships. The port offers access to two-thirds of the nation’s population within a 16-hour drive and connects with two inland ports in South Carolina to accelerate the movement of goods. This facility has made South Carolina one of the fastest-growing locations for new business in the U.S. — attracting global companies like Boeing, Mercedes Benz, BMW, Michelin and Volvo.”
Hagood Morrison, MBA, SIOR
Senior Vice President & Principal
Charleston, SC
The Port of Charleston is the top economic driver for South Carolina and is responsible for one in 11 jobs in the state. The port, along with its inland counterparts, accounts for $53 billion in annual economic activity, 187,600 jobs and 10% of the total state GDP. From 2011–2016, it was the fastest-growing major port in the U.S. The Port of Charleston is a gateway port for automotive companies as well as the growing manufacturing industry in the Southeast U.S. The port is also growing as a major point of export of PET pellets to Europe.
With a variety of recent capital improvements, the Port of Charleston is well positioned to compete with other East Coast ports for the increasing number of larger container vessels crossing the newly expanded Panama Canal. The most important capital improvement underway is the deepening of the harbor slated to complete at the end of the decade. Increasing the depth from 45 feet to 52 feet will make it one of the deepest harbors on the East Coast. Other important improvements underway include the construction of the Hugh K. Leatherman, Sr. Terminal, which will increase container capacity by 50%. It is the only container terminal under construction in the U.S. and is scheduled to complete in 2020.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
736,326 | -11.9% | 694,829 | 2.9% |
2009 |
579,075 | -21.4% | 554,552 | -20.2% |
2010 |
520,824 | -10.1% | 535,070 | -3.5% |
2011 |
580,416 | 11.4% | 560,343 | 4.7% |
2012 |
625,566 | 7.8% | 565,398 | 0.9% |
2013 |
651,227 | 4.1% | 629,802 | 11.4% |
2014 |
697,553 | 7.1% | 668,154 | 6.1% |
2015 |
799,581 | 14.6% | 721,882 | 8.0% |
2016 |
848,751 | 6.1% | 721,315 | -0.1% |
YTD 2017* |
238,090 | 13.3% | 203,510 | 13.9% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The South Carolina Ports Authority has invested heavily in new cranes and equipment in recent years, and its $1.3 billion capital plan includes equipment purchases and upgrades for the existing and in-development container terminals in Charleston.
The Port of Charleston has 16 active container cranes, all of which are Post-Panamax ready. Two more Post-Panamax cranes will be installed by 2018. The current harbor depth of 45 feet can handle Post-Panamax ship sizes and ships with capacity of up to 10,000 TEUs at high tide. The planned deepening of the harbor to 52 feet will significantly expand that capability to ships of up to 13,000 TEUs.
Trade:
The Port of Charleston’s top trade partners include Germany, China/Hong Kong, the United Kingdom, Japan and India — which reflects the port’s importance to automobile manufacturing in the U.S. Top imports include automobile parts, automobile tires, furniture, cotton and plastics. Top exports include paper products, automobile parts, wood pulp, meat, logs and lumber.
Intermodal:
The Port of Charleston is served by CSX and Norfolk Southern for daily express intermodal and merchandise rail services, connecting Charleston with hubs across the Southeast, Gulf and Midwest. In addition to CSX and Norfolk Southern’s double-stack intermodal trains, the RapidRail dray program provides a cost-efficient connection between the marine terminals and rail yards.
The Inland Port Greer is also nearby, located on the expanding I-85 corridor. The inland port is surrounded by 94 million consumers within 500 miles and also serves to extend the Port of Charleston’s intermodal reach by 212 miles.
Real Estate Impact:
South Carolina’s industrial markets have been booming, coinciding with the increased cargo flowing through the ports and a large increase in manufacturing in the region. Charleston finished 2016 as the top growth market in the country in terms of absorption as a percentage of inventory, with that ratio equaling 7.9%. Development is growing at a rapid pace, with more than 3 million square feet under construction or planned.
With demand for new, larger fulfillment centers to handle the insatiable demand from e-commerce retailers, the Greenville-Spartanburg-Anderson market is becoming an industrial powerhouse with some dubbing it the “Inland Empire of the East Coast.” Three growing industrial fields dominate the area: automotive (anchored by BMW and Michelin), advanced materials manufacturing (supporting the specialty textiles industry serving Boeing and the automotive sector) and the logistics and distribution facilities that serve the southeastern United States. These factors make Greenville-Spartanburg-Anderson an emerging industrial market to watch in 2017.
Port of Houston
271,182 loaded outbound containers handled in Q1 2017 — 17.7% higher than in Q1 2016
“Occupier interest, development activity and leasing on the far-east side of Houston have recently accelerated. The majority of that activity can be tied directly to the Port of Houston and its significant economic contribution, fueling 2.7 million jobs and $617 billion in activity. The Houston Ship Channel is home to the second-largest petrochemical complex in the world and is a major contributor to Houston’s position as the number-one port in the nation by foreign tonnage. Houston’s port activity continues to grow after the opening of the expanded Panama Canal — leading to the recognition of Houston as the new ‘third coast.’”
Gary Mabray
Principal
Houston, TX
The Port of Houston is a 25-mile-long complex of more than 150 private and public industrial terminals along the 52-mile Houston Ship Channel. Each year, more than 241 million tons of cargo move through the Port of Houston, carried by more than 8,200 vessels and 223,000 barges. The port is consistently ranked at or near the top in the U.S. in terms of foreign waterborne tonnage, imports/exports and total tonnage handled. It is also one of the nation’s leading breakbulk ports, handling 41% of project cargo at Gulf Coast ports.
The port has been instrumental in the city of Houston’s development as a center of international trade. Carrier services on all major trade lanes link Houston to international markets around the globe and the ship channel intersects the busy barge traffic lane of the Gulf Intracoastal Waterway. Surrounded by one of the nation’s largest populations, Houston is also centrally located as a strategic gateway for cargo originating in or destined for the western and midwestern United States.
The Port of Houston plans to undertake significant infrastructure improvements in the next few years to accommodate future demographic growth in the region as well as the larger vessels and increased cargo resulting from the Panama Canal expansion. Improving efficiency at the public terminals through more modern facilities and equipment is essential to meeting one of the port’s mandates — to promote and facilitate commerce to benefit local partners, Texas and the nation.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
540,563 | -6.6% | 873,285 | 5.2% |
2009 |
447,468 | -17.2% | 846,917 | -3.0% |
2010 |
478,221 | 6.9% | 870,683 | 2.8% |
2011 |
533,552 | 11.6% | 873,271 | 0.3% |
2012 |
602,858 | 13.0% | 876,882 | 0.4% |
2013 |
627,380 | 4.1% | 893,928 | 1.9% |
2014 |
734,805 | 17.1% | 856,145 | -4.2% |
2015 |
839,482 | 14.2% | 948,740 | 10.8% |
2016 |
884,831 | 5.4% | 916,080 | -3.4% |
YTD 2017* |
243,192 | 26.5% | 271,182 | 17.7% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The are two container terminals at the Port of Houston: the Barbours Cut Container Terminal and the Bayport Container Terminal. The port has 41 cranes, 13 of which are Post-Panamax ready. The port’s depth of 45 feet can handle Post-Panamax ships of up to 6,000 TEUs.
Trade:
Like the Port of Oakland, the Port of Houston is one of the only major ports in the U.S. where a majority of loaded cargo handled is from exports. While loaded exports dropped by 3.4% in 2016, exports still represented 51% of total loaded container volume. Exports have surged in 2017, with more than 271,000 loaded outbound TEUs handled through March — a 17.7% increase compared with the same time last year.
Top trading partners include Mexico, China, Brazil, Germany and the Netherlands. While energy-related commodities dominate imports and exports at the Port of Houston, other top imports include motor vehicles and furniture, while plastics and cotton are some of the other top exports.
Intermodal:
Both container terminals at the Port of Houston offer modern intermodal services via three Class I rail providers: BNSF, Union Pacific and Kansas City Southern.
Real Estate Impact:
A resurgent local and national economy, along with the prospects of lower energy regulations, were a boon to the Port of Houston in Q1 2017. While first quarter leasing activity was down from last year (3.6 million square feet in Q1 2017 vs. 6.7 million square feet in Q1 2016), the increase in container traffic could be a demand driver for the remainder of 2017.
The overall industrial vacancy rate in the Houston market remains low at 5.6%, and preleasing has been strong for recently completed and under construction product in Q1 2017. In fact, 60% of the product delivered in Q1 was pre-leased, while 78% of the product under construction is pre-leased. Much of the product under construction is in the East-Southeast Far submarket, where the Port of Houston is located.
Yet Houston is not the only market that benefits from the Port of Houston. Many industrial markets throughout Texas see the port as a demand driver, including Dallas-Fort Worth, where much of the product imported is funneled. Dallas-Fort Worth remains one of the most active industrial markets in the U.S. with more than 18 million square feet under construction.
Port of Long Beach
The deepest natural harbor in the United States at 76 feet
“The Port of Long Beach is the second-largest container port in the country, after the Port of Los Angeles. The port has commenced a decade-long, $4.5 billion capital improvement program to modernize by building cleaner, more efficient terminals, roads, bridges and other infrastructure. The Port of Long Beach is not only a top demand driver for the nearby South Bay market but also for other areas of Southern California, as well as major industrial markets throughout the Southwest U.S.”
Kevin McKenna
Executive Vice President
Ontario, CA
The Port of Long Beach is one of the top seaports in the U.S. and a leader in goods movement and environmental stewardship. Each year, more than $180 billion in trade moves through Long Beach. Everything from clothing and shoes to toys, furniture and consumer electronics arrives at the port before making its way to store shelves throughout the country. Specialized terminals also move petroleum, automobiles, cement, lumber, steel and other products. The Port of Long Beach supports more than 30,000 jobs in Long Beach, 316,000 jobs throughout Southern California and 1.4 million jobs throughout the United States. It generates about $16 billion in annual trade-related wages statewide.
The port is a leader in innovative environmental programs, with a Green Port Policy helping to minimize or eliminate negative environmental impacts. Serving as a model for ports around the world, the Port of Long Beach pioneered programs including the Green Flag vessel speed-reduction program to improve air quality, “green leases” with environmental covenants and the San Pedro Bay Ports Clean Air Action Plan. The port is also moving to outfit its container terminals with shore power, which allows docked ships to plug into land-based electricity instead of burning diesel fuel to run their engines. At least one berth at every container terminal has shore power but by 2020, all container berths will have shore power.
The Hanjin bankruptcy created a 5% drop in loaded inbound container volume at the Port of Long Beach in 2016. However, Mediterranean Shipping Company's takeover of Hanjin’s Long Beach Terminal, along with robust economic fundamentals, led Long Beach to its best quarter for total container volume since 2007 in Q1 2017. The Port of Long Beach is already Post-Panamax ready, meaning the port can concentrate its future capital improvements on the environment, modernizing technology and improving road and rail infrastructure to get products to consumers quickly and efficiently.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
3,189,363 | -13.9% | 1,687,051 | 7.2% |
2009 |
2,534,897 | -20.5% | 1,352,053 | -19.9% |
2010 |
3,128,560 | 23.4% | 1,562,398 | 15.6% |
2011 |
3,024,965 | -3.3% | 1,506,693 | -3.6% |
2012 |
3,062,290 | 1.2% | 1,540,188 | 2.2% |
2013 |
3,455,323 | 12.8% | 1,704,932 | 10.7% |
2014 |
3,517,514 | 1.8% | 1,604,932 | -5.9% |
2015 |
3,625,263 | 3.1% | 1,525,560 | -4.9% |
2016 |
3,442,575 | -5.0% | 1,529,497 | 0.3% |
YTD 2017* |
798,282 | 2.1% | 358,479 | 0.4% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The Port of Long Beach has the deepest harbor in the U.S. at 76 feet, making it the only port in the country deep enough to handle some of the largest container ships in the world. The port can accommodate vessels capable of holding up to 18,000 TEUs. Like the Port of Los Angeles, this creates a notable advantage over many East Coast ports. The port features six container terminals, 10 piers and 66 Post-Panamax cranes.
Trade:
Nearly 70% of the total loaded containerized volume at the Port of Long Beach is from imports. Top trading partner countries in 2016 were: China/Hong Kong, South Korea, Japan, Taiwan and Vietnam. Crude oil, electronics and plastics are the top imported items while petroleum chemicals and waste paper were the top exports in 2016.
Intermodal:
Five of the six terminals at the Port of Long Beach include on-dock rail facilities, from which cargo can reach Chicago in 72 hours. Like the Port of Los Angeles, there are two Class I rail operators at the Port of Long Beach: Union Pacific and BNSF. The Intermodal Container Transfer Facility (ICTF) is only a few miles away and has improved rail service across the country and between the ports of Los Angeles and Long Beach and major nearby rail yards.
Real Estate Impact:
Like its sister port in Los Angeles, the Port of Long Beach is surrounded by the largest industrial markets in the country. But the Greater Los Angeles market is not the only market that relies on imports from the ports of Long Beach and Los Angeles to stock its warehouses. Industrial markets throughout the Southwest U.S. are serviced by the ports.
One such growth market is the Greater Phoenix Area. Greater Phoenix was named one of the 10 emerging industrial markets to watch in 2017 because of its central location, which can be accommodated by both the ports of Long Beach and Los Angeles.
Port of Los Angeles
#1 U.S. port for loaded inbound container volume in 2016 (4.5 million TEUs)
“The Port of Los Angeles is the nation’s top container port and the gateway to the United States for international commerce — the port handles 41% of all cargo entering into the country. This thriving seaport not only sustains its competitive edge with record-setting cargo operations, but it is also known for ground-breaking environmental initiatives and progressive security measures. The port remains one of the top economical demand drivers for California and the surrounding industrial markets, which lead the nation in activity, investor demand, rent growth and new development.”
Hans Mumper
Executive Managing Director
Los Angeles, CA
Dubbed “America’s Port,” the Port of Los Angeles encompasses 7,500 acres of land and water along 43 miles of waterfront. As the largest port in the U.S. in terms of container traffic, the port handled 8.8 million units of cargo in 2016 — setting an all-time record for ports in the Western Hemisphere. The reason for the port’s success is its deep natural harbors, its proximity to Asia and its large and growing population — 28.3 million people live within 250 miles of the port.
The Port of Los Angeles has more than $2.6 billion of capital improvements planned for the next decade to modernize and improve its terminals and rail and warehouse infrastructure. The port is also committed to the environment, including efforts such as a clean truck program, reducing emissions of ocean-going vessel operations, improving water quality and significantly increasing the use of solar power. Despite the expansion of the Panama Canal and related improvements along East Coast ports, the Port of Los Angeles is expected to remain the top port in the U.S. in terms of cargo volume for the foreseeable future.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
4,138,590 | -6.2% | 1,782,502 | 10.9% |
2009 |
3,524,386 | -14.8% | 1,668,911 | -6.4% |
2010 |
3,973,933 | 12.8% | 1,841,273 | 10.3% |
2011 |
4,066,764 | 2.3% | 2,109,394 | 14.6% |
2012 |
4,092,621 | 0.6% | 2,043,076 | -3.1% |
2013 |
3,976,692 | -2.8% | 1,921,069 | -6.0% |
2014 |
4,269,760 | 7.4% | 1,932,014 | 0.6% |
2015 |
4,159,462 | -2.6% | 1,656,677 | -14.3% |
2016 |
4,544,748 | 9.3% | 1,818,502 | 9.8% |
YTD 2017* |
1,087,947 | 5.9% | 509,549 | 17.9% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The Port of Los Angeles has one of the deepest harbors in the U.S. at 53 feet, deep enough to handle vessels capable of holding up to 15,000 TEUs — a significant advantage over ports along the East Coast. The port contains nine container terminals, 15 marinas and 30 berths equipped with Alternative Maritime Power®. There are 86 total cranes at the port, with 72 able to handle Post-Panamax vessels (6,000 TEUs).
Trade:
A majority of the total containerized volume coming through the Port of Los Angeles is from imports. At the end of 2016, 71.4% of loaded containers handled at the port were from imports. Top trading partner countries in 2016 were: China/Hong Kong, Japan, Vietnam, South Korea and Taiwan. Furniture, auto parts and apparel are the top imported items while paper, animal feed and scrap metal were the top exports in 2016.
Intermodal:
There are two Class I rail operators at the Port of Los Angeles: Union Pacific and BNSF. The Intermodal Container Transfer Facility (ICTF), operated by Union Pacific, is a large near-dock rail yard located approximately five miles from the Port of Los Angeles. Since opening in 1986, the ICTF has greatly enhanced transcontinental rail service as well as the relay of marine cargo containers between both the ports of Los Angeles and Long Beach and major rail yards near downtown Los Angeles.
Real Estate Impact:
The largest industrial combined market in the U.S. surrounds the Port of Los Angeles. Greater Los Angeles — which includes Los Angeles County, Orange County and the Inland Empire — totaled 1.6 billion square feet of existing industrial inventory at the end of 2016. Demand for industrial real estate in all markets is robust, with the surrounding ports remaining one of the top drivers.
In 2016, Los Angeles County posted the lowest industrial vacancy rate in the U.S. at 1.3%. Located approximately 50 miles east of the Port of Los Angeles, the Inland Empire has become one of the most dynamic markets in the U.S., constantly finishing in the top five in terms of U.S. activity and development. The Inland Empire has also become an e-commerce hub for the western U.S. with Amazon.com alone currently occupying more than 7 million square feet — its largest footprint in the U.S.
Port of New York & New Jersey
Largest 250-mile radius population of any port in North America (61 million people)
“The Port of New York and New Jersey is where containerization first began with the sailing of the Ideal X from New Jersey to Houston in 1956. In Northern New Jersey, port-related users and e-commerce companies looking for same-day delivery to the New York City area have helped keep vacancy rates at historical lows, particularly in submarkets near the Port of New York and New Jersey. As New Jersey continues to set new port volume records, demand for new construction has surged, evidenced by the 12.9 million square feet of industrial product under construction — up from 4 million square feet during this time last year. The Port of New York and New Jersey continues to invest in its operations in order to handle larger container ships and to improve operations. New Jersey’s industrial market has responded well, recording historically high leasing activity, rental growth and construction starts along with increased investor demand.”
Michael Markey
Executive Managing Director
Woodbridge
The Port of New York and New Jersey is the busiest container port on the East Coast with nearly 30% of the market share, and it is the third-largest container port in North America. More than 61 million people live within 250 miles of the port — the highest population within that radius for any port in North America. The New York-Newark-Jersey City Metropolitan Statistical Area (MSA) also ranks first in the nation in current-dollar GDP. Because of this, the Port of New York and New Jersey is best positioned to take advantage of the increased imports and larger ships crossing the newly expanded Panama Canal. However, some improvements need to be completed before the Port of New York and New Jersey can handle these larger vessels.
The Bayonne Bridge — an arch bridge spanning the Kill Van Kull strait connecting Bayonne, NJ with Staten Island, NY — is undergoing a renovation to raise its clearance from 151 feet to 215 feet. The bridge’s current height only allows ships of less than 10,000 TEUs to berth at three of the port’s main terminals. The new, elevated height will allow ships of up to 18,000-TEU capacity to call at all four of the port’s main terminals. This is a necessity to compete with other ports along the East Coast. Other capital improvement projects underway include the replacement of the Goethals Bridge, an expansive road-widening project set to complete in 2019, and a significant investment in the port’s rail capabilities including the expansion of on-site rail facilities.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
2,548,974 | -2.7% | 1,616,240 | 9.4% |
2009 |
2,245,035 | -11.9% | 1,393,072 | -13.8% |
2010 |
2,579,094 | 14.9% | 1,518,328 | 9.0% |
2011 |
2,683,689 | 4.1% | 1,621,264 | 6.8% |
2012 |
2,749,570 | 2.5% | 1,543,298 | -4.8% |
2013 |
2,760,555 | 0.4% | 1,466,701 | -5.0% |
2014 |
2,944,663 | 6.7% | 1,428,845 | -2.6% |
2015 |
3,214,338 | 9.2% | 1,391,625 | -2.6% |
2016 |
3,202,690 | -0.4% | 1,356,127 | -2.6% |
YTD 2017* |
773,388 | 1.9% | 331,700 | 0.3% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The Port of New York and New Jersey has a harbor depth of 50 feet, deep enough to handle vessels capable of holding up to 13,000 TEUs. The port contains six container terminals and 61 cranes— with 47 cranes able to handle Post-Panamax vessels (6,000 TEUs).
The Port of New York and New Jersey operates extensive environmental programs, ranging from proposed strategies to reduce air emissions from shipping to an Environmental Management System to reduce the impact of facilities operations.
Trade:
A majority of the total containerized volume coming through the Port of New York and New Jersey is from imports. At the end of 2016, 70.2% of loaded containers handled at the port were from imports. Top trading partner countries in 2016 were: China/Hong Kong, India, Germany, Italy and the Netherlands. Pharmaceuticals, gasoline and motor vehicles are the top imported items, while motor vehicle parts, motor vehicles and skin care products are the top exports.
Intermodal:
The Port of New York and New Jersey’s Express Rail System handles more than a third of the cargo that feeds the Eastern Seaboard, with coverage to every major city in the Midwest, Northeast and Eastern Canada. Class I railroad partners such as CSX Intermodal, Norfolk Southern and Canadian-Pacific Railway service the port. The port’s three on-dock rail terminals (with a fourth under construction at Port Jersey) handle same-day transfers between ship and rail. The port is also investing $1.5 billion through 2024 to enhance port access by rail, which will include improvements such as an expanded roadway capacity and greatly modernized intermodal rail service.
Real Estate Impact:
Because of the large surrounding population, the Port of New York and New Jersey is a major demand driver for many industrial markets across the Northeast and Mid-Atlantic U.S. However, the markets that receive the most direct benefits are Northern New Jersey and Central New Jersey. 2016 set the high watermark in leasing and net absorption in these markets and while these numbers will be difficult to surpass, the markets continue to fire on all cylinders.
Every major statistical category in Northern and Central New Jersey has been moving in the right direction in early 2017. The vacancy rate continues to decline, despite more than 4 million square feet of new construction in the past nine months. Much of the new product being delivered is leased prior to completion or shortly thereafter. The industrial market has also seen explosive asking rent growth. In fact, the average asking rent is up 36.4% from its low point in Q3 2011 and is up 13% from its pre-recession peak in Q4 2007.
The Northwest Seaport Alliance
The central conduit for 80% of all trade with Alaska
“The Northwest Seaport Alliance, which combined the previously competing ports of Seattle and Tacoma, has been a great leap forward for the Puget Sound region. Blending ocean and ground shipping, smaller 40-foot containers are repackaged onto 53-foot truck trailers and immediately shipped from the terminal to the customer. E-commerce’s impact on the industrial world has helped industrial vacancy in the Puget Sound market drop to under 3%.”
Scott Alan
Senior Vice President
Seattle
The Northwest Seaport Alliance was created in 2015 as the first arrangement of its kind in North America. The ports of Seattle and Tacoma joined forces to unify management of marine cargo facilities and business operations to strengthen the Puget Sound gateway.
With 40% of the state’s family-wage jobs tied to international trade, this dedication to the shipping industry has been well received. In fact, marine cargo operations in the Tacoma and Seattle harbors supported more than 48,000 jobs in 2013, generating nearly $4.3 billion in economic activity. Marine cargo activity also generates nearly $140 billion in total economic activity, one-third of Washington’s state GDP.
The Northwest Seaport Alliance is in the midst of a 10-year strategic plan to grow cargo volumes, create jobs and improve its financial performance. The plan includes developing and managing strategic terminals that are equipped to handle newer, larger container ships and the increased amounts of cargo these ships bring. Investments currently under way include the Terminal 5 Berth Modernization and the Pier 4 Reconfiguration, which will create one contiguous berth capable of serving two 18,000 TEU ships.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
1,313,425 | -12.7% | 644,210 | 1.2% |
2009 |
1,084,767 | -17.4% | 648,751 | 0.7% |
2010 |
1,373,976 | 26.7% | 722,506 | 11.4% |
2011 |
1,248,791 | -9.1% | 875,508 | 21.2% |
2012 |
1,339,737 | 7.3% | 974,954 | 11.4% |
2013 |
1,238,894 | -7.5% | 983,870 | 0.9% |
2014 |
1,217,374 | -1.7% | 907,867 | -7.7% |
2015 |
1,308,214 | 7.5% | 871,522 | -4.0% |
2016 |
1,391,590 | 6.4% | 984,274 | 12.9% |
YTD 2017* |
351,607 | 13.1% | 247,186 | 6.0% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The Northwest Seaport Alliance has 11 container terminals, 22 international container carriers and four container carriers providing regular sailing to Alaska and Hawaii. The Northwest Seaport Alliance has 61 cranes, 47 of which are Post-Panamax ready. The natural harbor depth can handle ships of up to 13,000 TEUs.
Trade:
A majority of the total containerized volume coming through the Northwest Seaport Alliance was from imports in 2016, however the rate of exports as a percent (43.2%) is much higher compared with other ports like the Port of Los Angeles and the Port of Long Beach. The Northwest Seaport Alliance is also one of the top ports for domestic shipping, handling 80% of total trade with Alaska.
Top trading partner countries in 2016 were: China/Hong Kong, Japan, South Korea, Taiwan and Vietnam. Furniture, auto parts and toys are the top imported items while animal feed, paper and lumber are the top exports.
Intermodal:
Both BNSF and Union Pacific provide fast transcontinental service from the Northwest Seaport Alliance to key distribution points across North America. Both train lines provide competitive transit times from nine on- or near-dock intermodal yards and three nearby intermodal facilities including the Tacoma South Intermodal Facility, the South Seattle Intermodal Facility and the Northwest Container Services.
Real Estate Impact:
The Northwest Seaport Alliance is a major driver for the Puget Sound industrial market, which includes markets in and around Seattle and Bellevue. Situated in the economic powerhouse of the Pacific Northwest, Seattle is one of the fastest-growing cities in the nation, making it a popular industrial market for both regional and last-mile distribution.
With a vacancy rate of approximately 3% and a lack of big land sites left in the core markets, vacancies in the Puget Sound market should continue to trend downward for the foreseeable future. Based on the market’s current fundamentals, industrial asking rental rates are expected to continue increasing roughly 10%–15% per year for at least the next two years. With such strong leasing levels and elevated rental rates, Puget Sound industrial properties will remain solid investments for years to come.
Port of Oakland
Highest percentage of total loaded container volume from exports in 2016 (51.7%)
“The Port of Oakland is the fifth-busiest container port in the United States. Serving one of the nation’s largest metropolitan areas, the port loads and discharges more than 99% of containerized goods moving through Northern California. The port generates more than 73,000 jobs across the region and also serves as an ideal location for logistics and industrial distribution. Surrounded by one of the world’s wealthiest regions and a population base of 10 million e-commerce consumers, the Port of Oakland enables major institutional landlords and occupiers to capitalize on the growing e-commerce industry.”
Greig Lagomarsino, SIOR
Executive Vice President
Oakland, CA
The Port of Oakland was established in 1927 and is a world-class international cargo transportation and distribution hub. Located on the mainland shore of San Francisco Bay, one of the great natural harbors of the world, Oakland was among the first ports globally to specialize in the intermodal container operations that have revolutionized international trade and that stimulate the global economy.
The Port of Oakland has many projects in the works to stay competitive and also environmentally conscious. Beginning in spring 2017, up to six 366-foot-tall cranes at the Port of Oakland’s largest terminal will be raised 27 feet to make it easier to load and unload megaships. The port, which operates its own electric utility, also approved a deal to purchase solar power for the next 20 years. Under the agreement, the port will buy approximately 11,000 megawatt hours of electricity annually from a solar farm.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
796,404 | -8.5% | 910,700 | 0.2% |
2009 |
701,501 | -11.9% | 966,882 | 6.2% |
2010 |
802,657 | 14.4% | 955,579 | -1.2% |
2011 |
797,272 | -0.7% | 993,826 | 4.0% |
2012 |
791,672 | -0.7% | 986,452 | -0.7% |
2013 |
803,314 | 1.5% | 1,014,796 | 2.9% |
2014 |
845,810 | 5.3% | 969,378 | -4.5% |
2015 |
844,234 | -0.2% | 858,146 | -11.5% |
2016 |
883,647 | 4.7% | 947,574 | 10.4% |
YTD 2017* |
212,064 | 3.5% | 228,356 | 3.2% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
Seven container terminals serve the Oakland waterfront. All shipping channels and 90% of the berths at the port are dredged to 50 feet to make them capable of accommodating vessels with capacity of up to 13,000 TEUs. The port has a total of 34 cranes, 27 of which are capable of handling Post-Panamax vessels.
Few ports have available real estate to house distribution and transloading activities inside their gates. But Oakland has a unique opportunity planned in the coming decade with the redevelopment of the former Oakland Army Base into a 360-acre hub for import warehouses and transloading facilities.
Trade:
Agricultural export tonnage has grown 233% at the Port of Oakland in the past five years. The result has transformed the port’s trade profile, making Oakland a leading gateway to Asia — especially for California growers.
The Port of Oakland reported a 10.4% increase in export trade volume in 2016. Overall, 51.7% of total loaded container volume handled at the port in 2016 was from exports — the highest for a major port in the U.S. Top trading partners include China/Hong Kong, Japan, South Korea, Taiwan and Australia. The top imports include beverages and spirits, furniture, glassware, electrical machinery and plastics. Top exports include edible fruits and nuts, beverages and spirits, wood pulp, meats and cereals.
Intermodal:
Two Class I rail providers service the Port of Oakland. Union Pacific and BNSF railroad facilities are located adjacent to the heart of the marine terminal area to provide reliable and efficient movement of cargo between the terminals or transload facilities and the intermodal rail facilities.
Real Estate Impact:
While Oakland remains the top beneficiary of the port, the Port of Oakland is a top demand driver for all East Bay and Central Valley industrial markets. At the end of Q1 2017, Oakland posted one of the lowest industrial vacancy rates in the country at 1.9%. Oakland also has one of the highest industrial asking rents in the country, finishing Q1 at $11.40 per square foot per year.
Despite some new industrial development, especially in or surrounding the port, Oakland is still an infill market. Because of this, other markets further east are ramping up big-box development. One of those markets is Stockton/San Joaquin County, where nearly 4 million square feet of speculative development was under construction at the end of 2016. With record-low vacancies in the East Bay, Northern California’s Central Valley and particularly Stockton/San Joaquin Valley are expected to see continued demand and development activity for the foreseeable future.
Port of Savannah
2.9 million loaded TEUs handled in 2016 — the third-highest annual level in the port’s history
“The Port of Savannah is one of the fastest-growing ports in the nation. Year over year, the Port of Savannah has seen robust activity driven by its one-of-a-kind infrastructure. This infrastructural access to the area's two major interstates, Interstate 95 and Interstate 16, not only feeds the Savannah industrial market but also areas throughout the Southeast U.S. With many ongoing improvement initiatives, the Port of Savannah is setting itself up for long-term success and sustainability.”
David Sink
Principal
Savannah, GA
The Port of Savannah is the fourth-largest seaport in North America and the second-largest on the East Coast. The Port of Savannah is home to the Garden City Terminal — the largest single terminal in the U.S. which operates two Class I rail yards. The Port of Savannah is only a four-hour drive to some of the largest industrial markets in the U.S., including Atlanta, Charlotte and Orlando.
In the coming years, the Port of Savannah will expand its reach to new markets through the growth of intermodal rail, the deepening of the Savannah River and the acquisition of additional cranes to accommodate giant cargo ships. The Port of Savannah is also creating alliances with other ports along the East Coast to stay competitive in an era of shipping consolidation. The East Coast Gateway Terminal Agreement between the Port of Savannah and the Port of Virginia is the first of its kind, allowing the ports to jointly acquire operating systems and equipment, jointly draft agreements with carriers, shippers and terminal operators, and jointly create marketing materials to attract services, alliances and carrier network agreements.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
1,073,263 | 2.2% | 1,082,940 | -1.0% |
2009 |
883,553 | -17.7% | 1,026,801 | -5.2% |
2010 |
1,051,258 | 19.0% | 1,149,217 | 11.9% |
2011 |
1,065,199 | 1.3% | 1,241,278 | 8.0% |
2012 |
1,088,291 | 2.2% | 1,250,172 | 0.7% |
2013 |
1,145,964 | 5.3% | 1,249,243 | -0.1% |
2014 |
1,347,428 | 17.6% | 1,299,018 | 4.0% |
2015 |
1,622,592 | 20.4% | 1,251,460 | -3.7% |
2016 |
1,670,871 | 3.0% | 1,274,272 | 1.8% |
YTD 2017* |
440,129 | 10.4% | 356,132 | 11.8% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The Port of Savannah has two terminals: the Ocean Terminal and the Garden City Terminal, which is the busiest single terminal in the U.S. The Port of Savannah has 36 cranes in service, 26 of which are Post-Panamax ready. Currently, the harbor depth can only handle ships of up to 6,000 TEUs. However, projects to deepen the harbor to 47 feet are slated to complete in the next five years.
Trade:
While a majority of the total containerized volume coming through the Port of Savannah in 2016 was from imports, the rate of exports is much higher than at the three larger U.S. ports in Los Angeles, Long Beach and New York/New Jersey. At the end of 2016, only 56.7% of loaded containers handled at the port were from imports.
Top trading partner countries in 2016 were: China/Hong Kong, South Korea, Germany, India and Japan. Pharmaceuticals, motor vehicle parts and furniture are the top imported items while motor vehicles, cotton and poultry are the top exports.
Intermodal:
The Port of Savannah is the only East Coast port with two Class I rail yards. These rail yards provide service to and from major population centers in the Southeast, Gulf Coast and Midwest U.S.
The port also features two intermodal container transfer facilities located in a single terminal, which are served by CSX and Norfolk Southern Railway. The port’s intermodal service has the fastest westward transit times in the South Atlantic region, including overnight service to a five-state area: Alabama, Georgia, Florida, North Carolina and South Carolina.
Real Estate Impact:
The Port of Savannah is a boon to the Southeast U.S not only in terms of distribution but also in manufacturing. The Savannah industrial market continues to post robust industrial fundamentals and was one of the top five growth markets in the U.S. in terms of absorption as a percent of inventory.
Many imports from the Port of Savannah also flow into other major industrial markets, including Atlanta — one of the largest big-box markets in the country. The Atlanta industrial market began 2017 on a strong note, with delayed occupancies from the previous quarter filling space in Q1. All in all, almost 6.4 million square feet of industrial space was absorbed in Q1. This marks the highest quarterly space absorption since Q4 2014, a year when Atlanta saw the most industrial space absorbed in the country.
Port of Virginia
Only East Coast port with congressional approval for 55-foot depth channels
“The Port of Virginia is riding a wave of momentum. 2016 was a year of record volume, including rail volume growth of 13.9% at the port and welcoming the first vessel to transit the new, wider Panama Canal. As the third-largest East Coast port, the Port of Virginia is preparing for the future with a 40% capacity increase by 2020. Combined with 50-foot depth channels (expandable to 55 feet) and zero draft restrictions, the result will be a modern container terminal complex capable of handling the largest ships in the Atlantic trade. The port has a clear path forward to continued growth and opportunities for generations to come.”
Chip Louthan, SIOR
Senior Vice President
Richmond and Hampton Roads
With some of the most advanced container terminals in all of the Americas, the Port of Virginia serves as a global gateway to commerce. It is also an economic engine for the Commonwealth of Virginia and the contiguous states of the Mid-Atlantic. More than 374,000 jobs are linked to the port — equal to 9.4% of Virginia’s workforce. The Port of Virginia is home to Foreign Trade Zone 20, where more than $1.6 billion of total merchandise is received annually. The Port of Virginia offers direct service to more than 45 countries worldwide and is a day’s drive from two-thirds of the U.S. population.
The future of the Port of Virginia is bright. With a current depth of 50 feet, the port is the only one on the East Coast with congressional approval to dredge an additional five feet. When this is completed, the Port of Virginia will have the deepest channel depth on the East Coast. Also, the Norfolk International Terminals (NIT) optimization project will work to modernize and expand the port’s rail and motor transportation capabilities in the coming years.
| Total Loaded TEUs | ||||
|---|---|---|---|---|
| Loaded Inbound | Year Over Year % Growth | Loaded Outbound | Year Over Year % Growth | |
2008 |
858,259 | NA | 942,075 | NA |
2009 |
689,931 | -19.6% | 791,831 | -15.9% |
2010 |
766,680 | 11.1% | 824,331 | 4.1% |
2011 |
768,873 | 0.3% | 855,334 | 3.8% |
2012 |
870,318 | 13.2% | 936,808 | 9.5% |
2013 |
934,119 | 7.3% | 998,843 | 6.6% |
2014 |
1,017,879 | 9.0% | 1,034,526 | 3.6% |
2015 |
1,082,520 | 6.4% | 997,828 | -3.5% |
2016 |
1,174,893 | 8.5% | 1,006,119 | 0.8% |
YTD 2017* |
297,888 | 8.3% | 267,978 | 8.1% |
* YTD as of March 2017
TEU = twenty-foot equivalent unit, a measurement of a ship’s cargo-carrying capacity. The dimensions of one TEU are equal to that of a standard 20-foot shipping container: 20 feet long, 8 feet tall.
Capabilities:
The Port of Virginia manages four container terminals as well as the Virginia Inland Port located in Front Royal. The Port of Virginia has 30 cranes, 27 of which are Post-Panamax ready.
Trade:
The Port of Virginia finished 2016 with more than 2.1 million loaded containers handled — the port’s highest level in a decade. The first quarter of 2017 continued that trend as handled loaded container volume was up 8.2% compared with the same time last year.
Top trading partners include China/Hong Kong, Germany, India, the United Kingdom and Japan. Top imports include salt, furniture and bedding, beverages, automobiles and plastics. Top exports include petroleum, grain and seeds, wood, animal feed and plastics.
Intermodal:
The Port of Virginia has one of the top intermodal rail services in the country. A full 33% of all goods entering and exiting the Port of Virginia are handled by rail — the highest percentage of any port on the East Coast.
Two Class I railroads, CSX and Norfolk Southern, serve the port via container transfer facilities at Virginia International Gateway and Norfolk International Terminals. These services are assisted by short line rail partners including the Norfolk and Portsmouth Belt Line and the Commonwealth Railway. The port’s intermodal rail connections provide daily service to the Ohio Valley and the upper Midwest, and a new partner intermodal rail market in North Carolina bodes well for additional market penetration in the southeastern U.S. via rail from the port.
Real Estate Impact:
The Port of Virginia is a demand driver for many markets in the Mid-Atlantic and helps to serve the large, growing millennial population in Washington, D.C. The market that is reaping the most rewards from the Port of Virginia is the Shenandoah Valley. The Shenandoah Valley — which encompasses parts of Virginia, West Virginia and Maryland — offers a plethora of advantages including land available for development and proximity to the metro Washington, D.C., Baltimore and Ohio Valley population bases.
Vacancy rates in the Shenandoah Valley have been cut in half post-recession, finishing 2016 at 6.7%. New development will remain strong in the valley in the coming year, with many major retailers looking to build large big-box facilities due to the region’s proximity to the Port of Virginia and its expansive rail capabilities. All of these factors make the Shenandoah Valley an emerging market to watch in 2017.