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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 volume of goods that pass through each port has a direct correlation to industrial real estate demand. The major seaports across the country all posted strong results in 2018, but some slowed in early 2019, for both loaded inbound and outbound container volume, for a variety of factors. In this interactive report, we will review the current state of the top nine U.S. seaports. We will go over the factors driving container volume fundamentals and provide an outlook for the rest of 2019 and beyond. Additionally, we will showcase the logistics advantages each port possesses, what projects are underway to modernize and better service importers and exporters, and most importantly, go over how all of this effects industrial real estate.
Contact
Pete Quinn, SIOR
National Director of Industrial Research | USA +1 602 222 5184 james.breeze@colliers.com
National Director of Industrial Services | USA +1 317 713 2107 pete.quinn@colliers.com
Largest 250-mile radius population of any port in North America (61 million )
NORTHEAST
New York-New Jersey
Hover over each market to learn more
48% of loaded TEU volume came from exports in 2018, the highest in the country
TEXAS
Houston
The deepest natural harbor in the United States at 76 feet
CALIFORNIA
Long Beach
#1 U.S. port for loaded inbound container volume in 2018 (4.9 million TEUs)
Los Angeles
80% of trade with Alaska goes through the Northwest Seaport Alliance Ports
WASHINGTON
Northwest Seaport Alliance
965,552 loaded inbound containers handled in 2018 was an all-time record
Oakland
3.7 million loaded inbound containers handled in 2018, an all-time record
GEORGIA
Savannah
33% of goods entering and exiting the Port of Virginia are handled by rail
VIRGINIA
Port of Virginia
The fastest growing port in the U.S. from 2013 to 2018
SOUTH CAROLINA
Charleston
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 are one of the top demand drivers for industrial real estate.
James Breeze National Director of Industrial Research | USA +1 602 222 5184 james.breeze@colliers.com
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Virginia Beach
Charleston SOUTH CAROLINA
Houston TEXAS
Long Beach CALIFORNIA
Los Angeles CALIFORNIA
New York- New Jersey NORTH EAST
Northwest Seaport Alliance WASHINGTON
Oakland CALIFORNIA
Savannah GEORGIA
Virginia Beach VIRGINIA
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2019 U.S. INDUSTRIAL RESEARCH REPORT
U.S. Seaports Outlook Report
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 volume of goods that pass through each port has a direct correlation to industrial real estate demand. The major seaports across the country all posted strong results in 2018, but some slowed in early 2019, for both loaded inbound and outbound container volume, for a variety of factors. In this interactive report, we will review the current state of the top nine U.S. seaports. We will go over the factors driving container volume fundamentals and provide an outlook for the rest of 2019 and beyond. Additionally, we will showcase the logistics advantages each port possesses, what projects are underway to modernize and better service importers and exporters, and most importantly, go over how all of this effects industrial real estate. Robust demand for goods and rapid changes to global supply chains continue to force U.S. seaports to evolve. To get products to consumers quicker and more efficiently, global shippers use ever-larger ships. In turn, these larger ships have forced ports to adapt, 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 the influx of larger ships due to deeper harbors, the expansion of the Panama Canal has created an opportunity for more cargo to shift to ports along the East Coast and the Gulf Coast. Dredging and infrastructure projects are underway (or planned) at nearly all of the ports, pressuring West Coast ports to modernize infrastructure and improve functionality to keep pace. 2018 was another strong year for U.S. seaports with increased twenty-foot equivalent unit (TEU) counts, minimal labor disputes and no disruptions from the major consolidations in the shipping industry. The industrial markets surrounding the nine seaports showcased in this report also performed exceptionally well. Combined, the markets finished 2018 with an overall vacancy rate of just 3.4%, significantly lower than the national average of 5%. Despite these low vacancy rates, activity was strong as 28 million square feet was absorbed and 35 million square feet completed construction. While 2018 was robust, there are significant headwinds to look out for in 2019, as shown by early TEU counts at some ports. Tariffs recently enacted by the U.S. on China, who exported more than $500 billion worth of goods into the U.S. in 2018, will raise the price of goods and could lower import volumes if a deal is not reached. Though demand from American consumers should remain strong despite possibly increased prices brought on by tariffs, demand could decline if the current trade skirmish escalates into a full-scale trade war, with downside risks to both inbound TEU counts and demand for distribution space near seaport locations. Ultimately, the American consumer will decide the level of import volumes, but if the weakening global economic fundamentals extend into the U.S., volumes could further decrease, reducing demand for industrial real estate. On the export front, China could be a main culprit of reduced exports in 2019 for two reasons: counter tariffs on U.S. goods and a slowing economy. Chinese exports dropped sharply in late 2018. Weakening economic fundamentals in many parts of Europe, which remains the top importer of goods shipped from many East Coast ports, are already reducing export levels in the first few months of 2019. How much these threats from China and Europe impact export TEU counts at U.S. seaports on an annual basis is uncertain at this point, but these issues could reduce industrial space demand. In this Industrial U.S. Seaport Outlook Report, we explore these trends and their effects on ports throughout the country, providing insight into current port capabilities and fundamentals. We also explore how the rapidly changing global shipping industry, consumer preferences in the U.S. and abroad, a changing global economic landscape, and U.S. trade policies will affect each port and the surrounding industrial real estate markets in the coming quarters.
INTRODUCTION
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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 volume of goods that pass through each port has a direct correlation to industrial real estate demand. The major seaports across the country all posted strong results in 2018, but some slowed in early 2019, for both loaded inbound and outbound container volume, for a variety of factors. In this interactive report, we will review the current state of the top nine U.S. seaports. We will go over the factors driving container volume fundamentals and provide an outlook for the rest of 2019 and beyond. Additionally, we will showcase the logistics advantages each port possesses, what projects are underway to modernize and better service importers and exporters, and most importantly, go over how all of this effects industrial real estate.
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Loaded Inbound
Year-Over-Year % Growth
Loaded Outbound
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
579,075 520,824 580,416 625,566 651,227 697,553 799,581 883,334 955,285 1,010,468
-21.4% -10.1% 11.4% 7.8% 4.1% 7.1% 14.6% 10.5% 8.1% 5.8%
554,552 535,070 560,343 565,398 629,802 668,154 721,882 748,708 804,203 809,872
-20.2% -3.5% 4.7% 0.9% 11.4% 6.1% 8.0% 3.7% 7.4% 0.7%
Total Loaded TEUs
Port of Charleston
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 17 active container cranes, all of which are Post-Panamax ready. 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.
Capabilities:
The Port of Charleston’s top trade partners include Germany, China/Hong Kong, Japan, the United Kingdom and India — which reflect 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.
Trade:
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 serves to extend the Port of Charleston’s intermodal reach by 212 miles.
Intermodal Transportation:
South Carolina’s industrial market continues to post robust fundamentals, coinciding with the increased cargo flowing through the Port and a large increase in manufacturing in the region. Charleston finished 2018 with a massive amount of new development completed. More than 3.8 million square feet completed construction, equal to more than 7% of the markets total inventory. The development was warranted as a decade-high 3.3 million square feet was absorbed. With demand for new, larger fulfillment centers to handle the insatiable demand from e-commerce retailers, the Greenville/Spartanburg/Anderson industrial market is becoming an industrial powerhouse and one of the top 10 emerging industrial markets in the country. 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 help the region post robust fundamentals including a record 7.9 million square feet of net absorption in 2018.
Real Estate Impact:
The Port of Charleston is the top economic driver for South Carolina and is responsible for 1 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 2013–2018, 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.
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 continues to create future opportunities for growth with three major projects underway: dredging of the harbor to 52 feet, the construction of the Leatherman terminal in North Charleston with a direct connection to Interstate 26 and new cranes to accommodate Post-Panamax ships at all the container terminals. The Port offers access to two-thirds of the nation’s population within a 16-hour drive and connects with two inland ports (Greer and Dillon) 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.
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Vice President Charleston
Mark Erickson, SIOR
Depth:
45’
Proposed:
52’
Terminals
2
Berths
6
Cranes
17
Post-Panamax Cranes
Main Trading Partners:
Class | Operators
A THIRD TERMINAL UNDER CONSTRUCTION. DUE 2021
VIEW PROPERTIES
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Senior Vice President Atlanta
Ben Logue, SIOR
“Atlanta is the transportation and logistics hub of the fastest growing geographic region in the country. Most major companies are locating or expanding in Atlanta, due to its growing population (especially in the millennial segment), and relatively low cost of living. Atlanta is home to the world’s busiest passenger airport and near one of the fastest growing seaports (Savannah) in the country. Because of this, Atlanta is on pace for another year of robust big-box growth in 2019.”
Atlanta
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ALL MARKETS
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of new leasing activity in 2018 is an all-time record.
MAIN TRADING PARTNERS
447,468 478,221 533,552 602,858 627,380 734,805 839,482 884,831 1,076,033 1,179,497
-17.2% 6.9% 11.6% 13.0% 4.1% 17.1% 14.2% 5.4% 21.6% 9.6%
846,917 870,683 873,271 876,882 893,928 856,145 948,740 916,080 966,197 1,076,036
-3.0% 2.8% 0.3% 0.4% 1.9% -4.2% 10.8% -3.4% 5.5% 11.4%
A THIRD TERMINAL UNDER CONSTRUCTION DUE 2021
Port of Houston
There 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.
Loaded imports into the Port of Houston increased by an impressive 9.6% in 2018 to a record 1.2 million TEUs. Loaded exports also had a record breaking year, hitting the one million TEU mark for the first time ever. Exports make up nearly 48% of total loaded TEUs handled at the port, the highest percentage of any major port in the country. The Port of Houston is the top seaborne supplier of American-made goods to Mexico. The newly agreed upon USMCA trade pact should keep goods flowing out of the Port of Houston as long as the deal is ratified in congress. Overall, top trading partners for the Port of Houston are Mexico, China/Hong Kong, Germany, Brazil and the Netherlands.
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.
Houston’s industrial market continues to expand with significant new construction and demand. Occupiers continue to move into Houston to take advantage of its significant logistics advantages, including the Port of Houston. The region also has a booming job market, with job growth having increased by 3.7% during 2018 according to data recently released by the U.S. Bureau of Labor Statistics. The Houston MSA created 114,400 jobs (not seasonally adjusted) between November 2017 and November 2018, growing faster than the U.S. during the same time period. Employment sectors with the most substantial growth include support activities for mining which grew by 11.7% over the year, the construction sector which increased by 10.8, and durable goods manufacturing which was up by 9% over the year. While the overall Houston industrial market is flourishing, it is also becoming a top emerging big-box market with more than 72 million square feet in inventory, 6.4 million square feet of leasing activity and more than seven million square feet in net absorption in 2018. Major occupiers continue to move into newly developed big-box space including Costco, Amazon, Dollar Tree, Best Buy and Ikea. The Port of Houston not only is a demand driver for the local market but many regional markets as well. One of the top benefactors of imports from the port is the Dallas-Fort Worth industrial market. Dallas-Fort Worth is one of the largest and most active industrial markets in the country, finishing Q1 2019 with more than six million square feet of positive absorption, the most in the country.
Port activity continues to be the catalyst for increased industrial development and leasing on the east side of Houston. More retailers, 3PLs, and energy related industries continue to benefit from the Port’s logistics advantages including Foreign Trade Zones, the Panama Canal expansion, and pro-trade “heavy haul” regulations. Literally millions of square feet of new manufacturing, warehousing and distribution space either built in the last two years or currently under construction on the far east side of the Houston market can be linked to Port activities. As Houston continues to grow, so does the Port activity to support that growth.
Principal Houston
Gary Mabray, SIOR
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 moves 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 or Midwestern United States. Houston’s port activity continues to grow after the opening of the expanded Panama Canal, as more occupiers use a regional distribution model to better service the growing e-commerce consumer base in the U.S. 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 its mandates — to promote and facilitate commerce to benefit local partners, Texas and the nation.
30
41
22
Class | Operators:
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 17 active container cranes, all of which are Post-Panamax ready. 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, Japan, the United Kingdom and India — which reflect 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 TRANSPORTATION 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 serves to extend the Port of Charleston’s intermodal reach by 212 miles. REAL ESTATE IMPACT South Carolina’s industrial market continues to post robust fundamentals, coinciding with the increased cargo flowing through the Port and a large increase in manufacturing in the region. Charleston finished 2018 with a massive amount of new development completed. More than 3.8 million square feet completed construction, equal to more than 7% of the markets total inventory. The development was warranted as a decade-high 3.3 million square feet was absorbed. With demand for new, larger fulfillment centers to handle the insatiable demand from e-commerce retailers, the Greenville/Spartanburg/Anderson industrial market is becoming an industrial powerhouse and one of the top 10 emerging industrial markets in the country. 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 help the region post robust fundamentals including a record 7.9 million square feet of net absorption in 2018.
Charleston Houston Long Beach Los Angeles New York - New Jersey Northwest Seaport Alliance Oakland Savannah Virginia
ALL PORTS
2,534,897 3,128,560 3,024,965 3,062,290 3,455,323 3,517,514 3,625,263 3,442,575 3,863,187 4,097,377
-20.5% 23.4% -3.3% 1.2% 12.8% 1.8% 3.1% -5.0% 12.2% 6.1%
1,352,053 1,562,398 1,506,693 1,540,188 1,704,932 1,604,932 1,525,560 1,529,497 1,470,514 1,523,008
-19.9% 15.6% -3.6% 2.2% 10.7% -5.9% -4.9% 0.3% -3.9% 3.6%
Port of Long Beach
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 15,000 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, 80 berths and 66 Post-Panamax cranes.
Total trade in 2018 amounted to $109 billion. From a TEU perspective, nearly 73% of the total loaded containerized volume at the POLB was from imports. The Port finished 2018 with a record 3.9 million loaded inbound TEUs handled, a 6% increase compared with 2017. Overall, 5.6 million loaded TEUs were handled, also an all-time record for the Port. Like all other ports on the West Coast, the POLB is heavily reliant on trade with China. China/Hong Kong was the top trading partner with the Port, with South Korea, Japan, Taiwan and Vietnam following in tow. Like all other major ports in the U.S., escalating trade tensions and tariffs could lower both inbound and outbound TEU totals — however if current tariffs are reversed, look for TEU volumes to remain on par with 2018.
Five of the six terminals at the POLB include on-dock rail facilities, from which cargo can reach Chicago in 72 hours. There are two Class I rail operators at the Port: 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 railyards.
The Port of Long Beach is one of the top seaports in the U.S. and is 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 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 partners with the POLB on 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 Port of Long Beach (POLB) is continuing its strength as the number two port in the country with a record year in 2018 and a number of other notable benchmarks. In March of 2019, the largest ship to ever call on the United States arrived at the POLB. The successful arrival of the 19,500 TEUs rated MSC Eloane confirmed the POLB’s place as a world-class logistics hub ready to handle the largest container ships crossing the Pacific. In their efforts to be good stewards of the environment, the POLB is actively working on their Clean Air Action Plan, which aligns with the statewide California Sustainable Freight Action Plan. Both of these initiatives are working toward the goal of zero emissions vehicles and cargo handling at the POLB.
Senior Vice President Los Angeles Colliers Logistics and Transportation Solutions Group
Chuck Littell, CCIM
Like its sister port in Los Angeles, the POLB is surrounded by the largest industrial markets in the country. 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. Just like with the Port of Los Angeles, Southern California’s Inland Empire industrial demand is heavily reliant on inbound container volume from the POLB. Both the ports of Los Angeles and Long Beach feed Southern California warehouses, but their reach does not stop there. Much of the products flowing into both ports end up in two other emerging markets in the Southwest, Phoenix and Las Vegas. The Phoenix industrial market continues to post robust fundamentals, finishing 2018 number nine in annual net absorption at 7.9 million square feet. Demand is robust in Phoenix because of the area’s many logistics advantages, a strong economy, affordable labor and a growing population. This robust tenant demand is fueling new development as many speculative and build-to-suit projects continue to work their way through the development pipeline. The Las Vegas industrial market posted some of the strongest fundamentals in the country in 2018 and is one of 10 emerging markets to watch in 2019. Demand is driven by both regional distributors that are picking the region over other areas in Southern California and local businesses that are expanding because of the area’s growing economy and population. Las Vegas’ close proximity to California means that more than 26 million people live within 250 miles of the market, over 22% of which are millennials.
76’
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CAPABILITIES There 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. TRADE Loaded imports into the Port of Houston increased by an impressive 9.6% in 2018 to a record 1.2 million TEUs. Loaded exports also had a record breaking year, hitting the one million TEU mark for the first time ever. Exports make up nearly 48% of total loaded TEUs handled at the port, the highest percentage of any major port in the country. The Port of Houston is the top seaborne supplier of American-made goods to Mexico. The newly agreed upon USMCA trade pact should keep goods flowing out of the Port of Houston as long as the deal is ratified in congress. Overall, top trading partners for the Port of Houston are Mexico, China/Hong Kong, Germany, Brazil and the Netherlands. INTERMODAL TRANSPORTATION 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 Houston’s industrial market continues to expand with significant new construction and demand. Occupiers continue to move into Houston to take advantage of its significant logistics advantages, including the Port of Houston. The region also has a booming job market, with job growth having increased by 3.7% during 2018 according to data recently released by the U.S. Bureau of Labor Statistics. The Houston MSA created 114,400 jobs (not seasonally adjusted) between November 2017 and November 2018, growing faster than the U.S. during the same time period. Employment sectors with the most substantial growth include support activities for mining which grew by 11.7% over the year, the construction sector which increased by 10.8, and durable goods manufacturing which was up by 9% over the year. While the overall Houston industrial market is flourishing, it is also becoming a top emerging big-box market with more than 72 million square feet in inventory, 6.4 million square feet of leasing activity and more than seven million square feet in net absorption in 2018. Major occupiers continue to move into newly developed big-box space including Costco, Amazon, Dollar Tree, Best Buy and Ikea. The Port of Houston not only is a demand driver for the local market but many regional markets as well. One of the top benefactors of imports from the port is the Dallas-Fort Worth industrial market. Dallas-Fort Worth is one of the largest and most active industrial markets in the country, finishing Q1 2019 with more than six million square feet of positive absorption, the most in the country.
"Port activity continues to be the catalyst for increased industrial development and leasing on the east side of Houston. More retailers, 3PLs, and energy related industries continue to benefit from the Port’s logistics advantages including Foreign Trade Zones, the Panama Canal expansion, and pro-trade “heavy haul” regulations. Literally millions of square feet of new manufacturing, warehousing and distribution space either built in the last two years or currently under construction on the far east side of the Houston market can be linked to Port activities. As Houston continues to grow, so does the Port activity to support that growth."
3,524,386 3,973,933 4,066,764 4,092,621 3,976,692 4,269,760 4,159,462 4,544,748 4,716,089 4,870,582
-14.8% 12.8% 2.3% 0.6% -2.8% 7.4% -2.6% 9.3% 3.8% 3.3%
1,668,911 1,841,273 2,109,394 2,043,076 1,921,069 1,932,014 1,656,677 1,818,502 1,899,934 1,904,583
-6.4% 10.3% 14.6% -3.1% -6.0% 0.6% -14.3% 9.8% 4.5% 0.2%
Port of Los Angeles
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).
A majority of the total containerized volume coming through the Port of Los Angeles is from imports. At the end of 2018, 71.9% of loaded containers handled at the Port was from imports. Top trading partner countries in 2018 were China/Hong Kong, Japan, Vietnam, South Korea and Taiwan.
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 2018, making it the largest industrial region in the country. Demand for industrial real estate in all markets is robust, with the surrounding ports remaining one of the top drivers. In 2018, Los Angeles County, which comprises the Central Los Angeles, Mid-Counties, South Bay, San Fernando Valley and San Gabriel Valley posted the lowest vacancy rate in the U.S. at 1.6%. Overall vacancy rates remain low despite more than five million square feet of new development. Much of this new development was on locations of older industrial or manufacturing sites. While the process of redeveloping older sites is costly, occupiers are willing to pay high rents to be located near the port and its massive population base. Redevelopments will continue in the future, as Los Angeles County will remain one of the most in demand final-mile markets in the country and could be a top candidate for the next multi-story warehouse that breaks ground in the U.S. Located approximately 50 miles east of the Port of Los Angeles, the Inland Empire has become the most dynamic and in demand industrial market in the country. The Inland Empire has also become the premier big-box and e-commerce hub for the western U.S., with Amazon.com alone currently occupying more than seven million square feet — its largest footprint in the country. In 2018, a whopping 27.7 million square feet of big-box product leased in the Inland Empire, by far the most in the country with many occupiers citing the region’s population and close location to the ports as the top reasons for moving into or expanding within the market.
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 6.8 million loaded TEUs in 2018, setting an all-time record for the Port. 2019 is off to a robust start despite potential headwinds like trade and weakening economic fundamentals abroad, with loaded TEU counts up 4.6% in the first quarter. While solid economic fundamentals in the U.S. should keep imports flowing into the Port for the remainder of 2019, trade negotiations with China bear watching. In 2018, more than $151 billion worth of trade with China went into and out of the Port, representing over half of its total volume. If recently enacted 25% tariffs on Chinese imports are here for the long haul, loaded inbound container volumes could decline. The Port has more than $2.6 billion in 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.
The Port of Los Angeles is the largest gateway for international trade for the approximate 50 million consumers living within a six-hour driving radius. Containers loaded with consumer products including furniture, auto parts, apparel, footwear and electronics are transferred efficiently and quickly from the Port to Southern California warehouses where they are stored to meet consumer demand. Products are then sent from the warehouses to local retailers or shipped directly to e-commerce consumers completing the global supply chain. The strong economy has driven an increased demand for new warehouses and final-mile delivery facilities for e-commerce sales in the Southern California industrial market. We remain the most active industrial market in the country and also the most desirable for institutional capital. Demand for new warehouses is at record levels and construction is striving to meet the demand.
Executive Vice President Greater Los Angeles-Inland Empire
Kevin McKenna, SIOR
53’
9
57
84
72
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 15,000 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, 80 berths and 66 Post-Panamax cranes. TRADE Total trade in 2018 amounted to $109 billion. From a TEU perspective, nearly 73% of the total loaded containerized volume at the POLB was from imports. The Port finished 2018 with a record 3.9 million loaded inbound TEUs handled, a 6% increase compared with 2017. Overall, 5.6 million loaded TEUs were handled, also an all-time record for the Port. Like all other ports on the West Coast, the POLB is heavily reliant on trade with China. China/Hong Kong was the top trading partner with the Port, with South Korea, Japan, Taiwan and Vietnam following in tow. Like all other major ports in the U.S., escalating trade tensions and tariffs could lower both inbound and outbound TEU totals — however if current tariffs are reversed, look for TEU volumes to remain on par with 2018. INTERMODAL TRANSPORTATION Five of the six terminals at the POLB include on-dock rail facilities, from which cargo can reach Chicago in 72 hours. There are two Class I rail operators at the Port: 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 railyards. REAL ESTATE IMPACT Like its sister port in Los Angeles, the POLB is surrounded by the largest industrial markets in the country. 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. Just like with the Port of Los Angeles, Southern California’s Inland Empire industrial demand is heavily reliant on inbound container volume from the POLB. Both the ports of Los Angeles and Long Beach feed Southern California warehouses, but their reach does not stop there. Much of the products flowing into both ports end up in two other emerging markets in the Southwest, Phoenix and Las Vegas. The Phoenix industrial market continues to post robust fundamentals, finishing 2018 number nine in annual net absorption at 7.9 million square feet. Demand is robust in Phoenix because of the area’s many logistics advantages, a strong economy, affordable labor and a growing population. This robust tenant demand is fueling new development as many speculative and build-to-suit projects continue to work their way through the development pipeline. The Las Vegas industrial market posted some of the strongest fundamentals in the country in 2018 and is one of 10 emerging markets to watch in 2019. Demand is driven by both regional distributors that are picking the region over other areas in Southern California and local businesses that are expanding because of the area’s growing economy and population. Las Vegas’ close proximity to California means that more than 26 million people live within 250 miles of the market, over 22% of which are millennials.
"The Port of Long Beach (POLB) is continuing its strength as the number two port in the country with a record year in 2018 and a number of other notable benchmarks. In March of 2019, the largest ship to ever call on the United States arrived at the POLB. The successful arrival of the 19,500 TEUs rated MSC Eloane confirmed the POLB’s place as a world-class logistics hub ready to handle the largest container ships crossing the Pacific. In their efforts to be good stewards of the environment, the POLB is actively working on their Clean Air Action Plan, which aligns with the statewide California Sustainable Freight Action Plan. Both of these initiatives are working toward the goal of zero emissions vehicles and cargo handling at the POLB."
2,245,035 2,579,094 2,683,689 2,749,570 2,760,555 2,944,663 3,214,338 3,202,690 3,396,469 3,676,113
-11.9% 14.9% 4.1% 2.5% 0.4% 6.7% 9.2% -0.4% 6.1% 8.2%
1,393,072 1,518,328 1,621,264 1,543,298 1,466,701 1,428,845 1,391,625 1,356,127 1,415,322 1,476,780
-13.8% 9.0% 6.8% -4.8% -5.0% -2.6% -2.6% -2.6% 4.4% 4.3%
Largest 250-mile radius population of any port in North America (61 million people)
The record-breaking cargo volume experienced in 2018 spilled over into 2019 as the Port of New York and New Jersey continued to see a growing number of mega-ships come through since the raising of the Bayonne Bridge. To keep up with occupier demand at the Port, developers have been breaking ground on construction projects at a record pace. Five projects totaling more than two million square feet began construction this quarter at the Port Market, while tracking 39 proposed development sites totaling 11.2 million square feet.
Port of New York and New Jersey
More than $43 billion worth of goods, or 5.2 million loaded TEUs, flowed in and out of the Port in 2018. A majority of the total containerized volume flowing through the Port of New York and New Jersey was from imports. At the end of 2018, 71.3% of loaded containers handled at the Port were from imports. Top trading partner countries in 2018 were China/Hong Kong, India, Germany, the United Kingdom and Brazil. Unlike ports on the West Coast, the Port of New York and New Jersey is not as heavily reliant on trade with China, as only 25% of total trade comes from there. While the percent of trade with China is lower, it still represents a large chunk of overall trade that could be affected because of increased tariffs. The Port is more heavily reliant on trade with Europe, and trade tensions with the EU as well as weakening economic fundamentals bear watching in the coming quarters.
The Port of New York and New Jersey’s Express Rail System handles more than one-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, Norfolk Southern and Canadian-Pacific Railway service the Port. The Port’s on-dock rail terminals handle same-day transfers between ship and rail. The Port also has also invested $1.5 billion through 2024 to enhance port access by rail, which will include improvements such as an expanded roadway capacity and modernized intermodal rail service.
Record-breaking fundamentals can be attributed to the completion in June 2017 of the Bayonne Bridge Navigational Clearance Project, which raised the clearance under the bridge from 151 feet to 215 feet, allowing the world’s largest container ships to pass under it and serve port terminals in New York and New Jersey. Since the bridge project was completed, the Port has seen a dramatic increase in the size of vessels calling on the Port, with nearly 30% of all containerized cargo at the Port now carried on vessels with the capacity to handle 9,000 or more TEUs – the size vessel that could not transit under the old Bayonne Bridge. 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 12,000 TEUs. The Port contains six container terminals, 32 berths and 61 cranes — with 47 cranes able to handle Post-Panamax vessels.
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. New Jersey’s industrial markets had a strong end to 2018, with market fundamentals setting new historic benchmarks. A majority of market activity was in Central New Jersey due to the amount of available land to develop. In 2018, Central New Jersey posted 10.7 million square feet of positive absorption, the fifth-highest in the U.S. Northern-Central New Jersey also has a booming big-box market. The big-box market (200,000 square feet and larger) in Northern and Central New Jersey remains robust despite a dwindling amount of land to develop big-box product, which lowered the overall vacancy rate to 3% in 2018. Additionally, the greater metropolitan market has the benefit of being in one of the most densely populated, affluent areas in the country. The Northern-Central New Jersey market is one of the most dynamic and in-demand final-mile markets in the country. The market can reach such a high number of consumers that many occupiers are now focusing more on the opportunity cost of not locating within the market (how much potential sales and opportunity will they lose by not occupying a final-mile facility) rather than the actual cost of renting a final-mile facility. Brokers report that for every four occupiers looking for final-mile space in the region, there is only one readily available facility. While creative, multi-story warehouse development has so far centered in the immediate New York City area, the massive cost of redeveloping within the city could drive future multi-story projects along the New Jersey corridor, with the Meadowlands and Port markets as the most likely sites for this future development.
The Port of New York and New Jersey is the busiest container port on the East Coast, and 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. During 2018, the Port of New York and New Jersey handled more than seven million TEUs for the first time in its history, which dates back to the 1950s. The cargo growth was bolstered by an 8.2% increase in imported goods including clothing, furniture, electronics and other everyday products over the previous record for imports set in 2017. 2019 also started off on a high note. Cargo activity increased 6.3% year over year to 622,531 TEUs, marking the fifth-highest volume on record. Rail volume at the Port also remains robust, posting lifts in excess of 50,000 containers for the 11th consecutive month, and is up 8.8% from the prior year to 54,705 containers. The Port handled one-third of all containers on the East Coast of North America; an increase in market share of 2.8% over last year. In addition to cargo containers, the Port also set a new all-time record for cargo handled by rail, moving 645,760 containers, up 13.8% over the previous record set in 2017. To enhance the Port’s ability to handle the record cargo growth, the Port Authority announced a major new expansion of the rail network serving the Port of New York and New Jersey, allowing the agency to advance its five-year strategic goal to expand rail capacity for cargo destined for outside the region. The expansion will reduce congestion and emissions, and get goods to their final destination more efficiently and at a lower cost. The new ExpressRail Port Jersey facility culminates a $600 million Port Authority capital investment program dating back to the 1990s that established direct rail access to on-dock and near-dock intermodal rail services at all of its major marine terminals. The opening of the final rail facility will allow the Port to advance its strategic five-year goal to handle more than 900,000 rail lifts in 2023, the equivalent of more than 1.5 million fewer truck trips traveling through local roads.
50’
32
61
47
Executive Managing Director Woodbridge
Michael Markey
701,501 802,657 797,272 791,672 803,314 845,810 844,234 883,647 919,523 965,552
-11.9% 14.4% -0.7% -0.7% 1.5% 5.3% -0.2% 4.7% 4.1% 5.0%
966,882 955,579 993,826 986,452 1,014,796 969,378 858,146 947,574 930,826 897,804
6.2% -1.2% 4.0% -0.7% 2.9% -4.5% -11.5% 10.4% -1.8% -3.5%
CAPABILITIES A total of seven terminals serve the Port of Oakland. All shipping channels and 90% of the 18 berths at the Port are dredged to 50 feet to make them capable of accommodating vessels up to 12,000 TEU capacity. The Port has a total of 34 cranes, 27 of which are capable of handling Post-Panamax vessels. 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. TRADE Agricultural export tonnage has grown significantly 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. This also makes Oakland highly susceptible to the ongoing trade disputes with China, evidenced by a second consecutive year of export declines at the Port in 2018. Imports continue to rise, with 965,552 loaded inbound containers handled in 2018, an all-time record. Top trading partners remain China/Hong Kong, Japan, South Korea, Taiwan and Vietnam. 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 2018, Oakland posted one of the lowest industrial vacancy rates in the country at 1.6%. Oakland also has one of the highest industrial asking rents in the country, finishing 2018 at $9.22 per square foot per year for warehouse/distribution space. Oakland is an infill market and because of this, other markets further east with available land are ramping up big-box development. One of those markets is Stockton-San Joaquin County which is one of the fastest growing big-box markets in the country. Another market taking advantage of the Port as well as the region’s population and logistics advantages is Sacramento. Sacramento is one of the top 10 industrial markets to watch in 2019 because of its excellent location as well as access to a strong labor pool. Because of this, more than three million square feet of net absorption was posted in 2018, an all-time record. While 2019 got off to a slow start because of a lack of vacant space to absorb, both occupiers and landlords remain bullish on one of the most high potential markets in the U.S.
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 completed many projects in 2018 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 are in the process of being raised by 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. With terminal expansion projects well underway or completed, Oakland is now focusing on developments within the harbor footprint that will improve efficiency and differentiate it from other U.S. ports. The Cool Port cold storage and transloading facility completed in 2018 and features a rail track running up the middle of a structure with dozens of truck bays. This allows frozen and chilled products to be unloaded from rail cars and transloaded into marine containers in a temperature-controlled environment.
Executive Vice President Oakland
Greig Lagomarsino, SIOR
"The Port of Oakland was the first major port on the West Coast and today is one of the busiest container ports in the United States. Approximately 50% of the nation’s total container cargo volume is carried by California’s three major container ports. Serving one of the nation’s largest metropolitan areas, the Port of Oakland loads and discharges more than 99% of containerized goods moving through Northern California and generates more than 84,000 jobs in the region and more than one million jobs across the United States. The industrial real estate market is thriving as a direct result of this activity."
Port of Oakland
1,084,767 1,373,976 1,248,791 1,339,737 1,238,894 1,217,374 1,308,214 1,391,590 1,380,652 1,452,623
-17.4% 26.7% -9.1% 7.3% -7.5% -1.7% 7.5% 6.4% -0.8% 5.2%
648,751 722,506 875,508 974,954 983,870 907,867 871,522 984,274 927,345 953,495
0.7% 11.4% 21.2% 11.4% 0.9% -7.7% -4.0% 12.9% -5.8% 2.8%
The Northwest Seaport Alliance has 10 container terminals, 22 international container carriers and four container carriers providing regular sailing to Alaska and Hawaii. The Northwest Seaport Alliance has 47 cranes, 43 of which are Post-Panamax ready. The natural harbor depth can handle ships of up to 12,000 TEUs.
The majority of the total containerized volume coming through the Northwest Seaport Alliance was from imports in 2018, however the rate of exports as a percent (39.7%) is much higher than other ports like the Port of Los Angeles and the Port of Long Beach. In 2018, 2.4 million TEUs were handled at the ports, setting an all-time record. The Northwest Seaport Alliance is one of the top ports for domestic shipping, handling 80% of total trade with Alaska. Internationally, top trading partner countries in 2018 were China/Hong Kong, South Korea, Japan, Australia and Vietnam. While trade volume is projected to remain robust in 2019, the Northwest Seaport Alliance will continue to battle West Coast Canadian ports, especially the Port of Prince Rupert. The Northwest Seaport Alliance will need to continue to innovate and keep labor issues stable or risk losing TEU traffic to competing ports up north in Canada in the coming quarters.
Both BNSF and Union Pacific provide fast transcontinental service from the Northwest Seaport Alliance to key distribution points across North America. Both railways 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.
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 final-mile distribution. Market fundamentals were strong in the Seattle/Puget Sound industrial market in 2018, with record net absorption, construction completions, product under construction and asking rental rates. Despite a slow start to 2019 due to a lack of product available, the Seattle/Puget Sound industrial market is projected to be a top ten emerging industrial market in 2019 due to extensive demand from final-mile and regional occupiers.
The Northwest Seaport Alliance was created in 2015 and was 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. The dedication to the shipping industry has been well received, with 40% of the state’s family-wage jobs tied to international trade. In fact, marine cargo operations in both the Tacoma and Seattle harbors supports 50,000 jobs and generates nearly $4.3 billion in economic activity. Marine cargo activity also generates nearly $140 billion in total economic activity, representing one-third of Washington’s state GDP. The Northwest Seaport Alliance is amid 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 associated additional cargo. Investments currently underway 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.
The Northwest Seaport Alliance remains a significant driver of the industrial market in both the Puget Sound Region and the Pacific Northwest, ranking as the fourth-largest container gateway and first in refrigerated exports in North America. Improvements that are planned and underway to expand the capacity of both the Ports of Seattle and Tacoma to accommodate larger ships will only further its position as a primary conduit for trade between Asia and the United States, and Alaska and the lower 48 states, creating more jobs and more pressure on an industrial real estate market already challenged to balance demand and supply.
Executive Vice President Seattle
Bill Condon, SIOR
10
23
43
A total of seven terminals serve the Port of Oakland. All shipping channels and 90% of the 18 berths at the Port are dredged to 50 feet to make them capable of accommodating vessels up to 12,000 TEU capacity. The Port has a total of 34 cranes, 27 of which are capable of handling Post-Panamax vessels.
Agricultural export tonnage has grown significantly 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. This also makes Oakland highly susceptible to the ongoing trade disputes with China, evidenced by a second consecutive year of export declines at the Port in 2018. Imports continue to rise, with 965,552 loaded inbound containers handled in 2018, an all-time record. Top trading partners remain China/Hong Kong, Japan, South Korea, Taiwan and Vietnam.
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.
Intermodal:
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 2018, Oakland posted one of the lowest industrial vacancy rates in the country at 1.6%. Oakland also has one of the highest industrial asking rents in the country, finishing 2018 at $9.22 per square foot per year for warehouse/distribution space. Oakland is an infill market and because of this, other markets further east with available land are ramping up big-box development. One of those markets is Stockton-San Joaquin County which is one of the fastest growing big-box markets in the country. Another market taking advantage of the Port as well as the region’s population and logistics advantages is Sacramento. Sacramento is one of the top 10 industrial markets to watch in 2019 because of its excellent location as well as access to a strong labor pool. Because of this, more than three million square feet of net absorption was posted in 2018, an all-time record. While 2019 got off to a slow start because of a lack of vacant space to absorb, both occupiers and landlords remain bullish on one of the most high potential markets in the U.S.
The Port of Oakland was the first major port on the West Coast and today is one of the busiest container ports in the United States. Approximately 50% of the nation’s total container cargo volume is carried by California’s three major container ports. Serving one of the nation’s largest metropolitan areas, the Port of Oakland loads and discharges more than 99% of containerized goods moving through Northern California and generates more than 84,000 jobs in the region and more than one million jobs across the United States. The industrial real estate market is thriving as a direct result of this activity.
7
18
34
27
883,553 1,051,258 1,065,199 1,088,291 1,145,964 1,347,428 1,622,592 1,670,871 1,875,833 2,081,638
-17.7% 19.0% 1.3% 2.2% 5.3% 17.6% 20.4% 3.0% 12.3% 11.0%
1,026,801 1,149,217 1,241,278 1,250,172 1,249,243 1,299,018 1,251,460 1,274,272 1,372,453 1,444,403
-5.2% 11.9% 8.0% 0.7% -0.1% 4.0% -3.7% 1.8% 7.7% 5.2%
Port of Savannah
The Port of Savannah has two terminals: the Ocean Terminal and the Garden City Terminal, the latter of 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. In February 2019, an announcement was made that the Garden City Terminal would undergo an expansion to handle ships carrying 14,000 TEUs by 2024.
While a majority of the total containerized volume coming through the Port of Savannah in 2018 was from imports, the rate of exports is much higher than at the three larger ports in Los Angeles, Long Beach and New York/New Jersey, finishing 2018 with 41% of loaded TEUs coming from exports. At the end of 2018, more than 3.5 million loaded TEUs were handled at the Port, the most on record. Top trading partner countries in 2018 were China/Hong Kong, South Korea, Japan, Germany and India. While export levels do bear watching in the coming quarters due to weakening economic fundamentals in Europe and trade/economic worries in China, the Port as a whole should continue to see record volumes, already evidenced in the first quarter of 2019 due to population growth, and the corresponding shifts in companies supply chains to better service these higher populations.
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. and are a vital transportation method that feeds the Atlanta industrial market. 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 Alabama, Georgia, Florida, North Carolina and South Carolina. In 2018, the GPA announced the groundbreaking of the Mason Mega Rail Terminal. The terminal will increase the Port of Savannah’s rail lift capacity to one million containers per year, and open new markets spanning an arc of cities from Memphis to St. Louis and Chicago to Cincinnati. GPA officials estimate that the new terminal will begin to come online by the fall of 2019, with project completion in the fall of 2020.
The Port of Savannah continues to be a boon for industrial real estate markets in the state of Georgia. The Savannah industrial market continues to post robust industrial fundamentals and finished 2018 as the second-highest industrial growth market in the country with net absorption as a percentage of inventory at 8.7%. The Savannah industrial market already started 2019 on a high note, with nearly two million square feet of positive absorption. The Savannah industrial market is projected to be one of the top 10 emerging industrial markets to watch in 2019 because of its robust logistics advantages and the fact that it is one of the new major port markets with land available to develop industrial properties. Look for new development to soar and absorption to increase in the coming quarters. Many imports from the Port of Savannah also flow into other major industrial markets, including Atlanta — one of the largest industrial markets in the country. The Atlanta industrial market was a top performer in 2018, finishing second in the country in overall net absorption, with occupancy gains of 21 million square feet and 19 million square feet in new development. Atlanta remains one of the most in-demand big-box markets, with nearly 200 million square feet of existing inventory. In 2018, nearly 26 million square feet of big-box space leased, the fourth-highest in the country. Looking ahead, the Atlanta and Savannah industrial markets will continue to experience robust demand from occupiers who desire to be near the Port of Savannah, as well as its surrounding inland ports, to make use of the multiple logistics advantages, leading to strong fundamentals for the foreseeable future.
The Port of Savannah is the fourth-largest seaport in North America and the second-largest on the East Coast. The Port is home to the largest single-terminal container facility of its kind in North America, and is comprised of two modern, deep-water terminals: Garden City Terminal and Ocean Terminal. Together, these facilities exemplify the GPA’s exacting standards of efficiency and productivity. Garden City Terminal is the fourth-busiest container handling facility in the United States, encompassing more than 1,200 acres and moving millions of tons of containerized cargo annually. One of the most important and productive civil works projects in the country, the Savannah Harbor Expansion Project, will support jobs and commerce throughout the nation. The total economic impact of Georgia’s deep-water ports on Georgia’s economy is $84 billion. The GPA supports more than 369,000 jobs and approximately $20.4 billion in personal income annually. Deepening is underway with completion as early as 2020. The East Coast Gateway Terminal Agreement between the Port of Savannah and the Port of Virginia has changed the landscape of both ports significantly. The ports are now able 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. The ports are reaping the benefits, with increased TEU counts — a direct result of improved and streamlined rail functions at both ports because of this agreement.
The Port of Savannah continues to rank as one of the fastest-growing and most efficient deep-water ports in the nation with record-breaking container volume. The economic impact of the Georgia Ports Authority (GPA) is substantial and far-reaching, including 439,220 jobs (9% of Georgia’s total employment) and $106 billion in sales (11% of Georgia’s total sales). The local industrial real estate continues to thrive and is currently one of the most dynamic markets in the U.S. in terms of absorption as a percent of inventory. Major investments in local infrastructure, both on- and off-Port, continue and will further establish Savannah as a long-term success story.
Principal Savannah
David Sink
42’
47’
36
26
(EST. 2020)
689,931 766,680 768,873 870,318 934,119 1,017,879 1,082,520 1,174,893 1,276,335 1,327,409
-19.6% 11.1% 0.3% 13.2% 7.3% 9.0% 6.4% 8.5% 8.6% 4.0%
791,831 824,331 855,334 936,808 998,843 1,034,526 997,828 1,006,119 1,014,570 977,786
-15.9% 4.1% 3.8% 9.5% 6.6% 3.6% -3.5% 0.8% 0.8% -3.6%
The Port of Virginia manages four container terminals as well as the Virginia Inland Port located in Front Royal. The Port of Virginia has seven berths and 30 cranes, 27 of which are Post-Panamax ready.
The Port of Virginia finished 2018 with nearly 1.3 million loaded inbound containers handled — the Port’s highest level in a decade. The Port handles a much larger percent of loaded export volume compared with other major ports in the U.S. In 2018, 42.4% of the total loaded TEUs handled were for exports. Top trading partners include China/Hong Kong, Germany, India, Japan and Italy.
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. This gives the Port of Virginia a huge advantage in today’s supply chain that heavily relies on rail to get products to the end consumer more quickly and efficiently. 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.
The Port of Virginia is a demand driver for many industrial markets in the Mid-Atlantic, with products even expanding into the Midwest and across the Eastern Seaboard. It also 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, DC., Baltimore and Ohio Valley population bases, making the Shenandoah Valley one of 10 industrial markets to watch in 2019. Vacancy rates in the Shenandoah Valley have been cut in half post-recession, finishing 2018 at 4.3%. While the market only comprises of 93 million square feet of existing product, development remains strong with more than 1.9 million square feet completing construction and 3.3 million square feet in development. As the Port of Virginia continues to expand and surrounding inland ports prosper, fundamentals and development will continue in the valley for the foreseeable future.
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 also in the process to dredge an additional five feet. When congressional approval is complete, 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.
Record-setting container volumes handled at the Port of Virginia is fueling industrial and logistics demand throughout Norfolk and the entire Commonwealth of Virginia. Partly catalyzed by the Port of Virginia’s global reach and growth, logistics users and industrial developers are expanding and investing in all three primary logistics corridors in Virginia: Norfolk/Southeastern Virginia, the Richmond/I-95 corridor and the Shenandoah Valley/I-81 corridor. The Port of Virginia is opening $700 million in container terminal modernization and expansions in 2019 at Virginia International Gateway, and 2019-2020 at Norfolk International Terminals, promising a 40% capacity growth to support continued logistics real estate investment and demand. Virginia’s position as the northernmost right-to-work state and location providing two-day Less-Than-Load (LTL) and truckload access to the entire U.S. East Coast population gives supply chain users competitive reach and costs for their distribution networks.
Senior Vice President Norfolk
Lang Williams, SIOR
55’
4
(TBD)
CAPABILITIES The Port of Savannah has two terminals: the Ocean Terminal and the Garden City Terminal, the latter of 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. In February 2019, an announcement was made that the Garden City Terminal would undergo an expansion to handle ships carrying 14,000 TEUs by 2024. TRADE While a majority of the total containerized volume coming through the Port of Savannah in 2018 was from imports, the rate of exports is much higher than at the three larger ports in Los Angeles, Long Beach and New York/New Jersey, finishing 2018 with 41% of loaded TEUs coming from exports. At the end of 2018, more than 3.5 million loaded TEUs were handled at the Port, the most on record. Top trading partner countries in 2018 were China/Hong Kong, South Korea, Japan, Germany and India. While export levels do bear watching in the coming quarters due to weakening economic fundamentals in Europe and trade/economic worries in China, the Port as a whole should continue to see record volumes, already evidenced in the first quarter of 2019 due to population growth, and the corresponding shifts in companies supply chains to better service these higher populations. INTERMODAL TRANSPORTATION 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. and are a vital transportation method that feeds the Atlanta industrial market. 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 Alabama, Georgia, Florida, North Carolina and South Carolina. In 2018, the GPA announced the groundbreaking of the Mason Mega Rail Terminal. The terminal will increase the Port of Savannah’s rail lift capacity to one million containers per year, and open new markets spanning an arc of cities from Memphis to St. Louis and Chicago to Cincinnati. GPA officials estimate that the new terminal will begin to come online by the fall of 2019, with project completion in the fall of 2020. REAL ESTATE IMPACT The Port of Savannah continues to be a boon for industrial real estate markets in the state of Georgia. The Savannah industrial market continues to post robust industrial fundamentals and finished 2018 as the second-highest industrial growth market in the country with net absorption as a percentage of inventory at 8.7%. The Savannah industrial market already started 2019 on a high note, with nearly two million square feet of positive absorption. The Savannah industrial market is projected to be one of the top 10 emerging industrial markets to watch in 2019 because of its robust logistics advantages and the fact that it is one of the new major port markets with land available to develop industrial properties. Look for new development to soar and absorption to increase in the coming quarters. Many imports from the Port of Savannah also flow into other major industrial markets, including Atlanta — one of the largest industrial markets in the country. The Atlanta industrial market was a top performer in 2018, finishing second in the country in overall net absorption, with occupancy gains of 21 million square feet and 19 million square feet in new development. Atlanta remains one of the most in-demand big-box markets, with nearly 200 million square feet of existing inventory. In 2018, nearly 26 million square feet of big-box space leased, the fourth-highest in the country. Looking ahead, the Atlanta and Savannah industrial markets will continue to experience robust demand from occupiers who desire to be near the Port of Savannah, as well as its surrounding inland ports, to make use of the multiple logistics advantages, leading to strong fundamentals for the foreseeable future.
"The Port of Savannah continues to rank as one of the fastest-growing and most efficient deep-water ports in the nation with record-breaking container volume. The economic impact of the Georgia Ports Authority (GPA) is substantial and far-reaching, including 439,220 jobs (9% of Georgia’s total employment) and $106 billion in sales (11% of Georgia’s total sales). The local industrial real estate continues to thrive and is currently one of the most dynamic markets in the U.S. in terms of absorption as a percent of inventory. Major investments in local infrastructure, both on- and off-Port, continue and will further establish Savannah as a long-term success story."
