ATLANTA—There's plenty of talk about the Panama Canal expansion and how that will impact port traffic—and industrial commercial real estate. Now, a new report reveals East Coast ports are growing at a faster rate than ports in the West.
Still, CBRE's first-ever North America Ports Logistics Annual Report says even as the East Coast ports are gaining ground, the ports of Los Angeles and Long Beach still topped the report's first-ever “Ports and Logistics Index,” thanks to infrastructure that is well-suited to handle the largest cargo container ships, their proximity to Asian export markets, a strong local economy and a deep industrial real estate market.
Turning to Georgia, the Port of Savannah is growing so rapidly it has become port of choice for logistics operations with an overall index ranking that puts it sixth in the nation. Part of the reason is that Savannah has the lowest occupancy costs while maintaining the highest shipping volume by market size in North America. In fact, shipping volume is similar in Seattle, a market 25 times the size of Savannah.
“The Port of Savannah took advantage of ample industrial land and an increase in port activity in the mid 2000s to emerge as a major port on the East Coast,” says Brian Reed, a research manager at CBRE. “That same port-focused mindset continues to pay dividends now. Not just for the port, but for the region as a whole.”
In terms of the commercial real estate ranking component—which was weighted less heavily in the overall rankings than port infrastructure—the characteristics measured included a market's total size, availability of existing industrial space, demand activity, historical and forecasted construction rates, rent growth and each market's position in its own cycle. The markets with healthy amounts of existing and planned space for their size, and which have experienced growth during the current recovery cycle but have not yet reached their peaks, rose to the top of the list.
”Our port has created an operational environment that is highly appealing to our logistics related clients,” says Bill Sparks of CBRE Savannah. “The Port of Savannah services and efficiencies coupled with an abundance of land for industrial development and a healthy management/labor relationship will keep Savannah on the growth path.”
New York and New Jersey, Seattle/Tacoma Alliance, Oakland, and Savannah round out the top six ports on the Index, which ranks the top 15 North American ports based port infrastructure capabilities and the strength of the local industrial real estate market. The 7-15-ranked ports on the Index are: Charleston; Metro Vancouver; Virginia (Norfolk); Houston; Baltimore; Everglades (Ft. Lauderdale); PortMiami; Montreal, Canada; and Jacksonville.
“Although the location needs of supply chain users are somewhat fixed given existing distribution centers and customer locations, these networks are always evolving and adjusting to meet increasingly complex inventory requirements,” says David Egan, head of industrial research in the Americas for CBRE. “As ports across North America continue to address operational efficiencies caused by greater cargo volumes, labor disputes and a shortage of workers, supply chain users are exploring diversification strategies that move some portion of inbound cargo from the congested West Coast ports to East and Gulf Coast ports.”
Mark Dishaw, senior vice president of Trammell Crow's Atlanta Business Unit, says Interstate 75 is the robust interstate that connects Henry County to the larger Atlanta Metro area to the north. It also serves as a gateway for distribution to the dynamic and expanding Florida population centers and the Port of Savannah to the south: "Due to its location, this area has proven to be one of the best logistical locations for distributors in the Southeastern US, and is home to many major corporations—Home Depot, Georgia Pacific, Whirlpool, Toys R Us, Kimberly Clark and CEVA Logistics, to name a few.”
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