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Import Slowdown Reduces Demand Around Largest Ports

BOSTON-Southern California, New Jersey and Florida are all seeing increases in vacancy rates, report says.

By John McCloud | Updated on January 22, 2008

BOSTON-A decline in import traffic is pushing up warehouse availability rates in markets surrounding the nation’s largest ports, according to an analysis by Laura Stone Mortimer, vice president and managing economist for Torto Wheaton Research. While Southern California markets face the greatest impact due to the fact the ports of Los Angeles and Long Beach handle 40% of US imports, she says markets in New Jersey and Florida are also seeing a rise in vacancies as a result of slowing imports.

California’s Inland Empire started to exhibit rising availability in Q2 ’07, Stone Mortimer notes. Since then, the rate has risen 230 basis points to 9.1%. “The warehouse availability rate has not been this high in the Inland Empire since Q1,” she observes. She adds that the increase, especially in Riverside County, is the result not only of a plunge in demand but also of perpetually growing supply. The market saw 13.5 million sf of completions last year, after 29.6 million sf in ’06.

The falloff in consumer demand inevitably is affecting the Inland Empire, she says, which is why Torto Wheaton is forecasting a slight contraction in rents there until the economy recovers. By contrast, she continues, Los Angeles County has been much less affected because most regional and national distribution business has shifted inland and land constraints limit construction of new inventory.

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