Surprisingly, given the falloff in Asian imports due to the slumping retail economy, several West Coast ports performed better than average last year, though they still saw declines. These included Tacoma, WA which experienced a 3.3% decline, Los Angeles at 6.04% and and Portland, OR, Oakland, CA and Long Beach, CA at 6.4% each. Seattle, on the other hand, performed far below the national average, with a decline of 13.7%.
Furthermore, even the ports with better-than-average showings recorded steep declines in the final months of the year. The Port of Tacoma, for example, saw volume tumble 12.3% in December, while Los Angeles dropped 15.18% in December and Oakland saw year-over-year declines of 16.5% in November and 13% in December. While most analysts believe the first few months of the new year will show comparable decreases, the unexpected 1% rise in January retail sales provides some hope the pattern will improve as the year wears on.
The falloff has led to reductions in business for distribution facilities serving the ports. Most observers expect to see a noticeable rise in vacancies in major distribution markets, though not at equivalent levels to the decline in imports. Rather than abandoning entire buildings, most logistics companies and retailers will simply operate facilities at less than capacity, but some, especially the growing number of such businesses forced to declare bankruptcy, will have no option but to give up space.
Vacancies have already begun to rise in most port markets. According to Q4 reports from Cushman & Wakefield, the Oakland industrial vacancy rate jumped to 7.4% in December from 5.7% 12 months earlier, while the rate in California's Inland Empire, the largest West Coast warehouse/distribution market and one of three largest in the country, doubled from 6.2% at the end of '07 to 12.4% at the end of '08. The brokerage predicts Inland Empire leasing activity, which decreased by 9.8 million square feet last year, will decline further this year, with an influx of sublease space causing a high level of negative absorption. Cushman does not anticipate growing tenant interest until 2011.
On a global basis, container traffic grew last year. According to Drewry Shipping Consultants, worldwide container traffic volume increased 7.2% last year. The most recent edition of the UK-based company's Container Forecast, however, predicts growth will slow to 2.8% this year, despite a projected 12.7% jump in the number of container ships.
In Canada, '08 container traffic remained nearly stable at Port Metro Vancouver, BC and actually rose in Montreal, with a 7.2% increase generating a record 1.46 million 20-foot-equivalent units (TEUs). The recently completed Port of Prince Rupert, BC, which competes with US ports for cargo destined for markets in the US Midwest, reported 181,890 TEUs in its first full year of operation. Officials there anticipated the figure rising to 200,000 TEUs for '09.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
