Between 2001 and 2008, there was continued container consolidation as the nation‚s top 10 ports increased their combined market share of cargo from 89.2% to 91.6%. At its peak in 2007, containerized freight at these ports had increased roughly 65% since 2001, but it has been receding steadily since the current recession began in 2007, say Collier's US research director James Cook and regional research analyst Thomas Galvin. The effects of the US recession led to rapid increases in consumer saving and drastic decreases in consumer spending. As global demand for foreign goods decreased, shipping rates fell abruptly and have only slowly begun to recover.
The year 2009 was an exceptionally challenging one from the standpoint of the nation's leading container ports, as total maritime container traffic continued to decline. "Due to the sudden and large drop in port activity, industrial markets located within regions that service seaports have, on average, recorded losses greater than those of the nation as a whole," relates Cook.
During the past two years, vacancy rates climbed at a faster pace in the port markets relative to the overall industrial market. The only exception was the port city of Houston, where shipping activity--and corresponding industrial occupancy--posted considerable growth. According to Colliers research, this positive activity is expected to continue.
Meanwhile, Atlanta and Charlotte have shed less industrial space than the national average, namely because the nearby ports of Charleston and Savannah are more export focused than most other US ports and have been less affected by declining imports. There is a clear relationship between port activity and change in industrial demand, says Cook. "A back-of-the-envelope calculation shows that for every 1% change in port twenty-foot equivalent units industrial demand changes roughly 0.33%. Thus, the 60% rise in port activity experienced from 2001 to 2007 led to a 20% rise in industrial real estate occupancy in port markets. Likewise, the 15% decrease in port activity in recent years saw occupancy decrease by 5% in port markets."
The effects of the global economic slowdown have been severe for world trade. Shifting economic conditions in the US have led to lowered consumption domestically and also internationally. While US consumption is expected to remain low for a number of years, as the American consumer continues to save and pay down debt, this is not the case in every country. Asian and European economies, for instance, are expected to return to health in advance of a US recovery, and an expected weaker American dollar bodes well for foreign exports. According to Cook, US ports that are suited for export to these rebounding economies should fare better in terms of demand for industrial real estate. "In the future, exports will play a greater role for port-serving industrial markets as American goods are shipped out of the country and a new path of goods movement is established."
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