Port is Multi-Billion-Dollar Contributor to GDP

Enhanced infrastructure and relatively stable industrial real estate drove the port’s ranking up.

HOUSTON—The port of Houston’s $265 billion in supported economic activity or approximately 16.1% of the entire Texas GDP, is likely the primary reason why it receives significant coverage in both regional and national analyses, says CBRE . Despite the recent shock in energy prices, which often overshadows positive headlines, the port managed to demonstrate strong growth numbers in 2015. In fact, coupled with volume growth of 9.2% in 20-foot equivalent units (TEUs) in 2015, enhanced port infrastructure and relatively stable industrial real estate fundamentals drove the port’s ranking up five spots to fifth place in CBRE’s 2016 North America Seaports and Logistics Index this year.​ Billy Gold , senior vice president for CBRE industrial services in Houston, tells GlobeSt.com: “The port of Houston’s significant investments to its infrastructure and container terminals will ensure the port can accommodate the present and future logistics needs that are being generated by a diverse group of industries such agricultural exports, and food and consumer imports. These demands, coupled with the growth of the petrochemical sector and the ongoing needs of the energy industry, prove that the port of Houston continues to be an integral part of companies’ logistics and supply chain management plan.” Houston’s global trade—whether import or export—requires different types of logistics space with varying attributes. For example, resins and plastics, accounting for 29% of all 2015 port exports, require a more intensive and lengthier use of industrial space supported by a skilled labor force, says CBRE. The largest import category last year was food and drink (17%) and requires a less intensive process, featuring quicker inventory turnover. Other commodities such as chemicals and minerals are characteristically transported via tankers and necessitate  unique logistics operations frequently centered around rail and pipeline. However, these operations likely indirectly impact industrial demand by related and supported operations, which have heavily shaped the Gulf Coast landscape. With no question, shipping logistics are the largest users of industrial space. CBRE Research has shown the increased traffic at the port correlates positively with market occupancy, even more so in submarkets with closer proximity to the port. As the epicenter of the Gulf Coast petrochemical and refining industry, the Southeast submarket in Houston is nearly fully occupied with a scant 4.2% vacancy rate. In terms of overall economic impact, Texas benefits through the jobs created and the tax dollars generated through by being a large participant on the world’s trade stage. Considering that routes to and from the port are the most used of the canal, the $5.3 billion expansion will likely increase port traffic by an estimated 10 to 15% where capital investment preparations have been ongoing. This will, at the least, sustain and likely increase the economic effects on both jobs and industrial real estate demand along the Gulf Coast and around Texas in general, says the report.  Meanwhile, the expanded water channels will add US shipping alternatives with cost savings to/from the East and Gulf Coasts. Trade analysts report many shippers are awaiting the expansion to be opened and operating before officially rerouting additional cargo away from the West Coast to the East and Gulf Coasts.