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E-Commerce Floods US Seaports With Unprecedented Volume

HOUSTON—Even with the surge in construction, demand for industrial buildings is so robust that nine of 12 markets have reported availability rates from post-recession peaks declining faster than the national rate.

By Lisa Brown | lisabrown | | Updated on August 03, 2016
Industrial Industrial availability rates are declining faster than national rates.
HOUSTON—The rapid growth of e-commerce has fueled development of warehouses and distribution centers in the 12 primary US inland-port markets at nearly twice the national rate, according to a new report from CBRE Group Inc. Even with the surge in construction, demand for industrial buildings in those markets is so robust that nine of the 12 have recorded availability rates from post-recession peaks declining faster than the national rate. CBRE senior vice president Tom Lynch tells GlobeSt.com: “Inland ports don’t have to be right at the port to be economically feasible; in Houston, for example, they can be as far as 60 miles away and still accomplish a company’s objectives. As long as warehouse facilities are within a reasonable distance, consumer goods companies are able to deliver products to their customers in a timely fashion, without having to cope with congestion that usually happens at some of the more major ports.” By far the leading catalyst for the growth of inland ports is e-commerce, which has flooded US seaports with an unprecedented volume of foreign cargo destined for markets across the US. That cargo is routed from seaports to nearby inland ports, which are major transportation hubs where cargo is handled, warehoused and broken into smaller batches for further distribution to consumers within that region. “Inland ports account for more than half of the fastest growing industrial markets in the US because they are key way stations in the national e-commerce distribution network,” said David Egan , CBRE’s head of industrial and logistics research in the Americas. “As online commerce continues to expand, more shippers, retailers and logistics firms will seek top-quality, big-box warehouses in the leading inland-port markets to serve as critical links in their supply chains.” In the report, CBRE identifies the main inland ports in the US based on connections to major seaports, transportation infrastructure and close proximity to major population centers. Those are Southern California’s Inland Empire, Phoenix, Dallas/Fort Worth, the Kansas City metro, Houston, St. Louis, Chicago, Memphis, Columbus, OH, Atlanta, Greenville, SC, and East and Central Pennsylvania. Inland ports are defined as having a class-I rail connection to a major seaport and also having access to significant transportation infrastructure, be it rail, highway, waterway or a combination of the three. “As an inland port with close proximity to the Port of Houston, this market offers a variety of benefits that you don’t always find in other inland port markets,” Lynch says. “For example, the lack of zoning provides consumer companies with a wide variety of options when it comes to determining the best location for their distribution or warehouse facility. For this reason, you see a lot of major consumer companies having satellite facilities in the Houston market in addition to a main distribution facility.” Collectively, the 12 inland ports expanded bases of industrial properties by 2.7% in this year’s first quarter, far outpacing the national average growth rate of 1.6%, according to CBRE research. The fastest growing of the 12 were the Inland Empire (4.3%), Greenville (4.2%), Atlanta and Dallas/Fort Worth (both at 3.6%). Meanwhile, even with this rapid growth, many of those markets can’t keep up with demand. The inland ports with the least availability are Chicago (6.6%), Kansas City (7.4%) and the Inland Empire (7.6%). “Inland-port markets have recovered faster than their non-port counterparts since the Great Recession,” said Scott Marshall , CBRE’s executive managing director of industrial and logistics in the Americas. “These markets will hold their edge because they have sustainable advantages in their infrastructure, access to population centers and connections to major seaports to benefit them for the foreseeable future.”  

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