Demand for Warehouse Space Grows at US Ports
Over the past five years, annual twenty-foot equivalent unit (TEU) volume at top ports grew by an average of 18%.
As more products are coming in through America’s ports, demand for warehouse space is rising.
Over the past five years, annual twenty-foot equivalent unit (TEU) volume at top ports grew by an average of 18%. Some ports are growing substantially faster over the same period.
In terms of annual TEU volume from 2015 to 2020, Philadelphia, Houston, Savannah, Baltimore, New York-New Jersey, Charleston, Los Angeles-Long Beach, Norfolk, Oakland, Miami/Everglades and Seattle/Tacoma have seen the most significant increases. The biggest jumps in warehouse inventory were found in Savannah, Charleston and Houston.
In 2020, Los Angeles-Long Beach (17.3 TEUs), New York-New Jersey (7.6), Savannah (4.7), Seattle/Tacoma (3.3) and Houston (3.0) led the way in TEUs.
Newmark says congestion, warehouse supply and land constraints in Los Angeles-Long Beach and New York-New Jersey have pushed people to other markets. Warehouse and distribution did grow by an average of 10% over the past five years in Los Angeles-Long Beach and New York-New Jersey, but it rose by 17% on average in the rest of the port markets Newmark studied.
That trend is carrying into this year. Warehouse development as a share of inventory was more than twice as high in less mature, less-dense port markets than in Los Angeles-Long Beach and New York-New Jersey in Q1 2021. At 12.6%, Savannah saw the most warehouse construction as a percentage of current inventory among markets in the top 10 of 2020 TEUs. Next were Charleston (7.5%) and Norfolk (7.3).
“To support occupiers that need to locate near maritime ports, redevelopment opportunities and land sites will be of increasing importance to investors, developers and operators, particularly those proximate to the most mature ports that process the majority of container volume in the United States,” according to Newmark.
Even with COVID disruptions, Newmark reports that many ports are recording all-time highs in trade volume this year.
One of the things driving growth at ports has been e-commerce. For instance, it led to record trade volume for the Port of Los Angeles each month, according to a report by CommercialEdge.
“In turn, this has directly fueled even further tightening of space availability across the already hot Southern California industrial markets,” the study said.
Overall, CommercialEdge reported that industrial space prices were up about a third in the first quarter while sales declined by about as much.
The sale price per square foot for industrial space in March 2021 for the nation was 29.1% higher year-over-year. On average, US industrial assets traded for $110.04 per square foot last month.