newsworthy
L.A./Long Beach top choice for port development
report said.
The Los Angeles/Long Beach complex gets the nod as the most desirable port city
for industrial property investment and development, according to real estate
developer Jones Lang LaSalle (JLL), which in June issued its first-ever index rating
U.S. ports on their attractiveness as industrial property markets. The index was
included in the company’s annual “Port, Airport and Global Infrastructure” report.
JLL used seven criteria to rank each port market, said John R. Carver, head of
port, airport, and global infrastructure and the executive in charge of the index.
The criteria used were twenty-foot equivalent unit (TEU) container volumes, TEU
growth rates, the ratio of land value to lease rates, vacancy rates, planned investment in infrastructure, labor costs, and the access of on-dock or near-dock service to Class I railroads.
Each port or port complex was given 30 points to start; the seven criteria were
ranked on a scale of one to 10, with 100 points the highest possible score.
Among the top 12, L.A./Long Beach scored the highest with a rating of 91. 4, the
only port to score over 90. It was followed by the Port of New York and New
Jersey at 89. 5 and Savannah, Ga., at 86. 3 points. The ports of Baltimore, Md., and
Charleston, S.C., brought up the rear with scores of 73. 8 and 73.0, respectively.
L.A./Long Beach’s 2009 volume of 11. 8 million TEUs, which dwarfed the traffic of
any rival, was an element in its favorable ranking but was not the only factor in its
favor, Carver said. For example, that port market has the lowest vacancy rate in the
nation at 6. 6 percent, a sign that despite pronounced declines in container traffic
last year, developers, investors, and tenants still find the region’s population base
and purchasing power to be powerful lures, the report said. (The Port of Savannah,
which ranked third in the overall index, had the highest vacancy rate at 17. 6 percent.
This was due to an oversupply of bulk warehouse space that was developed on a
speculative basis just as the global recession was starting, the report said.)
Asking rents in the Los Angeles basin have also held up despite the economic
weakness, according to the JLL index. Two prominent logistics firms, which JLL
wouldn’t identify, recently signed leases for 600,000 square feet of space for $7.20
per square foot. That is higher than the asking rents at the other 11 seaports surveyed; the closest is the Port of Miami at $6.77 per square foot.
In the same report, JLL said the industrial property segment surrounding the
nation’s major seaports is pressing ahead with billions in capital investment in an
effort to be well-positioned for the next sustained up-cycle.
Over the next five years, developers, investors, and users plan to pour about
$8.5 billion into container terminal and harbor dredging projects around the
country’s top 13 ports, according to the report. That is about one-fourth of the $34
billion that the American Association of Port Authorities said the nation’s ports
have spent on facility improvements since 1945.
The projected ramp-up in investment would provide a welcome boost for the
warehousing and distribution center markets within 15 miles of the nation’s key
ports. In the past 12 months, vacancy rates rose 1. 6 percentage points to 9 percent as tenants experiencing weak end demand for warehoused products shed
excess capacity, consolidated operations, or went out of business, the report said.
The firm said it believes that vacancy rates may have peaked and that leasing
activity is showing signs of life as domestic consumer demand and export growth
pick up steam. However, it cautioned that demand for warehouse and distribu-
tion space “remains critically low” and that “activity [is] not yet at levels that will
provide a sweeping boost to market sentiment.”
A copy of the full report is available at www.us.am.joneslanglasalle.com/
UnitedStates/EN-US/Pages/ ResearchIndustrial.aspx.
