DOMINANT U.S. PORTS VIE FOR CONTAINER TRADE WITH IMPROVED INFRASTRUCTURE FOR LARGER SHIPS

Land Constraints and Transportation Costs Push Asset Prices, Rental Rates to New Highs

Print
| Source: Transwestern
photo-release

Through a shared belief that the widened Panama Canal would shift international shipping to new routes, ports in both Southern California and New York/New Jersey have devoted the better part of 20 years to increasing their ability to handle larger ships, bigger containers and more traffic. Transwestern researchers explored how industrial development and infrastructure improvements are driving rent growth in both markets.

HOUSTON, Aug. 03, 2017 (GLOBE NEWSWIRE) -- In its most recent edition of “Ask the Expert,” Transwestern explores how the dominant U.S. seaports are on similar tracks to increase their share of global trade in containerized goods. The Ports of Los Angeles and Long Beach on the West Coast and the Port of New York and New Jersey on the East Coast have devoted the better part of two decades to deepening channels, raising bridges for greater clear heights, investing in greater terminal automation and shoring-up dockside infrastructure to handle ever-larger ships.


Authors Michael Soto and Matthew Dolly explain how industrial development is driving rent growth in both markets. Most notably, as activity at the major ports increases, rising transportation costs and access to labor are overshadowing rental rates as the top factors that companies consider in selecting space.

California’s proximity to manufacturers in Asia has made the Port of Los Angeles and nearby Port of Long Beach the dominant U.S. entry point, receiving 50 percent of all containerized goods shipped to the United States. The Port of New York and New Jersey, by contrast, recognized the promise of larger ships passing through the Panama Canal as an opportunity to capture new business.

“The Port of New York and New Jersey is catching up to its West Coast rivals thanks to increased traffic from the Panama Canal,” said Dolly, Director of Research for New Jersey. “The higher demand has pushed existing buildings and developable land to premium prices, with cap rates now roughly equal to those near the Southern California ports.”

The Ports of Los Angeles and Long Beach remain No. 1 and 2, respectively, in terms of annual container volume. Collectively, the two Southern California ports handled 15.6 million TEUs in 2016, or 32 percent of national volume, and their combined volume is expected to grow 3.9 percent annually through 2040.

“Proximity to customers is the top priority for retailers and manufacturers, so many are willing to pay higher rents to be closer to the population center,” said Soto, Research Manager for the Southern California region. “Even with more plentiful land in the Inland Empire, developers are weighing how far away they can build before the distance makes a location impractical for distribution centers.” 

The largest ports on both coasts have demonstrated their commitment to serving the largest container ships and maintaining high volumes of cargo traffic. In 2016, New Jersey’s Transportation Trust Fund established $400 million in annual funding devoted to road, bridge and transit improvements, vital to ensuring the stability and expansion of the local economy and transportation network. Major improvements are ongoing in Southern California as well, including the $1.5 billion replacement of the Gerald Desmond Bridge, to be completed in 2018.

Read more at: http://twurls.com/ports-landlord and http://twurls.com/ports-tenant

ABOUT TRANSWESTERN
Transwestern is a privately held real estate firm of collaborative entrepreneurs who deliver a higher level of personalized service – the Transwestern Experience. Specializing in Agency Leasing, Tenant Advisory, Capital Markets, Asset Services and Research, our fully integrated global enterprise adds value for investors, owners and occupiers of all commercial property types. We leverage market insights and operational expertise from members of the Transwestern family of companies specializing in development, real estate investment management and research. Based in Houston, Transwestern has 35 U.S. offices and assists clients through more than 180 offices in 37 countries as part of a strategic alliance with BNP Paribas Real Estate. Experience Extraordinary at transwestern.com and @Transwestern.

Attachments:

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/80d0bf57-7fcd-4f08-bee0-4de38a64eb89

Attachments:

A photo accompanying this announcement is available at http://www.globenewswire.com/NewsRoom/AttachmentNg/383e4124-de43-4a30-96ff-b68ece91cf24

Stefanie Lewis
Transwestern
713.272.1266
stefanie.lewis@transwestern.com