There's More Large Industrial Spaces Near Major Seaports Than In Decades
June 10, 2024
A recent analysis by CoStar Analytics says that there are record numbers of large industrial properties near major U.S. seaports. It’s a flip of recent experience.
“In some markets, such as Los Angeles and Northern New Jersey, it was extremely difficult to secure any major spaces in the mid-pandemic boom in imports from 2021 through early 2022,” CoStar wrote.
There was too much demand, especially in the wake of pandemic-related supply chain disruptions, as large volumes of shipments were held off-shore for lack of truck transportation and ready availability of sufficient warehousing.
“However, both the doubling of average industrial rents in many port-adjacent locations and the unprecedented wave of distribution center development have upended these tight market dynamics,” CoStar wrote. “In the current market, large tenants seeking industrial space near the busiest U.S. seaports have more options than at any point in at least 20 years.”
Since the end of 2020, the amount of industrial space within 30 minutes of the Port of Los Angeles, the Port of Newark, the Port of Houston, the Port of Savannah, and the Port of Virginia in Norfolk has increased by 9.5%, or 72 million square feet. Another 20 million square feet of space are still under construction, which would bring the total additional to 12.1%.
“Even in the area within a 30-minute drive of the Port of Los Angeles, where the density of existing properties has kept new warehouse construction limited, the total square footage of industrial space available for lease in properties 100,000 square feet or larger is close to 8 million square feet, the highest level CoStar has ever recorded,” they wrote.
Most of this new space is in the form of projects that are at least 100,000 square feet. The reason is economic. Developers wanted to appeal to large companies with strong credit and such companies typically are looking for bigger facilities.
The Port of Virginia is the only one of the five where the availability for nearby big box properties is below a 15-year average. Protected wetlands and wildlife reserves make additional building difficult. As larger industrial spaces near ports have seen a boom, those smaller than 50,000 square feet remain near the lowest levels CoStar had recorded. Few developers have built for smaller tenants.
Source: GlobeSt