The Port Authority of New York and New Jersey was judged the leading gateway for developers and users of industrial real estate in 2012 based upon its consistent cargo volumes and available blocks of industrial space within the immediate port area, according to a report by Jones Lang LaSalle.
New York-New Jersey increased its lead slightly over second and third-place ports Los Angeles and Long Beach compared to 2011. The Port, Airport & Global Infrastructure (PAGI) Index Score methodology used by Jones Lang LaSalle gave New York-New Jersey a score of 122.4, Los Angeles 112 and Long Beach 107.5.
Space availability plays an important role in the rankings. Los Angeles-Long Beach, for example, has virtually no large properties within Los Angeles County, whereas New York-New Jersey does have some availability, including three in-fill developments of sizable space under development, according to Jones Lang LaSalle.
Scores for the other gateways analyzed in the report included 82.2 for Savannah; 76.5, Baltimore; 75.4, Jacksonville; 72.5, Houston; 66.4, Charleston; 65.9, Tacoma; 62.5, Virginia; 61.8, Oakland; 58.6, Seattle; and 58, Miami. Scoring is based upon 25 performance metrics, divided into two major categories — terminal operating factors and real estate market factors. The score measures a port’s value to Jones Lang LaSalle and its customers.
In its port-centric study, the industrial real estate company is tracking 188 million square feet in active user requirements throughout the U.S., with about half of the total located in markets within a three-hour drive time of the ports.
As seaports work to enhance their infrastructure and industrial users seek properties with access to population centers and supply chain optimization, the combined efforts of these inter-dependent industries create “excellent momentum for industrial real estate,” the report stated.
Port container volumes are growing modestly and are inching closer to pre-recession highs. At the same time, ocean carriers are introducing ever-larger container vessels to mitigate their costs and maximize their efficiencies. This trend is having a decided impact on port competitiveness.
East Coast ports are preparing their harbors to accommodate vessels with capacities up to 12,600 20-foot containers, which will be the largest able to transit the expanded Panama Canal when that project in completed in 2015. However, carriers are already introducing post-Panamax vessels from Asia through the Suez Canal to the East Coast.
West Coast ports, with their deeper harbors, consistently handle post-Panamax vessels. In fact, the California ports are already handling vessels that will be too large for the expanded Panama Canal.
On the industrial real estate side, large blocks of available space near seaports are scarce. There are only 11 available spaces in excess of 500,000 square feet within 15 miles of any major seaport, and only 23 blocks are available for tenants in need of at least 250,000 square feet within five miles of a major port, Jones Lang LaSalle reported.
This is significant because industrial distributors continue to focus on maximizing their space efficiency while seeking the most effective use of their supply chain networks. Since transportation/drayage costs account for 50 percent of the equation, “being port-adjacent in a market home to a sizable residential population is the ideal scenario,” the report stated.
West Coast ports are highly dependent upon intermodal rail service. In Los Angeles-Long Beach, for example, only 50 percent of containerized imports remain in the basin. By contrast, 80 percent of imports in New York-New Jersey stay within 260 miles of the port.