Many U.S. ports have rebounded since the recession, which hit bottom when activity in the eight largest U.S. ports (Los Angeles, Long Beach, New York/New Jersey, Savannah, Oakland, Norfolk, Houston, Seattle) dropped by over 16.5% in 2009. Four years later, many of these ports are processing the same amount or greater numbers of TEUs than before the recession, and as a result, vacancy rates in Northern New Jersey, Hampton Roads, Houston, and Oakland have dropped to record levels.
EAST COAST PORTS HAVE MADE THE QUICKEST COMEBACKS
The Port of New York/New Jersey resumed prior peak level shipping pace in 2010, and as a result, warehouse/distribution vacancy in New Jersey has been steadily declining since 2010, to 8.3% at the end of 2013.
Warehouse/distribution vacancy in Houston spiked briefly during the recession, but overall shipping activity through the Port of Houston grew consistently between 2006 and 2012, causing vacancy rates in Houston to drop below pre-recession levels, to 6.6%.
Atlanta’s industrial market benefits from its proximity to the Port of Savannah, the fourth busiest port in the U.S. Since many of the products unloaded at the port are eventually housed and distributed at Atlanta industrial facilities, it plays a major role in the overall health of that industrial market.
WEST COAST PORT MARKETS HAVE TIGHTER VACANCY
While warehouse/distribution vacancy has dropped to 4.7% in Southern California, the Ports of Los Angeles and Long Beach have yet to reach peak shipping levels. As a result these vacancy rates will likely fall further as shipping improves: the warehouse/distribution vacancy rate in Southern California was 3.5% when TEU movement hit its peak at the Ports of Los Angeles and Long Beach in 2006.
The Oakland market has the tightest warehouse/distribution vacancy at 3.3%, and total TEUs through the Port of Oakland have been within 2.0% of peak levels since 2011.
The Port of Seattle quickly rebounded, with overall activity in 2010 and 2011 surpassing prior peak year TEU movement, but shipping through that port has slowed in recent years. Nonetheless, overall warehouse/distribution vacancy in the Seattle market has been steadily declining since 2010.
DECLINING VACANCIES SPURRING CONSTRUCTION
New warehouse/distribution development has also rebounded in these markets, and combined construction completions in 2014 are expected to hit a new record level.