7 U.S. Seaports Driving Economic Growth And Industrial Demand
U.S. seaports, a nearly $5 trillion business, are major industrial real estate and economic drivers, spurring job growth in and around towns that host these harbors.
Though President Donald Trump’s aggressive trade policies and the strong U.S. dollar could signal mild turbulence ahead for the industry, the country’s strong economic growth should sustain healthy import volumes, Colliers International reports in its Industrial U.S. Seaport Outlook.
U.S. ports have been forced to evolve these past few years as the shift in consumer preferences to online shopping has altered the global shipping business. Ships are getting bigger and ports are undergoing capital improvements to accommodate the size and workload of the new vessels — as was the case with the Panama Canal expansion.
To dissect how the industry is responding to these trends, Bisnow honed in on the performance of seven major seaports highlighted in Colliers' report.
Port Of Charleston
Top Trade Partners:
Germany, China, Hong Kong, UK, Japan, India
Maximum Ship Size: 14,000 TEUs
Terminals: 2
Depth: 45 feet
The Port of Charleston in South Carolina was the fastest-growing major U.S. port for five consecutive years (2011 to 2016), and is the main economic driver in the state. Port operations sustain about 187,600 jobs and account for roughly $53B worth of economic activity on an annual basis, Colliers reports.
Robust activity in this port continues to strengthen industrial markets in South Carolina, with Charleston's industrial market ending 2016 with the strongest absorption growth in the country. E-commerce is also driving demand for larger fulfillment centers in the Greenville-Spartanburg-
The South Carolina Ports Authority has been investing heavily in the harbor through a $1.3B capital plan that will fund new equipment and facility upgrades.
"This facility has made South Carolina one of the fastest-growing locations for new business in the U.S. — attracting global companies like Boeing, Mercedes-Benz, BMW, Michelin and Volvo," said Hagood Morrison, Colliers senior vice president and principal in Charleston.
CORRECTION, MAY 18, 12:04 P.M. ET: A previous version of this story incorrectly listed the depth of the Port of Charleston and the number of jobs it sustains. The story has been updated.
Port Of Houston
Top Trade Partners:
Mexico, China, Brazil, Germany, Netherlands
Maximum Ship Size: 6,000 TEUs
Terminals: 2
Depth: 45 feet
It is no surprise that imports and exports at the Port of Houston are dominated by energy-related commodities. This port accounts for $617B worth of economic activity and fuels 2.7 million jobs, according to Colliers Houston principal Gary Mabray.
Houston's commercial property market has been suffering a rough streak as headwinds in the oil industry cause economic pains for U.S. energy-producing markets, but prospects of lower energy regulations and strong economic activity both globally and domestically proved beneficial for the port in Q1. Colliers predicts robust container traffic will increase industrial leasing demand throughout the year. Industrial vacancies in the market remain low, at 5.6%, and 78% of new product under construction in Q1 is pre-leased.
"Occupier interest, development activity and leasing on the far east side of Houston have recently accelerated. The majority of that activity can be tied directly to the Port of Houston and its significant economic contribution," Mabray said.
Port Of Long Beach
Top Trade Partners:
China/Hong Kong, South Korea, Japan, Taiwan, Vietnam
Maximum Ship Size: 18,000 TEUs
Terminals: 6
Depth: 76 feet
The second-largest and deepest harbor in the nation, the Port of Long Beach is undergoing a $4.5B capital improvement plan that has been in the works for about a decade. The port predominantly deals with imports like crude oil, electronics and plastics, Colliers reports.
Surrounding the port are some of the largest industrial markets in the country, which rely heavily on imports from the Port of Long Beach to fill their warehouses. The harbor sustains about 30,000 jobs in Long Beach and 316,000 jobs in Southern California, generating $16B in trade-related wages. Last year the harbor was hit by the bankruptcy of Korea shipping giant Hanjin, which dropped loaded inbound container volume by 5%.
"The Port of Long Beach is not only a top demand driver for the nearby South Bay market, but also for other areas of Southern California, as well as major industrial markets through the southwest U.S.," said Kevin McKenna, Colliers executive vice president in Ontario, California.
Port Of Los Angeles
Top Trade Partners:
China/Hong Kong, Japan, Vietnam, South Korea, Taiwan
Maximum Ship Size: 18,000 TEUs
Terminals: 9
Depth: 53 feet
The Port of Los Angeles accounts for 41% of all cargo entering the U.S., making it the largest container port and trade gateway in the country. Industrial real estate inventory in the sector remains robust, totaling 1.6B SF of existing space in Los Angeles County, Orange County and the Inland Empire as of 2016. LA County posted the lowest vacancy rate in the country last year, Colliers reports, and continually ranks within the top five markets in the U.S. in terms of activity and development.
Known as "America's Port," top imports at the Port of Los Angeles last year included furniture, auto parts and apparel, while top exports included animal feed, scrap metal and white paper. The harbor will be undergoing about $2.6B in capital improvements over the next 10 years, which include upgrading the terminals, rails and warehouse infrastructure.
"The port remains one of the top economical demand drivers for California and the surrounding industrial markets, which lead the nation in activities, investor demand, rent growth and development," Colliers Los Angeles executive managing director Hans Mumper said.
Port Of New York – New Jersey
Top Trade Partners:
China/Hong Kong, India, Germany, Italy, Netherlands
Maximum Ship Size: 13,000 TEUs
Terminals: 6
Depth: 50 feet
The Port of New York and New Jersey is the third-largest container port in North America, and the busiest on the East Coast, Colliers reports. The port is positioned to use the new, larger Post-Panamax ships.
The port's proximity to dense populations drives industrial demand in markets across the Northeast and mid-Atlantic. Though more than 4M SF of industrial construction is underway, vacancies continue to fall in Northern and Central New Jersey, with asking rents up 36.4% in Q1 compared to Q3 2011 lows, and 13% compared to the Q4 2007 peak. Goods that often come through the harbor include pharmaceuticals, gasoline, motor vehicles and skin care products.
"In Northern New Jersey, port-related users and e-commerce companies looking for same-day delivery to the New York City area have helped keep vacancy rates at historical lows, particularly in submarkets near the Port of New York and New Jersey," said Michael Markey, Colliers executive managing director in Woodbridge.
The Northwest Seaport Alliance
Top Trade Partners:
China/Hong Kong, Japan, South Korea, Taiwan
Maximum Ship Size: 13,000 TEUs
Terminals: 11
Depth: 50 feet
Created in 2015 after the ports of Seattle and Tacoma joined forces, the Northwest Seaport Alliance is the gateway for 80% of all Alaskan trade. The port deals mostly in goods including lumber, apparel, auto parts, furniture and toys. The port sustains roughly 48,000 jobs and accounts for $4.3B in economic activity annually.
The Puget Sound industrial market is one of the biggest beneficiaries of port activity; this includes locations in Seattle and Bellevue, Washington. Industrial vacancies hover around 3% and Colliers expects that rate to continue a downward trajectory in Puget Sound.
"The Northwest Seaport Alliance, which combined the previously competition ports of Seattle and Tacoma, has been a great leap forward for the Puget Sound region," Colliers Seattle senior vice president Scott Alan said. "E-commerce's impact on the industrial world has helped industrial vacancy in the Puget Sound market drop to under 3%."
Port Of Virginia
Top Trade Partners:
China/Hong Kong, Germany, India, UK, Japan
Maximum Ship Size: 13,000 TEUs
Terminals: 4
Depth: 50 feet
The Port of Virginia has been on a winning streak, handling more than 2.1 million loaded containers in 2016 — its highest activity level in 10 years. This port serves as a gateway for global commerce, Colliers reports, and is the economic engine for the Commonwealth of Virginia. The port sustains about 374,000 jobs, and its operations spur demand in industrial markets within the mid-Atlantic and in Washington, DC. Industrial vacancy rates in the Shenandoah Valley, which includes Virginia and West Virginia, hovered around 6.7% at the end of last year.
"The Port of Virginia is riding a wave of momentum," said Chip Louthan, Colliers senior vice president in Richmond and Hampton Roads. "The third-largest East Coast port, the Port of Virginia is preparing for the future with a 40% capacity increase in 2020 ... the port has a clear path forward to continued growth and opportunities for generations to come."
