Even amid economic volatility, real estate in the markets surrounding the nationâ€™s seaports is leading the U.S. industrial real estate recovery.
The Port of Miami is no exception, with total net absorption, or space taken, more than doubling to 814,889 square feet in the first half of 2011 compared to 404,454 square feet in the first half of 2010. Total cargo volumes entering the port are up by 9.24 percent from the same time last year, according to Jones Lang LaSalleâ€™s third annual Port, Airport and Global Infrastructure report.
â€œEven with a myriad of global economic challenges, seaport industrial real estate has continued to retain its premium value over inland industrial locations,â€ said John Carver, head of Jones Lang LaSalleâ€™s Ports Airports and Global Infrastructure team, in a statement. â€œRising leasing volumes and demand for warehouse space at gateway logistics hubs such the Port of Miami is driving this continued coast inward recovery. In the last year, millions of square feet of space have been taken in and around our busiest ports, bringing vacancy rates down.â€
â€œWe expect several new developments serving the Port of Miami to break ground during the fourth quarter of this year and first quarter of next year,â€ said Steve Medwin, managing director at JLL. Developers are responding to the increased leasing activity, which has left fewer than 10 quality spaces over 100,000 square feet available in the market for big box tenants to lease. As todayâ€™s vacancy rate inches towards the historical average of 7-8 percent, fewer options are available for new companies entering the market and existing companies looking to expand into modern, quality distribution space.â€
This year, JLL ranked the top 12 U.S. port markets as part of an index that weighs various factors including cargo performance, investment plans and their real estate fundamentals. Ports in the index are also scored on their cargo container volumes, cargo growth rates and other factors such as land value-to-lease rate ratio, local vacancy rates, labor costs, availability of on- or near-dock service by Class I railroads as well as planned infrastructure investment.
JLLâ€™s ranking had the Port of Miami rising to 80.5 points from 79.8 last year.
The Port of Miami ranked fifth out of 12 in the rankings for vacancy rates. Rents around the Port of Miami are the highest on the East Coast at $6.17 per square foot but behind leaders on the West Coast â€“ Oakland at $6.36 and Los Angeles at $6.28 per square foot.
This year, the port with the highest score on the index is the Port of Los Angeles at 95.1, maintaining its reign from last year, while improving its annual score by 3.7 points. LA continues to top the charts owing to its high container volumes, market share of trans-pacific cargo traffic, its stable real estate market and the $1 billion earmarked for capital improvements in the next five years. Other ports that registered score improvements were Houston, Baltimore, Virginia and Charleston.
Carver said competition for large post-Panamax ships as a result of the Panama Canal upgrade is already on the agenda of U.S. ports.
â€œU.S. ports are mindful of the impending completion of Panama Canal expansion project and they have long been preparing to compete for the large â€˜post-panamaxâ€™ ships,â€ Carver said. â€œBut it will be the ports with an efficient and holistic approach to moving goods as quickly and as cost effectively as possible that will triumph.â€
In the Southeast, only the Port of Norfolk has the 50-foot draft depth necessary to accommodate fully loaded post-Panamax ships, but the Port of Miami plans to complete a dredging project by 2014, which is when a larger third lane on the Panama Canal is expected to be ready. The FEC Railway also has projects to restore rail service at the Port of Miami and build an intermodal yard at Port Everglades.
According to JLL, Florida as a whole is becoming a logistics hub.
â€œWith the stateâ€™s large consumer base, geographic position in close proximity to Panama, the rest of Latin America and the Caribbean, Florida has become a major import-export destination and is poised to become a national center for freight distribution,â€ Medwin said.
The development of Florida Inland Port, formerly known as Treasure Coast Intermodal Campus, is a new logistics and distribution model for the state. The Florida Inland Port is a proposed 4,000-plus acre, rail-oriented, logistics center in southwest St. Lucie County set to break ground next year. The project, which is being developed inland to serve the logistics needs of Floridaâ€™s ports, will allow shippers to offload their cargo at one of Florida's major seaports then utilize the new inland-based distribution centers, warehouses and assembly plants to complete the import-export cycle.
Other important port-related strategies are being implemented in South Florida. Broward County commissioners recently gave Port Everglades approval to start negotiating an intermodal container yard deal with the Florida East Coast Railway Florida East Coast Railway Latest from The Business Journals Florida East Coast Railway net loss deepensFlorida inland port development demand is more urgentIt's out! Our 2011 list of women of influence in NE Fla. Follow this company.
Jacksonville is also a competing for the intermodal traffic.
For South Floridians, trade talk is increasingly focused on Asia. In fact, Asia is interested in us too. The Business Journal in May wrote about a Chinese delegation led by Zhu Jiangsi, city secretary general of Xiamen, China, touring local convention hotels to learn how business is done here.