Canadian spending on 3PL space has more than doubled in the last 5 years, far outpacing real estate spending by 3PLs in the US, with port deconsolidation facilities leading the way.
The trend might signal that land investments in US ports could start to pay off in the coming recovery.
US logistics warehouse demand showed a lot of lift in H2/10 with port related real estate rebounding stronger than internal markets overall.
A lot of the investment in port related industrial real estate development has been driven by the widening of the Panama Canal, which is expected to be completed in 2014. Larger ships from the Far East will then be able to serve the East Coast directly, thus lowering transportation costs to market. The prevailing real estate investment thesis is that this will increase demand for port related real estate along the east coast.
Port authorities along the East Coast have been gobbling up stimulus dollars for dredging to accommodate larger ships. State and local governments have been racing to add muscle to road and rail infrastructure that serve the ports.
The east coast ports are spending billions on dredging and infrastructure to be competitive with each other. However, practically every west coast port from Port Rupert to Long Beach are also spending just as heavily to maintain and/or enhance their competitive position. In the end, the only winners here might well be the cargo shipping lines. They may ultimately have many more port of call options which may drag down overall port costs (i.e., port fees and real estate rents) across both seaboards.
Ted Morandin
410 349 9002
Morprop (www.morprop.com) provides advice to investors and their advisors regarding industrial transportation real estate. In addition to real estate expertise, Morprop’s directors include former senior transportation executives from Yellow Corporation (now YRCW), Purolator, Conway, FedEx Freight and Vitran. Morprop also provides research and management services to the ITPN (www.itpnetwork.com), the largest transportation real estate network in North America. Network brokers have an average of approximately 20 years of industrial real estate brokerage experience in their local markets and a deep understanding of transportation real estate. The brokers in the network have moved hundreds of transportation real estate assets and have significant liquidation experience in the sector.
