Chaos At The West Coast Ports: Logistical Nightmare As Congestion Reaches Historical Proportions

Ship

The problem, which began in late summer, initially stemmed from a shortage of truck drivers and the chassis that they use to haul containers to and from the Los Angeles shipping terminals. As peak season has begun, there are not enough chassis to handle the peak season container volume. Those shortages had occurred as U.S. import container volume was surging (up 6% year-over-year from January-October at the So Cal Ports). Also, the increase of massive container ships that are deluging the docks with cargo have been pushing the limits of the terminals’ capacity to work ships in a reasonable time. Increased safety inspections in Southern California have also increased average truck turn times to two to three hours at terminal gates and yards. Combine these with rail- and drayage-related delays and the growing tension between U.S. West Coast dockworkers and their employers and we have a perfect storm that has resulted in the worst congestion in more than a decade.

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Black Friday By The Numbers

Black Friday

My family and I recently moved into a new house that is walking distance to our superregional mall. That means that I can walk through the traffic jams to witness one of the great retail spectacles of the modern era—Black Friday. In many households, a firmly established tradition of the Thanksgiving holiday weekend, right up there with football and pumpkin pie, is to head to the mall.

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Speculative Construction: Northeast Perspective

Rendering

For the first time in over 10 years, a significant quantity of speculative construction is taking place in many U.S. cities. Developers have demonstrated renewed confidence in market fundamentals by starting speculative projects in the northeast cites of Boston and New York.

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The Corporate View of Sustainability

Green

Sustainable real estate practices have become commonplace for any occupier that leases, owns, or operates corporate facilities. While the degree of emphasis placed on sustainability varies by organization, and is often tied to larger enterprise goals and objectives, a discussion about corporate social responsibility and being “green” is part of almost every occupancy decision made today.

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Vacancy Rises As São Paulo Demand Grows

SÃO PAULO

Over the last year and a half, São Paulo vacancy has jumped 3.1 percentage points for all CBD class A properties. Historical analysis of vacancy rates show that 15% is the market’s equilibrium point, so in second quarter 2014 São Paulo officially became a tenant’s market.

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Inland Empire – The Big-Box Capital of the U.S.

The Inland Empire continues to attract its share of large industrial projects. Thus far in 2014, 17.7 msf of industrial space has come online, with an additional 12.3 msf underway. Looking at what's entitled and planned, there could potentially be 60 to 70 msf of new development in the next five years (provided the economy cooperates and leasing stays strong). Although proximity to the ports remains an important reason for the continued growth of the market, e-commerce has also become a driving factor. The Inland Empire has the land capacity to build modern fulfillment centers with higher clear heights, more power, ample parking, and proximity to UPS and FedEx hubs. In fact over the past 24 months, Amazon.com leased five fulfillment centers in the Inland Empire totaling 4.2 million square feet, making them the largest tenant in the Inland Empire. Wal-Mart.com has also recently announced plans to build a state-of-the-art 1.2-msf facility in Chino, a submarket located on the western edge of the Inland Empire. The building will exceed the new standard of 36’ clear heights with a 40’ clear ceiling. The facility is part of Wal-Mart’s overall strategy to compete with Amazon.com for internet sales.       With low rents relative to most of Southern California, the Inland Empire remains the most cost effective option for many companies seeking to expand within or enter the Southern California industrial market. This, along with its proximity to the ports makes it attractive to big-box users and guarantees substantial activity in the pipeline for the foreseeable future.

The sheer physical size of the Inland Empire is remarkable; combined, the two counties of Riverside and San Bernardino cover more than one-sixth of California, about the same area as the state of Virginia. Once home to one of the nation’s largest concentrations of dairy farms, the Inland Empire has evolved into the “big-box” capital of the U.S. with an industrial base of 450 million square feet.
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Industrial Build-To-Suit Projects Span Geographies

Industrial Structures
Industrial construction in the U.S. has increased significantly since the bottom of the recession. Historically, build-to-suit (BTS) construction has remained a smaller factor in the industrial market than speculative projects, although from 2010 to 2012 very little speculative industrial space was delivered as few developers would risk construction without a tenant in place. In 2011, as industrial development slowed to a trickle, more than 85% of all new construction was BTS. As the economy has rebounded, BTS has become a smaller portion of total construction across the U.S., as expected. Less than half (45%) of the industrial construction expected to come online in 2014 will be BTS. Still, BTS construction in 2014, will account for 72.9 million square feet (msf) of new space, an almost 70% increase over 2013 and a 118% increase over 2012. Some of the largest projects completed this year will be BTS.

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Sticker Shock for Landlords and Tenants in D.C.

Office

As of January 1, 2015, commercial office building taxes will be assessed using a pooled market value—a comparison of similar properties to recently sold assets of the same class and submarket. This marks a sharp change from the current method that considers factors such as current vacancies and tenant roll-over, concessions offered, and building profitability, and will result in steep increases for many properties as shown when new assessment rates were released earlier this year.
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The Effects of the Panama Canal Expansion on U.S. Ports

Panama Canal

The expansion of the Panama Canal is often referred to as a game-changer for global trade. The extent of the impact of Panama Canal expansion will depend largely on how U.S. ports and inland transportation providers invest in improvements to their infrastructure. With 65% of the canal’s tonnage either departing from or arriving to ports inside the U.S., it comes as little surprise that the canal’s expansion has prompted significant investments as port cities race to upgrade infrastructure in order to maintain competitiveness. Since 2009, the federal government has directly invested more than $400 million in infrastructure projects at 33 U.S. ports in 22 different states through the Transportation Investment Generating Economic Recovery (TIGER) program alone, all to improve the condition, efficiency and capacity of the nation’s ports— including roads, rail and waterside corridors that connect them with producers and consumers.
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New Jersey Industrial – Investors Want In

 

Warehouse

The New Jersey Industrial market (Northern & Central New Jersey) has performed well during the last year and a half. Overall vacancy has fallen more than a full percentage point since year-end 2012 and tighter market conditions have supported 7.1% rent growth over the same period. Robust demand in recent quarters yielded more than 6.0 million square feet of leasing activity in each of the first two quarters this year and more than 14.0 msf of space has been absorbed since the beginning of 2013.
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