By Jason Price
Port of entry markets in the United States remain one of the key drivers in the industrial market. As imports have risen steadily over the last few years in many of the ports across the country, the appetite for nearby industrial space has been robust. A huge driver of demand, imports increased 7.6% in 2017 and represented 68.0% of the total loaded cargo volume total in 2017 for the top 13 ports in the U.S. According to Port Tracker report, total U.S. import tally for 2017 came in at 20.1 million TEUs, which set a new record, topping 2016’s 19.1 million TEUs. The National Retail Federation is predicting imports will rise by 4.9% in the first half of 2018.
While the West Coast Ports accounted for 52.0% of loaded imports at the top 13 U.S. ports during 2017, the Port of New York and New Jersey’s cargo volumes for 2017 shattered the existing annual cargo volume record set in 2015 by 5.3%. Meanwhile, year-over-year, the Port of NY & NJ recorded a 7.3% increase with 6.7 million TEUs handled throughout 2017. The record-setting year helped the port maintain its status as the third busiest port in the nation with an almost 15.0% market share. The recent completion of the raising of the Bayonne Bridge allows mega container ships with capacities up to 13,000 TEUs to reach the port and will help the port of NY & NJ compete with others around the country going forward. Imports have now risen each of the last five years at the Port of NY & NJ, which has helped fuel the local industrial marketplace.
New Jersey now boasts historical lows in vacancy for industrial product (3.8%) while net absorption has eclipsed 10.0 msf for the fourth straight year. Leasing activity for 2017 totaled 25.6 msf, the third highest total on record for New Jersey. Furthermore, with quality space options limited and robust competition for space in the primary submarkets along the NJ Turnpike, asking rents have reached a recent historical high of $8.15 psf. The Port Region submarket remains among the tightest submarkets in the state for warehouse space and with land constraints, opportunities for new supply are somewhat limited to the immediate area.
With the explosive growth occurring in eCommerce, the demand for industrial space in warehouse, distribution, and fulfillment centers has been soaring. The U.S. industrial market has now recorded over 240 msf of absorption for four consecutive years—the strongest run on record. These banner numbers do not occur without healthy port markets, which accounted for 28% of the net absorption registered in 2017 and vacancy rate of just 3.5%.
As the Tri State Suburban Director in Cushman & Wakefield’s U.S. Research Services Group, Mr. Price has direct responsibility for the research platform in New Jersey, Long Island, and Westchester/Stamford. Jason is responsible for overseeing, executing and delivering market research and analytics to clients of Cushman & Wakefield’s Tri State Suburban Region’s Brokerage, Corporate Occupier and Investor Services, Capital Markets and Valuation and Advisory teams. He directly oversees the New Jersey platform, one of the largest suburban markets in the country, and is responsible for analyzing and reporting on the market trends affecting almost 800 million square feet of office and industrial property.