Houston Reaps Rewards of Panama Canal Expansion
According a new report from JLL, industrial real estate markets surrounding U.S. ports are booming, thanks to the $5 billion expansion of the Panama Canal in June 2016. With vacancy rates for industrial port-centric properties at an all-time low, about 25.4 million square feet of industrial space is under construction in the 14 markets JLL tracked in their report. There is especially significant growth in the East and Gulf Coast ports, which comprise about 65% of that 25.4 million square feet development.
Seeing the most port volumes and increased industrial real estate demand, Gulf Coast ports are making a significant impact on the industrial market. Over the past 10 years, Port Houston had the strongest port-centric industrial market in the U.S., averaging 2.3 million square feet of total net absorption. Demand for industrial space is very high, with Houston showing the largest decline of 6.3% in year-over-year industrial availability. Since 2010, overall asking rents in Houston have increased by 36.5%, making it the second highest rent growth market in the report.
Walter Kemmsies, managing director, economist & chief strategist of JLL’s Port, Airport and Global Infrastructure (PAGI) group, commented, “While the West Coast still handles about half of all shipping volume, the East Coast is seeing significant growth. The trans-Pacific trade lane is the largest in the U.S. by overall volume, so West Coast ports are still in high demand.”