U.S. ports shows port-proximate real estate demand continues to cool as vacancies climb despite increased cargo throughput at the top U.S. ports year-to-date, according to a Cushman & Wakefield report.
“Through the pandemic, many retailers leased excess space to shore up their supply chains, and now we’re seeing strategies shift back to a just-in-time inventory strategy,” says Jason Price, senior director, Americas head of logistics and industrial research. “We expect demand to remain soft in the near term before the market inflects in 2025.”
Key takeaways:
- Compared to the totals throughout much of 2023, Twenty-Foot Equivalent Units (TEU) volumes at key North American ports climbed through the first seven months of 2024. Rising import totals were the main driver, as the U.S. economy remained resilient despite relatively flat retail sales once adjusted for inflation.
- As a result of the International Longshoremen Association strike, shippers rushed to bring goods into the United States by the Sept. 30 contract expiration, leading to strong import totals throughout the months leading up to October.
- Houston, Savannah and the Inland Empire industrial markets posted the healthiest absorption totals (9.9 million square feet (msf), 7.3 msf, and 2.8 msf, respectively) through the first half of 2024, driven primarily by new construction deliveries with tenants in place.
- From 2023 through mid-2024, a significant amount of new supply was delivered across the United States (856.6 msf) as developers continued to introduce new Class A supply to the market amid a cooling trend. In that time, deliveries accounted for 4.9% of the second-quarter 2024 U.S. inventory total. However, the pipeline has now substantially dissipated, down 46% YOY.
“While import volumes edged higher across key U.S. ports, this has not affected their respective warehouse markets, many of which have experienced limited or negative net absorption since early 2024. However, some port-proximate markets continued to see healthy demand,” says Price.
