LOS ANGELES-In an update to our previous story, Barry Hill, SVP at Jones Lang LaSalle, talks about the firm’s recent Seaport Outlook report.
GlobeSt.com: Why is cargo volume flat? Do you anticipate it picking up soon?
Barry Hill: While total combined volume growth has been relatively flat recently, I expect we will see volumes grow in lockstep with the improving economy and job growth locally and nationally. There are 17 million more people in the US since the recession commenced in late 2007. This is a way of saying there are 17 million more consumers in the US. This helps account for import growth through a major trade gateway where 40% of imports from China bound for the US enter our shores. Also,US consumer confidence is on the mend. The index was at 81.4% in June, the best reading since January 2008. Consumer confidence is of relevance. since this measure of spending accounts for roughly 70% of US economic activity.
GlobeSt.com: How do you anticipate the Panama Canal and improvements at other ports affecting Long Beach and L.A.?
Hill: The impact of an expanded Panama Canal is expected to be minimal. The Ports of Los Angeles and Long Beach are far ahead of other US seaports in terms of infrastructure and are presently handling container ships too large to pass through an expanded Panama Canal. Individually, the two ports are ranked first and second, respectively, in total annual TEU volume (New York/New Jersey is ranked third). Access to the Southwest’s population and class-A rail lines linking the West coast directly to Chicago are key selling points of Southern California’s ports. In addition, both major intermodal carriers are investing substantially in infrastructure on a go-forward basis here in Los Angeles, and they have the ability to control both the speed and cost of delivery of containers to the Midwest or East coast.
GlobeSt.com: Specific to Los Angeles workers, how will the Panama Canal affect them? Some say that multifamily housing may be hurt by worker relocation.
Hill: Consistency and speed as it relates to docking a vessel at a terminal berth, unloading goods and sending product on its way, matters. Terminals will increase their reliance on automation and number of rail-mounted gantry cranes to stay competitive. The number of longshore gangs assigned to a ship will also increase. The latter presents labor opportunities in other post-Panamax-ready seaports.
GlobeSt.com: What did New York do to beat Long Beach and LA in your Index? Will it hold onto this position?
Hill: Jones Lang LaSalle’s PAGI Index score methodology is based on two components: “Commercial Real Estate,” (of which available blocks of space within radiuses from an individual seaport shape the results) and “Shipping” (annual TEU volumes, fluctuations over set periods of time, infrastructure, etc. matter) The Port of Los Angeles led the country in total TEU volume in 2012. Available blocks of large industrial space, however, were fewer than New York/New Jersey. This accounts for the top three rankings. New York/New Jersey has three under-construction warehouses in excess of 500,000 square feet directly adjacent to the port. Additional, existing blocks of space are also available inland. By the numbers, Northern New Jersey closed second quarter with an 8.3% vacancy rate, Central New Jersey recorded 9.3%, and Los Angeles was very tight at 4.6%. There are more tenant space options in the Northeast.