When the recession struck the US, among the places its impact was felt most dramatically were the ports of Southern California, where container traffic, an all-important measure of economic activity, plunged by more than 1.4 million units between 2007 and 2008, then plummeted another 2.5 million units between 2008 and 2009. So it should come as no surprise that industry experts in Southern California—where two of the largest ports in the nation are located—are keeping a close eye on traffic. They expect that when the recovery arrives, some of the first places it will make an impact will be at the ports, as well as in the logistics industry that so closely reflects port activity.

An uptick in traffic, logistics-watchers say, could be one of the first signs of a recovery since more logistics business means more demand for distribution space. And demand for distribution space is likely to increase long before occupancy rises for office, which is expected to lag rather than lead the recovery.

Lance Ryan, vice president of marketing and leasing at the Carson, CA office of Watson Land Co., points out that the ports of Los Angeles and Long Beach are a bellwether for gauging the US economy, especially since two-thirds of the containers coming through them are imports headed for retail stores. “Forty percent of all products imported to the United States enter through the Southern California ports,” Ryan explains. “Retail ultimately drives all of the import traffic,” he adds, pointing out that retailers choose the ports for importing their goods based largely, and logically, on where those goods are manufactured.

This bellwether role differentiates Southern California’s industrial market from those in other parts of the country, according to a report from Colliers International, which shows that not all industrial markets are created equal in how quickly and closely they reflect either a downturn or an upturn in the nation’s fortunes. During the sudden, large drop in port activity between 2007 and 2009, US industrial markets located within regions that service seaports, on average, recorded losses greater than those of the nation as a whole, according to the Colliers report.

To read more, please see the December issue of Real Estate Forum online.

Instant Insights /

Logistics: The Logical Place For CA Recovery to Start?

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