Companies are preparing for tariffs levied against China and other countries by the Trump administration by pulling freight forward, considering price hikes and adjusting supply chains, according to Savills’ Q4 industrial report. Freight movement pushed port volumes up last year.
Monthly TEU freight volume was up more than 20% year-over-year in Long Beach, California, nearly 19% in Los Angeles, and more than 16% in Seattle. Other top ports for the quarter were New York/New Jersey, Savannah, Oakland, Houston, Virginia and Charleston.
Despite tariff risks, healthy consumer trends, e-commerce and freight volumes signal stability, according to the report. E-commerce continues to grow in the post-COVID period, accounting for 16.2% of total retail sales during the fourth quarter, up from 14.2% in Q2 2022. Amazon has ramped up its facility opening activity in the past couple of years with expansion totaling 39.2 million square feet in 2024, its third most active year since 2020 and 2021.
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Reduced industrial construction is expected to push demand higher this year after deliveries peaked in 2023, according to the report. Speculative development continues to dominate the 355 million square foot industrial pipeline, but build-to-suit is growing, now accounting for 29.1% of inventory under construction.
Logistics and distribution made up 33% of industrial leasing last year, followed by manufacturing and consumer goods. Retail leasing was muted at just 4% of leasing activity, said Savills.
Class A vacancy has increased 730 basis points during the past two years, which is nearly double the overall industrial vacancy growth. This may create opportunities for a flight to quality, said the report. In addition, the smallest and largest buildings have the lowest vacancy rates while mid-range buildings are showing an expanding glut of available space.
Industrial sales volume grew each quarter during 2024, with the strongest volume coming during the last three months. Savills said capital markets activity is expected to increase over the coming year.
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Kristen Smithberg
Kristen Smithberg is a Colorado-based freelance writer who covers commercial real estate, insurance, benefits and retirement topics for BenefitsPRO and other industry publications.
