by Brianna Crandall — August 12, 2016 — The rapid growth of e-commerce has fueled development of warehouses and distribution centers in the 12 primary U.S. inland ports at nearly twice the national rate, according to a new report from global real estate advisor CBRE Group.
Even with the surge in construction, demand for industrial buildings in those markets is so robust that nine of the 12 have seen their availability rates decline from their post-recession peaks faster than the national rate.
By far the leading catalyst for the growth of inland-port markets is e-commerce, which has flooded U.S. seaports with an unprecedented volume of foreign cargo destined for markets across the country. That cargo is routed from seaports to nearby inland ports, which are major transportation hubs where cargo is handled, warehoused and broken into smaller batches for further distribution to consumers within that region.
David Egan, CBRE’s head of Industrial and Logistics Research in the Americas, explained:
Inland ports account for more than half of the fastest growing industrial markets in the U.S. because they are key waystations in the national e-commerce distribution network. As online commerce continues to expand, more shippers, retailers and logistics firms will seek top-quality, big-box warehouses in the leading inland-port markets to serve as critical links in their supply chains.
In the report, CBRE identifies the main inland-port markets in the U.S. based on their connection to major seaports, their transportation infrastructure, and their close proximity to major population centers. Those are: Southern California’s Inland Empire; Phoenix, AZ; Dallas/Ft. Worth, TX; Kansas City; Houston, TX; St. Louis, MO; Chicago, IL; Memphis, TN; Columbus, OH; Atlanta, GA; Greenville, SC; and East and Central Pennsylvania.
CBRE defines “inland ports” as having a Class I rail connection to a major seaport and also having access to significant transportation infrastructure, be it rail, highway, waterway or a combination of the three.
Collectively, the 12 inland ports expanded their base of industrial properties by 2.7% in this year’s first quarter, far outpacing the national average growth rate of 1.6%, according to CBRE research. The fastest growing of the 12 were the Inland Empire (4.3%), Greenville (4.2%), Atlanta and Dallas/Ft. Worth (both at 3.6%).
Meanwhile, even with their rapid growth, many of those markets cannot keep up with demand. The inland ports with the least availability are Chicago (6.6%), Kansas City (7.4%) and the Inland Empire (7.6%).
The CBRE report highlights three inland ports as representative of the category’s recent growth:
- Chicago, the largest U.S. inland port, registered a 26% increase in intermodal container shipments since 2000 to now handle more than 15 million TEUs (Twenty-foot-equivalent unit) annually. The ports inbound and outbound traffic is expected to grow by double-digit and triple-digit percentages by 2040.
- The Greenville area, where an inland port opened in 2013, has seen its cargo volumes grow by triple-digit percentages since then. Due in part to its growing manufacturing base and the nearby Port of Charleston, Greenville has emerged as one of the fastest growing industrial markets in the USA.
- St. Louis, a leading river port, capitalizes on less-expensive water transport to bring in shipments. That cargo then is distributed within a 500-mile radius of the port, including nearly one-third of the U.S. population.
Scott Marshall, CBRE’s executive managing director of Industrial and Logistics in the Americas, concluded:
Inland-port markets have recovered faster than their non-port counterparts since the Great Recession. These markets will hold their edge because they have sustainable advantages in their infrastructure, access to population centers and connections to major seaports to benefit them for the foreseeable future.
Inland Ports Logistics: 2016 North America Annual Report is available to download from the CBRE Web site.
