Grubb & Ellis - Tucson

Industrial Real Estate and Containerized Trade

Over the past 10 years, international trade and outsourcing have become the primary drivers of demand for industrial space. Of course, total domestic sales and production, the final consumers of imports, drive the aggregate demand, but international trade drives demand on a market and submarket level. The Inland Empire submarket of the greater Los Angeles market is the best example. Over the past ten years, the national warehouse market has grown by about 20 percent, while the Inland Empire market has doubled in size, grown to the seventh largest warehouse market in the country and become considered its own market instead of just a submarket of Los Angeles. Proximity to the Ports of Los Angeles and Long Beach and a similar rate of growth in containerized traffic, measured by twenty-foot equivalent units – TEUs, were the underlying drivers. However, when discussing TEUs, it is important to look beyond the headlines and focus on the true driver of industrial demand: imports. In March 2011, the Port of Los Angeles reported total volume of 600,796 TEUs. Of these, 110,923 were empty and 192,849 were loaded outbound – exports. The remaining 297,023 were loaded inbound – imports. Year-over-year growth was 10.2 percent for imports, 19.2 percent for exports and -6.6 percent in empties, blending to a total growth of 9.2 percent. The accompanying chart shows 2010 and 2009 volumes of only loaded, inbound TEUs. These numbers will appear smaller than what market participants are used to seeing, but these are the volumes impacting the local industrial real estate markets. The growth, 16.3 percent, and the overall story remain intact; the purpose here is to capture and track the underlying driver that is impacted by constantly changing macroeconomic variables such as the strength of the U.S. dollar.   Source: Grubb & Ellis, Zepal

Need more information? Contact:

Rene Circ

National Director of Research, Industrial

312.224.3962