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Sunday, Jan 29, 2023

Real Estate Broker Says Ports Losing Little Ground

Amid the congestion and labor strife that tied up the ports of Los Angeles and Long Beach late last year and early this year, frustrated importers threatened to start moving their overseas’ goods through other ports. That caught the attention of real estate broker Craig Meyer, president of the logistics and industrial services group for the Americas for brokerage Jones Lang LaSalle Inc.

His team, which tracks cargo movement through the nation’s sea and airports, took a look recently at whether the twin ports’ slowdowns would permanently alter the nation’s supply chain.

Much of the area’s industrial real estate market – and particularly the South Bay’s – depends on overseas cargo to fill its vast warehouses, Meyer said. Cargo activity is a huge engine of enterprise and an indicator of demand for space in the market.

Meyers and his team found that, since 2007, domestic container cargo volume has been shifting east. That year, West Coast ports handled 61 percent of the nation’s cargo, but that’s now fallen to 54 percent. East and Gulf coast ports, meanwhile, have grown their market share to 46 percent from 39 percent.

There’s no evidence so far that the shift is affecting the local real estate market or that tenants or owners are pulling up roots and heading east, according to Meyer’s data. In fact, the opposite is happening. For the past six months, the South Bay industrial real estate market’s vacancy rate has been below 3 percent, the tightest it’s been in a long, long time, he said.

During last year’s first quarter, the vacancy rate was 5.4 percent.

“The ports of Los Angeles and Long Beach are operating at capacity,” he said. “Taking a little bit off won’t really hurt.”

Indeed, even if a greater percentage of cargo is going to other ports, in real terms, there’s still more cargo coming into Los Angeles and Long Beach, thanks to the growth of incoming cargo overall.

Business Tide

The AltaSea marine research and interpretive center planned for the Port of Los Angeles will bring waves of money into the harbor area, according to a recent economic impact report by L.A. firm Kosmont Cos.

AltaSea, a project backed by the port and the Annenberg Foundation, will redevelop and reuse warehouses and wharf space at a 35-acre site called City Dock No. 1, turning the former industrial area in San Pedro into a site for scientific research, education and business.

The first phase is expected to be completed by 2020, while the rest of the area will be developed over the following 15 to 20 years. The project has a total expected cost of more than $500 million.

Once completed, AltaSea is expected to bring 1,348 jobs to the area, the report estimates, and 6,500 construction jobs while construction is under way. Sales, utility and business license taxes should also generate annual revenue of more than $279,000 for the city of Los Angeles, according to the report.

The project aims to become a home for landside tenants, as well as large research vessels that would need maintenance, inspection and staffing. One such vessel could bring in more than $5 million in economic activity, the report says.

AltaSea backers hope the research elements of the project, which will act like incubators, will spawn startups focused on commercializing concepts developed by the center’s scientists in areas such as ocean sustainability and marine exploration.

Short Hauls

A joint venture among Tutor Perini Corp. in Sylmar, Parsons Corp. in Pasadena and Zachry Construction Corp. in San Antonio has been named eligible to bid, along with four other teams, on the next phase of California’s high-speed rail project, a 22-mile mile area through Tulare and Kern counties and the cities of Wasco and Shafter. The phase has an estimated cost of $400 million to $500 million. The Tutor-Parsons-Zachry joint venture won the nearly $1 billion contract to build the first phase of the project, stretching 29 miles between Madera and Fresno, in 2013. … Volaris, a low-cost Mexican airline, has launched an international service connecting the city of Leon in the central Mexican state of Guanajuato to Los Angeles International Airport. The airline will offer four weekly flights beginning June 8.

Staff reporter Carol Lawrence can be reached at clawrence@labusinessjournal.com or (323) 947-5225, ext. 237.

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