Commercial Property Executive‘s Tudor Scolca interviewed Chris Burns, Duke Realty Executive Vice President for the Central and Western regions, on why California continues to be a hot industrial real estate market. The article, Navigating California’s Mighty Industrial Market, published November 11, 2021.
Excerpt from the article:
California’s industrial markets have been among the top performing in 2021. Vacancy in the Inland Empire, for example, reached 1.1 percent in September, CommercialEdge data shows, while average rents grew by 6.1 percent year-over-year, to $6.45 per square foot.
However, the West Coast is not without its issues. Recent global supply chain issues, labor shortages and cost increases, among other factors, have contributed to some significant shifts in the sector.
To find out more about current issues within California’s industrial sector, Commercial Property Executive spoke to Chris Burns, Duke Realty Executive Vice President for the Central and Western regions. Burns has been with Duke Realty for more than 17 years and is currently in charge of leasing and seeking new development opportunities in 10 logistics markets, including California.
California’s industrial markets remained some of the highest performing this year. Port markets have been especially strong. How have Southern and Northern California evolved this year, if you could please do a quick comparison of the two?
Burns: The Ports of Los Angeles and Long Beach are two separate ports adjacent to each other. While there are synergies between the two, they compete for customers. Individually, they are the two largest container ports by TEUs (twenty-foot equivalent unit) in the U.S. and when combined they handle approximately 17.3M TEUs annually, that’s 2.5 times the volume as the third largest container port, the Port of New York and New Jersey management of approximately 7.5M TEUs annually.
The Port of Oakland handles approximately 2.4M TEUs annually. Los Angeles and Long Beach are the gateway to the U.S. for imported goods from Asia and approximately 40 to 45 percent of all goods coming through the Ports are for the local Southern California population. The Port of Oakland, which also handles approximately 75 percent of the United States’ heavy trade with Asia, moves approximately 99 percent is containerized goods for Northern California annually.
Even with the supply chain disruptions, the Ports of Los Angeles and Long Beach and the Port of Oakland are having excellent years and will increase their volume by approximately 20 percent when compared to a pandemic impacted 2020.