Creating Resilience
Ports Strike Underscores Need for Additional Warehouse Capacity
October 3, 2024 3 Minute Read
The longshoremen’s strike that has effectively shut down all East and Gulf Coast seaports could make industrial real estate occupiers reconsider plans to reduce their warehouse/distribution space.
More than 2.5 billion sq. ft. in new leases have been signed since Q3 2020, largely to store more inventory to prevent a repeat of pandemic-era supply chain disruptions. Much of this leasing was near ports of entry, including the Inland Empire, Los Angeles County, Atlanta and Northern-Central New Jersey, or centrally located logistics hubs like Chicago and Dallas-Ft. Worth.
Many companies reevaluated their warehouse needs once the pandemic ended and supply chains were fully restored. This has led to more than 219 million sq. ft. of warehouse space available for sublease as of the end of August. But many of these same companies are now considering taking at least some of their sublease space off the market as potential supply chain disruptions loom due to labor disputes, geopolitical conflicts and severe weather events.
Figure 1: New Industrial Leasing Activity
Source: CBRE Research, October 2024.
Figure 2: Top 15 Markets for New Leasing Activity, Q3 2020 to Q2 2024
Source: CBRE Research, October 2024.
Strategically placed warehouse locations have enabled companies to increase import volumes and nimbly shift locations as needed. The 2022 West Coast port strike is a good example. A diversion of imports to East Coast ports created record import volumes in Savannah and Charleston. With the current strike at East and Gulf Coast ports, the reverse is expected to occur, with West Coast ports likely to see increased volume in coming months.
Figure 3: August 2024 Loaded Inbound TEU Volume by Port
