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JLL’s annual Seaports Outlook reports historically high occupancy and demand for Canadian ports
Seaports on the North American West Coast have collectively lost containerized traffic to their eastern seaboard counterparts since 2007, with one exception – Vancouver. According to JLL's seventh annual Seaports Outlook Report and index – the first of its kind in the industry – Canada's western port saw traffic rise 16.7 percent between 2007-2014, the largest spike on the West Coast and sixth best overall in North American.
That growth—an overall increase in North American traffic by 8.5 percent since 2007—has led to distribution centers near top seaports bursting with consumer goods and other cargo even before the Panama Canal extension opens next spring. This surge traffic has led to increased industrial demand in Vancouver and beyond.
"This increase in goods entering the Vancouver Port has had a notable effect on the industrial industry across Western Canada," said Marshall Toner, Executive Vice President of Industrial and Logistics at JLL Calgary. "In the last several years we have seen notable growth in the number of distribution centres receiving containers from Asia. There has been a significant amount of distribution space built in the vicinity of rail and air terminals, catering to clients who require easy access to rail and air to receive or distribute their product. Much of the product that enters Canada through Vancouver's port makes its way to Calgary's intermodal terminals to be distributed across the continent."
Distribution center and warehouse occupancy levels have reached historic highs, while expensive construction and labor costs keep new development sparse in many seaport industrial real estate markets. According to the report, which analyzes the health of major container seaports and their surrounding real estate, occupancy levels by total square feet have surpassed 2007, which was the high-point of the last real estate boom.
The 15 seaports ranked in JLL's report received a total of 43.4 million twenty-foot equivalent units (TEU) containers in 2014. West Coast cargo volume decreased by 2.2 percent over this time period; while East Coast and Gulf of Mexico cargo volume was up by 25.3 percent. Recent supply chain disruptions on the West Coast have resulted in companies re-evaluating their import strategies which JLL believes were related to TEU volumes rising faster for Canadian, Gulf and Eastern Seaboard ports in North America.
Vancouver—ranked No. 6—and Montréal, which JLL placed No. 11, both increased in TEU volume year-over-year, with Vancouver's TEU volume increasing 16.2 percent over the last three years (2011-2014). Though Montréal's growth has not been as substantial, the increase in goods flowing into the country has had a significant impact on the Canadian industrial and logistics industry across Canada—including port improvements.
"Canada's economic future is on the Seaway," said Mark Levy, Managing Director and lead of JLL's Ports Airports and Global Infrastructure (PAGI) practice group. "The Port of Montreal has observed strong increases in cargo volumes, and we are also seeing a significant uptick in bulk commodities at Thunder Bay in Ontario. In the next seven years, there will be a full expansion and modernization of the Westside terminals at the Port of St. John. Overall, Canadian ports are seeing dramatic growth and new governmental investment that is driving the industry."
Improving Infrastructure in Montréal
As global ports prepare for a Post-Panamax world, so does Montréal, which is making improvements currently to handle the larger capacity ships at its new Viau (Termont) container terminal. Estimated at $67 million, the project will be carried out through 2015-2018 and increase the port's handling capacity from 600,000 TEUs to more than 2.1 million TEUs.
The Contrecoeur container terminal will be executed in phases over a 10-year period. The site will serve as an extension to the Port of Montreal and will be able to accommodate a container terminal with a capacity of 3.5 million TEUs when fully deployed. Phase I is scheduled to be completed by 2021 with an annual capacity of 1.1 million TEUs.
Metro Vancouver Traffic Expanding Quickly
Traffic through Port Metro Vancouver (PMV) is expected to more than double in the next 15 years. Canada's largest port already trades over $170 billion in goods each year with more than 160 trading economies. The increasing demand will place higher importance on the proposed expansion at Roberts Bank in Delta, B.C.
Known as the Roberts Bank Terminal 2 project, this new three-berth container terminal will increase the port's annual container capacity by 2.4 million TEUs. PMV's Deltaport Terminal, Road and Rail Improvement Project will construct an overpass on the Roberts Bank causeway, reconfigure and add additional rail tracks, as well as make road improvements on Deltaport Way.
*JLL's Seaports Index ranks U.S. seaports based on terminal operating scores (their proximity to population density, transportation networks, recent infrastructure improvements) and the port area market score (industrial space availability and suitability).
JLL is Canada's fastest growing commercial real estate firm. JLL has two offices in Toronto, with the headquarters located downtown. The firm also operates in, Mississauga, Montréal, Ottawa, Vancouver, Calgary and Edmonton. JLL manages more than 50 million square feet of facilities across Canada. The firm offers tenant and landlord representation, project and development services, investment sales, occupier strategies and solutions, advisory and appraisal services, debt capital markets and integrated facilities management services to owners and tenants in Canada.
JLL (NYSE: JLL) is a professional services and investment management firm offering specialized real estate services to clients seeking increased value by owning, occupying and investing in real estate. A Fortune 500 company with annual fee revenue of $4.7 billion and gross revenue of $5.4 billion, JLL has more than 230 corporate offices, operates in 80 countries and has a global workforce of approximately 58,000. On behalf of its clients, the firm provides management and real estate outsourcing services for a property portfolio of 3.4 billion square feet, or 316 million square meters, and completed $118 billion in sales, acquisitions and finance transactions in 2014. Its investment management business, LaSalle Investment Management, has $56.0 billion of real estate assets under management. JLL is the brand name, and a registered trademark, of Jones Lang LaSalle Incorporated. For further information, visit www.jll.com.
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