New supply chain trends bring high rents to intermodal gateways like ORD, MIA and LAX

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With congestion issues and seaport gridlocks plaguing the transportation industry, air freight volumes are back on the rise. According to JLL’s annual Airport Outlook Report, global air cargo saw a 4.5 percent annual increase in 2014 and the forecast calls for 5 percent growth in 2015. This has created a flurry of leasing, building and investment in the distribution center real estate surrounding key U.S. airports. And as a result, rents are rising for tenants, while returns rise for savvy investors.

The report ranks the top airports for real estate investment in 2015, with Chicago’s O’Hare Airport (ORD) taking the top spot; followed by Miami (MIA), Los Angeles (LAX), Memphis (MEM) and Dallas-Fort Worth (DFW).

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Characteristics of the Top Airports

  1. Chicago O’Hare (ORD) tops the index with its large population base, central geographic location, complimentary rail assets and enormous industrial market. Chicago has a diverse occupier pool to draw from and future volume increases are anticipated. Tenant and manufacturer demand stays high because of its diverse carriers and strong workforce availability.
  2. Miami (MIA), the gatekeeper of trade between Latin America and the U.S., dominates the fresh flower and seafood markets. Miami has kept its second place on the index by enhancing its infrastructure through a significant capital improvement project. Investors also appreciate its market dominance, handling 71.6 percent of all U.S. perishable air imports. As a gateway airport, occupiers that need to be within 3 miles of the gates have driven low vacancies and increasing rents.
  3. Los Angeles (LAX) is in the midst of a multi-billion dollar capital improvement program that will create approximately 40,000 new jobs. The market’s vacancy rate is the lowest of all in the study at 2.8 percent, while rents command a 63.5 percent premium. LAX has proved to be an alternative shipping destination for some companies that have experience the cost of recent congestion at the ports of LA and Long Beach.
  4. Memphis (MEM) is centrally located and benefits from mild weather conditions that are favorable for the movement of goods. As an evolving logistics hub that has already attracted tenants ranging from automotive to machinery parts suppliers,  the market is still essentially viewed as a distribution hub.
  5. Dallas-Fort Worth (DFW) has a real estate score that was second only to Chicago, and tied with Miami; a distinction that largely comes from Alliance Texas. Alliance Texas is comprise d of 18,000 acres and offers multi-modal transportation access via BNSF and UP rail lines, interstate access and naturally, the DFW airport.

Read more on what’s impacting air cargo this year, and how the nation’s top airports rank in value to investors, developers and occupiers of airport-centric industrial properties.  Click here to download the research report.

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