Port of Houston Climbs to Number 5 in North America.

Despite a serious commodity slowdown in Houston, the Port of Houston’s climb to the fifth-ranked port market in North America demonstrates that rumors of a demise in Houston’s commercial real estate market are largely exaggerated, according to CBRE Group, Inc.’s second-annual North American Seaports and Logistics Index.

The port saw nearly 10 percent growth in 2015, driven by strong petrochemical export business, some residual effect of west-east cargo shift, and the strength of Houston’s industrial market. Combined with the upcoming Panama Canal and Houston Ship Channel’s expansions, midstream and downstream companies continue to see Houston and the Gulf Coast Region as a solid investment. According to the report, nearly $150 billion in petrochemical projects have taken place along the Gulf Coast since 2010, and $50-$60 billion in projects are located in the Houston-area.

“Companies today are facing monumental supply chain pressures due to changing consumer behavior and a need to balance cost and service while keeping their business safe from interruption,” said Adam Mullen, Occupier and Supply Chain Leader in CBRE’s Industrial & Logistics division, the Americas. “Recent shifts in port volumes as companies strain to determine their best global shipping routes underscore that global commerce is in a race – an arms race of sorts – to build better, even more efficient supply chains.”

While container volume grew by 9.2 percent, the value of exported goods dropped to $251 billion from 2014’s record of $289 billion. The biggest sectors to post losses were computer and electronics products ($45.3 billion), petrochemical and coal products ($44.1 billion), and chemicals ($39.9 billion), according to the Census Bureau. In spite of these losses, the Houston area is projected to see an increase of new exports in the near future.

“The Port of Houston’s significant investments to its infrastructure and container terminals will ensure the port can accommodate the present and future logistics needs that are being generated by a diverse group of industries such agricultural exports, and food and consumer imports. Improving efficiency at the port will better facilitate the import/export of goods that will satisfy the ongoing demands of population growth in Texas and adjoining states,” said Billy Gold, Senior Vice President for Industrial Services in Houston. “These demands, coupled with the growth of the petrochemical sector and the ongoing needs of the energy industry, prove that the Port of Houston continues to be an integral part of companies’ logistics and supply chain management plan.”



Overall, local economists anticipate mixed performance in the job market and the industrial market in 2016. While shifting oil prices have hit the office market hard, they have yet to derail industrial demand as vacancy in this submarket currently sits at 3.4 percent with 170 bps of decrease expected over the next two years.

“The industry premonition that 2015 was the year of the East Coast was born out in the overall stats and in the way our rankings turned out,” said David Egan, CBRE’s Head of Industrial & Logistics Research in the Americas. “It demonstrated that the benefit to the East Coast from the turmoil on the West Coast is real and quantifiable.”

That continued eastward shift means that the June 2016 opening of the widened Panama Canal, which will allow substantially larger ships a faster route from the Pacific to East Coast ports, likely won’t register as large an impact on cargo destinations as previously thought. Much of the cargo that could be transferred from West Coast delivery to East Coast delivery without substantial extra cost was shifted in recent years.

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