Supply chain growth drives real estate investment

   The spokes of the supply chain are the demand drivers for industrial real estate in the next two years, according to Colliers International’s North American Port Analysis, and investors need to look toward the nation’s ports for opportunity.
   Ports need to invest in capital expenditure to make sure they are ready for coming challenges, the report said. Real estate investors, meanwhile, should focus on the main points of activity in maritime, air and rail because those points will have the most future demand for industrial development. Aside from the major ports in the U.S., the report highlights inland distribution points like Atlanta, Dallas and Denver, along with major air cargo hubs like Memphis and Louisville as the perfect places for investment.
   When investing near maritime ports, Colliers analysts wrote that certain areas are more desirable if they are ready for post-Panamax ships, have the market cornered on a product or niche, or have an entry point to the national rail system. For investing in air cargo, Colliers analysts recommend sticking to airports like Atlanta or Columbus that have a partnership with a nearby port. In the next five years, the analysts predict, there will be, at most, six major air cargo markets in the United States.
   Investors must also pay attention to the shifting winds of commerce. The trade balance is shifting from Asia to Latin America, bringing the port focus in the U.S. from the West Coast ports to ports on the East Coast and in the Gulf of Mexico. Trade expansion with Russia and India is also fueling this change. Colliers analysts call Latin America the “next big growth opportunity.”
   At the same time, foreign investors, Colliers points out, are increasingly looking at port cities as opportunities. Three of the top five cities in the Association of Foreign Investment in Real Estate report had major ports. But port strife remains a global concern. The impact of recent U.S. strikes was felt as far away as Brazil and Europe.
   While there is a good future for maritime ports, air cargo is in for a decline, Colliers noted. As air freight ramps up in the Middle East and other hotspots around the world, it will decline in the U.S. Volumes will continue to drop, leaving demand for fewer air cargo hubs in North America.