In November, California led the nation in total exports ($12.8 billion) using the Bureau of Economic Analysis’ (BEA) U.S. Principal Parties of Interest (USPPI) series. Texas had the second highest total export value for the month ($11.7 billion). Year-over-year, California’s total exports increased by +9.7% while Texas’ total exports increased by +5.9%. In the area of manufactured exports, Texas edged out California with $9.6 billion versus $9.0 billion (year-over-year increases of +5.0% and +9.7% respectively). Year-to-date (YTD), total California exports increased by +7.6% (to $117.7 billion) compared with the first eleven months of 2006.
The California Employment Development Department (EDD) released December unemployment estimates last week. Seasonally adjusted, the Los Angeles County unemployment rate was 5.6%, up from 5.3% in November, from 5.1% in October, and from 4.5% a year earlier. December was the seventh consecutive month that the County’s unemployment rate increased over the previous year.
Take note, several development projects for industrial condo’s in the greater Los Angeles area have found that in the past year demand for their product has waned. Their marketing strategies have intensified with the goal of selling the remaining units.
The Southern California industrial market continues to generate superlatives — highest rents, lowest vacancies, most construction, greatest absorption — but 2008 looks to a see if not an actual slowdown at least a tapering off in the rate of growth.
One forecaster states “It’s a time to catch our breath and prepare for the next wave. Most industrial developers are welcoming the slowing. The pace has been almost too fast. All this money has been pouring in, and sales and lease activity has been unbelievable. I think most people agree we need a break to catch our breath and assess what the next steps should be. Demand remains solid on both the sales and leasing ends. Cap rates are holding. Rents are holding. It’s more a question of slowing acceleration than deceleration.”
If there is any serious concern about the region’s future, it lies in the possibility of a downturn at the ports of Los Angeles and Long Beach, which account for 40% of U.S. imports.
The International Association of Refrigerated Warehouses (IARW) in October released its annual listing of its top 20 North American member companies with the greatest gross capacity at their facilities. The combined space of these companies is more than 1.7 billion cubic feet. Company rankings with capacity in cubic feet are:
- AmeriCold Logistics, 415,989,001
- Atlas Cold Storage, 209,347,982
- Versacold Group, 206,058,661
- United States Cold Storage, 152,993,447
- Preferred Freezer Services, 152,982,511
- Interstate Warehousing, 63,670,368
- Burris Refrigerated Logistics, 58,133,995
- Total Logistic Control, 52,753,106
- Nordic Cold Storage, 51,722,100
- Cloverleaf Cold Storage, 48,982,883
- Columbia Colstor, 48,710,060
- Inland Cold Storage, 41,753,576
- Richmond Cold Storage Co, 40,486,491
- Henningsen Cold Storage, 37,600,574
- Frialsa Frigorificos, 33,458,847
- Hanson Logistics, 32,496,430
- Conestoga Cold Storage, 24,773,000
- Zero Mountain, 23,644,000
- Congbec Logistics, 22,500,000
- Interstate Cold Storage, 21,403,000
Total space: 1,739,460,032
The majority of the industrial market remains steady in either the recovery or expansion phase. Top markets include Los Angeles and Orange County, Calif., Sarasota, Fla., and San Francisco. One trend to watch: the development of intermodal facilities–where shipping containers are transferred between rail and truck. Container shipments have increased 37 percent in the last five years, and now represent the largest revenue source for railroads. This trend is expected to continue as manufacturing of consumer goods continues to shift to Asia. The twin ports in Los Angeles turn heavy loads of containers and the rail and truck yards are booming to keep pace with the imports.