The Port of Houston has fallen in the rankings in JLL’s annual seaports outlook report—the recently released index pegs us as the eighth-healthiest port market for industrial development, down from seventh last year. But JLL SVP John Talhelm says Houston is a bit of a mixed bag: We dominate in some metrics and keep slipping in others. Our biggest weakness is one that’s been talked about a great deal lately—the Port’s inability to receive Post-Panamax ships with 13,000 TEUs. While most other top-tier ports are dredging to 50 feet, our container ports are still only 40 feet. They’re getting dredged now to 45 feet, which will increase our capacity substantially to 10,000 TEUs. The Port Authority anticipates a 10% increase of container terminal activity, but the lack of depth is still hurting us in the rankings.
But that’s just one stat, John says. Houston blows everyone else out of the water (pun intended) on foreign tonnage, leads the pack in exports, and takes 60% of the containers that come into the Gulf. We’re leading the nation in population growth, our infrastructure is good, and we’ve got plenty of warehouses and land nearby. That abundance does hamper our distribution market—Harris County and its immediate neighbors span 11,000 square miles, the size of Massachusetts, Rhode Island and Connecticut combined, John tells us. That’s a jarring amount to cover, and distribution companies have tended to prefer West Houston as it's easier to maneuver around that area.
But wherever we are in national rankings, Houston’s port-related real estate is doing phenomenally well. The Southeast submarket had a large vacancy rate for years (thanks to massive overbuilding a decade ago), but John says it’s all soaked up now. Southeast warehouse product has had a 3.9% absorption rate year-to-date, double the next closest submarket. That’s caused rents to rise six cents up to the mid $0.30/SF range.
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