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U.S. Seaport Outlook 2012 - Jones Lang LaSalle

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					U.S. Seaport Outlook 2012
Port, Airport & Global Infrastructure (PAGI)



U.S. seaport markets providing safe harbor
in turbulent global waters
Commercial real estate near major U.S. seaports continues to outperform the broader industrial
market. Additionally, the tightness of these markets is funneling demand to inland distribution hubs
with strong trucking and rail connections.

Competition among U.S. seaports continues to increase for inbound container market in the midst
of an expanding Panama Canal. Larger ships are already calling on U.S. ports. The increasing flow
of containers is providing opportunities by matching empty boxes with export users.
Demand for modern facilities provides huge upside opportunities
for developers and near-dock land holders to reposition or
redevelop existing assets.
3 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012
4 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




In this report
The Jones Lang LaSalle Port, U.S. Seaport Market Outlook provides a distinctive analysis of seaport- and airport-centric industrial space in gateway U.S. real estate markets. Observing the influence
of global economic drivers, including trade and cargo flows, socioeconomic and political factors, as well as port capacity and infrastructure investment, it provides both a macro overview of current
trends impacting the domestic sector in addition to detailed information on major seaports and airports. This report explores warehouse property fundamentals in a 15-mile radius from seaports, given a
minimum building size of 50,000 square feet.

Key takeaways                                                         5   Emerging North American ports                                  18    Port of Baltimore                                               33
Ports battle supremacy in container game                              6   Seaport property clock                                         20    Port of Houston                                                 35
2012 PAGI Index Score methodology                                     8   Select top U.S. seaports and property market indicators        21    Port of Tacoma                                                  37
Trends that shape global trade                                        9   Port of New York / New Jersey                                  23    Port of Virginia                                                39
Exports: An untapped opportunity for industrial real estate?         10   Port of New York / New Jersey                                  24    Port of Charleston                                              41
Trends that shape global trade (continued)                           11   Port of Los Angeles                                            25    Port of Oakland                                                 43
What’s happening in Panama?                                          14   Port of Long Beach                                             27    Port of Seattle                                                 45
Seaport and airport connectivity                                     15   Port of Savannah                                               29    Port of Miami                                                   47
China dominates global container growth                              17   Port of Jacksonville                                           31    Port, Airport & Global Infrastructure report authors            49


Port, Airport & Global Infrastructure services                                                              Industrial and Logistics services
Transportation hubs evolve and grow as fast as the world turns. Emerging populations and shifting           From manufacturing plants to distribution centers, industrial real estate is at the backbone of the
patterns in the global movement of goods and cargo have accelerated new trends in logistics,                global economy. Today’s financial and competitive pressures demand that industrial property—
technology, transportation and security. Plus, the demand for worldwide shipping environmental              whether leased or owned—deliver maximum flexibility and efficiency. Our logistics and industrial
sustainability will only continue to grow. All of which magnifies the importance of real estate to          professionals understand the current business environment and offer innovative, profitable strategies
international distribution channels, and dictates that yesterday’s approaches won’t solve                   for supply chain optimization, site selection, sales, leasing, acquisition, financing, construction,
tomorrow’s challenges.                                                                                      project management, and property and facility management.


Our experienced team of aviation and maritime real estate experts draw upon deep, real-                     Our experts know all the issues that impact industrial real estate decisions and apply proven best
time knowledge of the trends, challenges and opportunities surrounding seaport and airport                  practices to address such challenges as skyrocketing energy, transportation, and labor costs;
infrastructure and their connectivity to the real estate equation. Working alongside the firm’s             heightened security needs; environmental requirements; and profound changes in global supply
integrated service lines, our Port, Airport & Global Infrastructure practice brings leadership, strategic   chains. Because of our depth of in-house talent, we can quickly assemble the right team. Regardless
relationships and service excellence to port and airport interests worldwide.                               of the size and scope of the assignment, you’ll have a single point of contact who manages all
                                                                                                            service delivery and is responsible for producing the measurable results that are agreed to up front.
5 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Key takeaways

   •      New score methodology: Our improved PAGI score methodology has revealed a shake-up at the top. The top three
          are still the same ports, but the Port of New York/New Jersey now leads Los Angeles and Long Beach.

   •      Three tiers of ports: The new scores have also revealed an underlying distribution of ports in three distinct tiers. The
          top two tiers have three ports each whereas the last contains an additional seven ports.

   •      Exports creating opportunities: Now at an all-time high for the United States, exports have become an increasingly
          important driver of activity at domestic ports and their surrounding real estate markets.

   •      East coast prepares for Panama: East coast ports continue to make progress in preparing for the opening of the new
          set of locks at the Panama Canal, now set to be completed in 2015.

   •      Investment pours into ports: Despite the uncertain macro environment, ports have continued to invest heavily in
          infrastructure improvements. At least $13 billion of public investment is flowing into ports over the next decade.
          These improvements will expand capacity and increase efficiency.

   •      New transshipment hub for Panama: The new port being constructed at Colon on the Atlantic side of the Panama
          Canal is poised to quickly jump into the ranks of the world’s most crucial transshipment hubs.

   •      Limited options for large space users: Large blocks of space are disappearing from port markets. A mere nine
          spaces can house a tenant of greater than 500,000 square feet within 15 miles of any major seaport. Only 20 blocks
          are available for tenants needing at least 250,000 square feet within five miles of a major port.

   •      Leverage changes hands in seaport markets: Overall, the seaport markets continue to lead the broader industrial
          real estate market, but some individual ports have now slipped. Notably, momentum has slowed near the Los
          Angeles and Long Beach ports while Jacksonville, Miami, Seattle and Tacoma have swung significantly into landlord-
          favorable territory.

   •      East coast has vacancy to burn: East coast ports such as Savannah, Charleston, Jacksonville and Baltimore have
          higher vacancy in their surrounding port markets, but they are also the fastest growing over the last 18 months. We
          expect development to remain cautious as these markets continue to tighten over the coming quarters.
6 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Ports battle supremacy in container game
A new dynamic describes port-centric industrial real estate, one that highlights key differences in   Vacancy remains higher in port submarkets that overbuilt before the recession. Many port
how each market is currently faring in its recovery cycle and how each market will be positioned      markets that experienced significant ‘big box’ development prior to the downturn have not yet
in the years to come. Competition for market share of inbound global shipping will remain             been able to burn off much of their excess construction. Houston, Charleston, Savannah and
fierce, whereas an opportunity is emerging for increased containerized export traffic. Strategic      Jacksonville all have double-digit vacancy.
capital investments in seaport infrastructure have a direct relationship between the port and
surrounding off-dock warehouse and distribution product. They also help determine the potential for   In general for the major U.S. seaports, the industrial real estate within a five-mile radius of the port
development over the long-term future.                                                                complex is at least 5.8 years older than that situated within a 15-mile radius, and this ratio goes up
                                                                                                      in the markets with higher vacancy levels.
Despite differing layers of connections between port throughput and leasing or development
fundamentals, most of the prime industrial real estate in the seaport trade areas continues to        The land constraints that plagued some of the larger, established container port markets prevented
outperform the industrial real estate market in general.                                              overbuilding or redevelopment, whereas much of the newer development that occurred in other
                                                                                                      markets was sprung up from increased demand for more modern distribution space with higher
Differentiation rising among ports                                                                    clear heights and more efficient dock configurations
The warehouse and distribution sector bordering America’s largest seaports, the networks of
Los Angeles and Long Beach on the west coast and New York / New Jersey in the east, both                The three largest seaports dominate both shipping and property variables
service considerable super-regional populations, and remain two of the tightest property markets in                        120




                                                                                                        Shipping Metrics
the study.
                                                                                                                                                                                                               New York / New Jersey
Some cities with strong demographics and a sizeable consumer base within a 24-hour trucking
window, markets like Seattle and the San Francisco Bay Area, have maintained strength within                               100                                                                                     Los Angeles
their entrenched port-related logistics sectors. Similarly, others that are competitive shipping
destinations, such as Houston, Miami and Baltimore, are moving to re-establish more solid leasing
and investment fundamentals. Lastly, ports that may not benefit from immediately large populations                                                                                                                     Long Beach

remain important throughput nodes to move goods and materials into other parts of the country.                                          Virginia
                                                                                                                                                                                     Savannah
                                                                                                                            80
                                                                                                                                      Charleston
                                                                                                                                                      Oakland
Tight, established infill warehouse product aligns with tight, substantial distribution hub                                                 Seattle                                  Jacksonville
markets. Many cities have built up around their ports, leaving less developable land for                                                                        Tacoma        Baltimore
large-footprint warehouses or distribution centers, constricting the flow of transportation                                                    Miami                     Houston

infrastructure and making redevelopment more costly. Yet the strongest port-centric                                         60

markets in the United States in 2012 also profit from a connection to a region that facilitates
‘big-box’ logistics real estate. The Ports of Los Angeles and Long Beach have the Inland
Empire; New York / New Jersey has the Exit 8A & 7A submarkets; and Seattle and Tacoma
have the Kent Valley- all of these have tight vacancy, generally under 5.0 percent.                                         40
                                                                                                                                 20                      40                     60                     80                        100

                                                                                                                                                                                                    Commercial Real Estate Metrics
                                                                                                      Source: Jones Lang LaSalle
7 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




With few large available blocks of space, where are ‘big-box’ users to go? There are less
than ten existing warehouse or distribution availabilities over 500,000 square feet in a 15-mile
radius surrounding the major seaports in our study, and less than 60 blocks greater than 250,000
square feet. For large users in markets like South California or the Northeast, that most certainly
means transporting cargo to inland destinations or bidding against other occupiers for space.

This not only provides opportunities to develop smaller distribution centers or redevelop aged or
obsolete product, but also to evaluate supply chain requirements, adapt potential transportation
routes, and assess competitive drayage options.

Markets like Savannah, Jacksonville which were overbuilt prior to the recession still have large
blocks ready for users. These blocks could attract new shippers and buoy these two fast growing
ports. While containers will continue to flow to where shippers can achieve the lowest overall cost
and highest level of service, more than ever factors other than labor, real-estate and drayage costs
are being considered.

Redundancy is a virtue in supply-chain networks, especially considering the possible
longshoremen’s strike at east and gulf coast ports. Just the west coast port strike years ago
had short and long-term effects, so could this one. Already, firms are making arrangements to
secure containers and land-side truck / rail capacity to move their goods to distribution centers in
preparation for the peak shopping season. Any short-term diversion of cargo could have a lasting
effect as shippers learn new ways to get their goods to stores.

Competition benefits consumers and economy The dynamics of capacity, labor, service levels,
taxes and more are driving fierce competition among the ports. Every action provokes a reaction,
and no one is sitting on their hands. When the Panama Canal’s new locks open, do not expect
west coast ports and rail operators to wave the white flag. And they should not, with their built in
advantages they can make a strong case to shippers. All this competition is good for American
consumers and it is good for trade which continues to grow, even in a weak global economy, and
will continue to add to our prosperity.
8 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




2012 PAGI Index Score methodology
The PAGI score was created to provide a quick snapshot of US seaports from the vantage point of              The terminal operating metrics are designed to capture the health and growth of the ports as
the real estate stakeholder - those who invest in, develop or occupy industrial property in port-            well as their functionality and connectivity. Our measures quantify the total volume of containers,
centric locations.                                                                                           short- and long-term growth in volume, rail connectivity, labor flexibility, lines of service and post-
                                                                                                             Panamax readiness. The winner in this category is the port of New York/New Jersey thanks to its
We based the index on 25 measurable performance metrics, divided into two major categories:                  very large and quickly growing container volume, its excellent rail connectivity (service from 3 class
terminal operating factors and the corresponding real estate market factors. The resulting index             I operators) and its near-term plans for post-Panamax readiness. Los Angeles falls shortly behind
score is then a combination of the performance indicators, providing a subjective measure of a               New York/New Jersey while Long Beach, Savannah, and Virginia round out the top tier.
port’s value to Jones Lang LaSalle clients and their customers.
                                                                                                             To produce our final JLL Seaport Index score the two components are weighted then combined.
The real estate metrics taken into consideration include the total amount of industrial real estate          This year’s highest ranked port is New York/New Jersey at 114.2. Los Angeles and Long Beach
stock, the age of the inventory, vacancy rates and availability of suitable blocks of space within 5,        are nearly tied with scores of 112.1 and 109.1 respectively. The remaining ports fall neatly into two
15 and 50 miles of each port. The highest real estate scores go to the ports which have a healthy            distinct tier groups.
supply of modern stock, low vacancy, but with still plenty of options for port related users to lease
or buy. This year, the highest score belongs to Los Angeles and Long Beach, with their dense and
dynamic markets just a short drive from the terminals. The Port of New York/New Jersey is not far
behind. Together, the 3 ports are well ahead of their closest competitors.


                     114.2
                                        112.1
                                                            109.1
       120


       100                                                             85.8
                                                                                   81.3
                                                                                                 78.1
                                                                                                            72.4
         80                                                                                                               66.5           66.0           65.1           64.7           64.6           63.4


         60


         40
                New York/ Los Angeles Long Beach                     Savannah   Jacksonville   Baltimore   Houston      Tacoma         Virginia     Charleston       Oakland        Seattle         Miami
                New Jersey
9 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Trends that shape global trade
Seaport-related industrial real estate markets in the United States are navigating cautiously through    More consumers are spread around the world
a choppy, global economic recovery. Influenced by a constantly evolving maritime logistics industry      Broad changes in manufacturing and consumption are affecting all aspects of trade, having
and current events played out on a world stage, stakeholders, including developers, logistics            far reaching implications on the flow of goods to and from port cities. Brazil, India and China
operators and shippers, are optimistic in the short term. Long-term prospects remain positive as         are expected to dramatically increase their economic influence over the long run. Many other
millions join the middle class and mature nations slowly heal from recessionary pressures.               economies in Asia are booming as well. Trade between these developing nations and the United
                                                                                                         States is shifting to accommodate. Exports of goods to China alone have nearly quadrupled in the
Tenants currently in the market for industrial space are cautious and less willing to sign in long-      last decade. In June, the Export-Import Bank announced that the United States exported $185
term leases. Flexibility in lease terms to minimize obligations beyond five years has been become        billion in goods and services, an all-time high edging out the $184.4 billion recorded in March.
more common, especially for third party providers. Tenants are demanding new or redeveloped
construction which incorporates energy and operational efficiencies. This provides huge upside
opportunities for developers and near-dock landholders to reposition under-utilized sites or
modernize in the areas immediately surrounding major U.S. seaports.

Firms seeking to offset increases in supply chain costs, do so not only by reducing real estate
operating expenses, but also leveraging automation to reduce labor and optimizing transportation
strategies – all factors which play into site selection and facility design. Correspondingly, the push
toward Class A facilities has thinned out the available inventory across major markets, and is
especially marked in dense or infill port-related submarkets.




   Critical variables affecting ocean-going cargo in 2013
   •    Fiscal & geopolitical uncertainty, both in the United States and abroad

   •    Potential upward shifts or spikes in fuel and energy prices

   •    Carrier capacity and rate structure flexibility

   •    A shift toward larger container vessels

   •    Risk mitigation and a geographic diversification of production
10 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Exports: An untapped opportunity for industrial real estate?
   Until recently, real estate interests addressing the growth of global containerized shipping in the          The role of inland port development grows
   United States were predominantly focused on development solutions catering to import traffic.                Helping match outbound cargo with inbound containers is stimulating activity at many U.S.
   Containers would arrive at major seaports, get stacked onto rail or drayed to a transload location           inland ports. These hubs are being designed to transload and transship both international
   for movement by truck, and many would eventually be moved to the center of the country and                   and domestic shipments more effectively between maritime ports and locations within the U.S.
   emptied. This has resulted in a growing issue within the maritime industry as to how to handle               heartland. Inland ports, connected by dedicated rail lines to one or more “sister” seaports,
   the concentration of empty ocean containers, countless numbers of which end up hundreds of                   provide a means for inbound and outbound ocean cargo to pass through congested waterfront
   miles from the waterfront, only to be returned empty.                                                        terminals more quickly and cost effectively.

   Greater profitability for developers, investors and communities                                              For those developments that can create demand for back-haul containers, they will find
   The increased attention on exporting of U.S. goods can and will provide a timely opportunity to              themselves much better positioned to attract traditional warehouse and distribution centers. For
   change this dynamic. For developers, investors and communities able to address the exporting                 large importers such as major retailers, the ability to find local demand for their empty containers
   of U.S. cargo, they will find greater ability to attract traditional distribution centers and third party    may prove to be the final determining factor in their site selection process.
   logistics users to their projects, as inbound cargo containers can then be better matched with
   export/outbound cargo, resulting in greater profitability for all concerned.                                 Real estate opportunities
                                                                                                                What does all this mean for real estate professionals? Plenty of opportunities, as the logistics
      Since 2007 exports have broken records while imports have recovered then stagnated                        industry and exporters establish hubs with immediate proximity to empty import containers, and
                                                                                                                to distribution hubs for shipment by rail to deepwater ports, then across the ocean to Asia, Latin
      130
                                                                                                                America and elsewhere. The trend toward establishing and expanding inland ports will continue,
                                 Exports         Imports    Index: 12/2007 = 100                                presenting opportunities for site selection, master planning and development of new logistics
      120                                                                                                       parks and intermodal terminals. Success relies on a deep understanding of the logistics patterns
                                                                                                                of inbound container destinations, regional output, rail connectivity and public use
      110                                                                                                       transloading infrastructure.

      100


       90


       80


       70


       60
            Jul-02 Apr-03 Jan-04 Oct-04 Jul-05 Apr-06 Jan-07 Oct-07 Jul-08 Apr-09 Jan-10 Oct-10 Jul-11 Apr-12

   *Figures adjusted for inflation using GDP deflator
   Source: Bureau of Economic Analysis, Census Bureau
11 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Trends that shape global trade (continued)
A number of other developing countries are seeking trading partners to satisfy increasing                Peak season troubles?
consumption influenced by migration patterns and population increase. The Word Trade                     Leading into the holiday season, strength of trade volumes are hinged on weak consumer
Organization has granted membership to 18 developing nations since 2000, offering eased                  confidence. After remaining stable and lean for an extended period, the inventory-to-sales ratio has
restrictions as they work to build import / export relationships abroad. Of the most recent is           begun to rise once again. This could lead to discounting and reduced margins in the second half of
Southeastern Asia’s Vietnam, admitted in 2007. Between 2000 and 2010 Vietnam’s population                the year as well as reduced forecasts for the typical peak retail season. And with lowered forecasts
increased by 10.6 percent, GDP grew by 288 percent over the same period. Russia was admitted             could come yet another disappointing peak season for carriers as the expected additional volumes
just this August; with some necessary reforms, the country could tap more economic potential and         fail to materialize.
grow its trade.
                                                                                                         Evolving business environment demands changes in maritime industry
Similar trends can be seen in other countries as they integrate into the global logistics equation. As   Changing dynamics of the global economic environment have helped to trigger fundamental shifts
wages grow in developing nations, production shifts to meet the new consumers’ needs displacing          in the maritime container industry. Operators are increasingly looking for efficiencies to increase
production that once headed for export markets. So while near-shoring may bring some production          their competitive advantage by reducing operating costs, minimizing redundancies in shipping
back to the United States, or more likely Mexico, it will not necessarily be at the expense of           routes/patterns, balancing volatility in pricing structure, and decreasing total landed shipping
production overseas. Additionally, free trade agreements between the United States and other key         cost to their customers. In addition, industry members are facing social and regulatory pressures
trading partners will continue to spur port activity in the years to come.                               from stakeholders to exemplify greater corporate social sustainability and mindfulness of
                                                                                                         environmental impacts.
Trends in technology and consumer behavior continue to shape the infrastructure of retail.
Successful firms will marry the security of a robust supply chain capable of withstanding                Rising cost of energy
disruptions with flexible logistics architecture agile enough to respond to evolving consumption         The rising cost of energy, which can account for as much as 60 percent of total operating expenses,
patterns. Following the earthquake and tsunami that devastated Japan in March 2011, the list of          has pushed some members of the container shipping industry to rethink how they manage their
manufacturing companies who closed their doors was long. Toyota production plants halted                 supply chains in order to keep transportation costs low. The volatility in energy prices can have a
delivery of vehicle component parts for several days while communities rebuilt, revealing the            dramatic impact on the overall cost of shipping; a 10 percent shift in oil prices can raise the cost
fragility of a just-in-time inventory strategy. This disruption underscored how important supply         of shipping a container by as much as 3.6 percent. The price of oil, down from its peak in April of
redundancy is to a company. Natural disasters are only one of the many threats multinational             2011, has started to creep back up in recent months raising fears of international supply constraints
corporations must negotiate.                                                                             and other geopolitical tensions.

Uncertainty hinders business investment both at home and abroad                                          Slow steaming
The mounting European debt crisis has drawn caution from investors and business leaders alike.           To help mitigate volatility in energy prices and soak up excess capacity, container shipping lines
Government bond yields have been pushed up, particularly in Greece, Portugal and Spain, adding           have implemented “slow steaming” practices to help decrease operating costs. Decreasing cruising
to the already insurmountable debt on the respective governments’ balance sheets, furthering             speeds to 20 knots, a 20 percent reduction in speed, can decrease fuel consumption by as much
the levels of concern for Europe to pull itself out of the current crisis. The labor force has been      as 40 percent (in wake of rising operating costs and decreased demand, many lines have adopted
burdened with the brunt of the larger fiscal issues, pushing unemployment rates to all-time highs        “super-slow steaming,” reducing cruising speed to 12 knots). Industry experts suggest carriers have
and consumer confidence increasingly lower.                                                              already gotten all they can out of this tactic.
12 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Global value chains                                                                                         example, faces a number of structural challenges including port and road congestion, shortages
The increasing importance of global production chains, driven by the rising trade of intermediate           in electricity, and a slow and cumbersome bureaucracy. Capital investment is necessary in these
inputs, has highlighted the necessity of maximizing efficiencies in manufacturing and shipping value        emerging markets so they may fully integrate into the global market.
chains. Global corporations are increasingly reliant on emerging countries able to supply low-cost
raw materials and production inputs and other services. China’s climb up the global value chain has         Larger ships, more efficiency
been dramatic but rising wages and an aging population are presenting challenges for its export-led         The expansion of the Panama Canal is creating new opportunities. For shipping lines, the
growth model and leading to a push for more domestic consumption.                                           expansion will result in operational efficiencies, improved vessel utilization and fuel efficiency. The
                                                                                                            emergence of larger capacity vessels places the burden of competitiveness on ports to be able
China’s gradual transition has created opportunities for other emerging economies in Asia, Africa           to handle increased shipping volumes now expected. While western coastal ports are currently
and Latin America to participate in the global manufacturing supply chain. Mexico especially will           handling post-Panamax ships, ports on the East and Gulf coasts are still preparing.
continue to produce more of the manufactured goods consumed in America.
                                                                                                            Several ports have projects underway to deepen shipping channels, expand intermodal/rail
Attempting to drive down costs by relocating presents challenges beyond sourcing cheap                      connectivity and retrofit existing infrastructure to accommodate the larger vessels expected over
labor. Infrastructure, logistics, custom administration and the countries’ regulatory and security          the coming years. This investment and expansion will bring growth opportunities to those ports
environments are equally important factors for companies can all affect total landed cost. India, for       equipped to handle larger ships, where there are rail and road connections to ship cargo inland as
                                                                                                            well as modern, functional distribution product.
                              Sector Spotlight:
                              Shipping capacity versus rates                                                Charting the course forward will require flexibility to achieve success
                                                                                                            Success of port-centric industrial real estate is closely correlated to port activity and broadly
                              Steamship lines have been caught in a vortex of capacity, rates and           influenced by the maritime logistics industry’s macro trends. Broad shifts in consumption patterns,
                              demand growth over the last several years. In 2009, when global shipping      an increasingly complex business environment and constant infrastructure developments are
                              demand collapsed, carriers were forced to slash rates. Still, many new        redefining what demand for such space will look like. In order to accommodate uncertainty, users of
                              ships were delivered and lines were forced to cut capacity using lay-ups      space are requiring shorter length commitments.
                              and tactics like slow-steaming. The industry could not maintain balance
                              and billions of dollars of losses ensued. In 2010, as trade continued to      Activity in the United States’ East and Gulf ports may increase as more become post-Panamax
                              rebound and shipping lines managed to raise rates, the industry had its       ready and per-container costs justify the shift away from western ports. Finally, technology will
                              most profitable year ever. But by the time 2011 rolled in, once again too     continue to be the catalyst for evolution from manufacturer to consumer, further increasing the
                              many ships had been delivered, demand growth faltered in Europe and           expectations of all parties. Stakeholders will benefit from a proactive approach to the challenging
                              America and supply and demand fell out of balance. Rates fell and losses      economic recovery near-term with calmer waters expected on the horizon.
                              reemerged. Early in 2012, shipping lines managed to push through rate
                              increases and recoup some of their 2011 losses, but a slowing global
                              economy and some new capacity coming online may undermine their
                              pricing power. The same dynamics that have whipsawed the shipping
                              industry remain in play, leading the multi-year outlook for shipping rates
                              to be summed up in one word: volatility. Meanwhile the industry will try to
                              manage capacity and look for innovations in pricing and contracts, but the
                              challenge is high with so many ships on order.
13 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




What’s happening in Panama?
   Time for an upgrade
   The canal has lost considerable market share to alternate trade routes in years past, stemming                                   is the Panama Colon Container Port, which will have a 2.25 million TEU capacity upon build-out.
   from its outdated infrastructure incapable of accommodating modern shipping vessels. Namely,                                     With a slated completion date of the first quarter of 2015, Colon will become one of the top 12
   post-Panamax and super-post-Panamax ships that each have a carrying capacity of about                                            transshipment terminals in the world and the second largest on the Atlantic side of the
   4,848 and 8,600 TEUs, respectively. This reality is in addition to a global logistics environment                                Panama Canal.
   characterized by rising fuel costs, expedited time-to-market deliveries and the one goal shared
   by all shipping lines: maximizing service levels, while mitigating costs. As a result, trade routes                              A temporary reprieve
   are integral.                                                                                                                    Plans to revitalize the Panama Canal were first announced in 2006, with a scheduled completion
                                                                                                                                    date of 2014; this has since been revised to 2015. The expansion project aims to create a
   The canal’s existing configuration has caused heightened wait times that have forced carriers to                                 new third lane of traffic, which will allow the transit of longer and wider ships, and consists
   bid for transit slots at auction. Upon completion, the third lane/locks will be able to accommodate                              of deepening and widening canal entrances while constructing new lock sets on the Pacific
   post- and new-Panamax ships—far more fuel efficient than smaller, older vessels—to pass                                          and Atlantic sides. An additional undertaking involves the widening and deepening of existing
   through and minimize old wait times. Larger economies of scale and speed equate to reduced                                       navigational channels in Gatun Lake and the deepening of Culebra Cut. Most dredging has been
   shipping costs. Shipping lines that call on the passage will enjoy a cost savings of 7 to 17 percent                             completed, while significant work remains on building the locks themselves. Upon completion,
   if they switch to post-Panamax vessels, as estimated by the Panama Canal                                                         the canal will be able to accommodate new-Panamax container vessels whose load capacity
   Authority (ACP).                                                                                                                 totals 12,600 TEUs.

   Transshipment hub for the western hemisphere                                                                                     Revitalization of the canal and its subsequent delay offers a temporary reprieve for several U.S.
   Moreover, due to its ideal location, Panama acts as a transshipment hub for smaller ports that                                   East Coast Seaports, many of which are racing to complete modernization projects of their own
   lack the capacity and infrastructure required to handle larger vessels. Existing terminals would                                 to become post-Panamax supply chain contenders as ships from, say, China, transit Panama.
   face serious capacity constraints if cargo throughput were to exponentially grow tomorrow. This                                  Many of these modernization projects are, in turn, running behind schedule as U.S. seaport
   is especially true on the Atlantic side. To cater to anticipated TEU volumes, the Panamanian                                     competition only intensifies to vie for Panama-based traffic to come.
   government has encouraged new infrastructure projects at the terminals. One such development


             Panama assumes full                           Panama Canal                           Port of                                 - Port Miami's deep dredge                 Port of Charleston -
             responsibility for the                        Expansion                              Baltimore's 50                            expected to be complete                  First phase of
             administration, operation                     project broke                          foot dredge                             - Dredging of Kill Van Kull                new marine                          Panama          Vessel Ports ready
             and maintenance of the                        ground                                 completed                                 and Newark Bay                           terminal ready                       Canal         related   to receive
             Panama Canal                                                                                                                   Channels to be complete                                                      updates        updates post-Panamax
                                                                                                                                                                                                                                                   vessels

       1999                    2006                    2007                2009                 2012               2013                 2014               2015                 2018                  2020

                                     Maersk's Emma                           Canal's contract                        Maersk's             Panama Colon          - Panama Canal Expansion project to         - Port of Virginia - First phase of
                                     Class vessels                           for the design                          Triple-E vessels     Container Port          be completed                                Craney Island expansion set to
                                     with a capacity                         and construction                        with 18,000          to open               - Redevelopment of Panama Canal Colon         be completed
                                     of 15,500 TEUs                          of new locks                            TEUs capacity                                Port terminal to be completed             - Port of Charleston - Dredging of harbor
                                     launched                                awarded                                 expected to                                - Port of NY/NJ - Raising of the Bayonne      to be completed between 2020 and 2024
                                                                                                                     be built                                     Bridge expected to be completed
14 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Seaport and airport connectivity
                 Prince Rupert




                                       Seattle /
                                       Tacoma


                            Vancouver




                                                                                                                               Chicago [ORD]                         Newark-Liberty
                                                                                                                                                                        [EWR]
                                                                                                                                                                                               New York /
                                                                                                                                                                                               New Jersey
                                                                                                     Kansas City                                                                            New York [JFK]
                                                                                                                                                    Columbus
                                                                                                                              Indianapolis                                             Baltimore
                     Oakland [OAK]
                                                                                                                    St. Louis [IND]                                          Norfolk
                                  Oakland                                                                                         Louisville
                                                                                                                                  [SDF]                                        Virginia            Inland port connections legend

                                  Los Angeles /
                                                                                                                                                                                                             Tier I container ports
                                  Long Beach                                       Dallas / Fort Worth [DFW]       Memphis [MEM]
                                                                                                                                                                  Charleston                                 Emerging container ports
                                        Los Angeles [LAX]                                                                           Atlanta [ATL]
                                                                                                                                                               Hardeeville
                                                                                                                                                                                                             Established inland ports
                                                                                                                                                         Savannah
                                                                                     San Antonio
                                                                                                                                    Mobile                                                                   Future inland ports
                                                                                                                    New Orleans                          Jacksonville
                                                                                                        Houston                                             St. Lucie
                                                                                                                                                                 Port Everglades
                                                                                                                                                                Miami
                                                                                                                                                                                                   Seaport and airport legend
                                                                                                                                                         Miami [MIA]
                                                                                                                                                                                                                     Major U.S. container seaport
                                 Anchorage [ANC]
                                                                                                                                                                                                                     Major U.S. cargo airport
                                                                      Manzanillo
                                                                                   Lazero Cardenas                                                                                                                   Emerging U.S. seaport
Global Economy                       BRIC exports have grown by

$316.1                               145.0%
Billion
the total monthly volume
                                            since 2005, reaching
                                          248.4 billion in 2011
of U.S. international goods
trade (imports plus exports)
recorded in May 2011, the
highest level recorded since
the summer of 2008


U.S. exports of goods and services
increased by

14.2%
in 2011 to
                                                      Global real
                                                   GDP growth is
                                                    forecasted to

$2,103.4
                                                         average



Billion                                      3.4%
                                             annually through 2015
16 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




China dominates container growth
  Top 10 ports                                                                                                        Worldwide cargo volume
                          0                      5                    10   15   20   25         30               35

            Shanghai                                                                                                                                                                                                                       4.0




                                                                                                                        Worldwide TEU Volume (B)
                                                                                                                                                                                                                                           3.5
           Singapore
                                                                                                                                                                                                                                            3.0
          Hong Kong                                                                                                                                                                                                                         2.5
                                                                                                                                                                                                                                            2.0
            Shenzhen                                                                                                                                                                                                                         1.5
                                                                                                                                                                                                                                             1.0
                Busan                                                                                                                                                                                                                        0.5

  Ningbo-Zhoushan




                                                                                                                                                                                                                                2012
                                                                                                                                                                                                                                   YTD Estimate
                                                                                                                                                   2001

                                                                                                                                                          2002

                                                                                                                                                                 2003

                                                                                                                                                                        2004

                                                                                                                                                                               2005

                                                                                                                                                                                      2006




                                                                                                                                                                                                           2009



                                                                                                                                                                                                                         2011
                                                                                                                                                                                             2007

                                                                                                                                                                                                    2008



                                                                                                                                                                                                                  2010
  Guangzhou Habor
                                                                                          2011 TEU Volume (million)
              Qingdao
                                                                                          2010 TEU Volume (million)
     Jebel Ali, Dubai

           Rotterdam



World’s top five fastest growing and slowing ports
17 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Emerging North American ports
In 2011 cargo volumes for emerging ports collectively increased by over 635,000 TEUS from 4
million TEUs during 2010. This is a 15.8 percent year-over-year (YoY) increase in TEU cargo                 Mexico
volume, and represents a significant increase across the board when compared to
established ports.                                                                                          Manzanillo

The Panama Canal expansion is set to be completed in 2015 and ports along the East and Gulf                 2011 TEU volumes: 1,762,508
Coasts of the U.S. are positioning themselves to take advantage of the increased container                  (16.6% YoY growth)
traffic that will occur once the expansion is finished. Ports are deepening channels and improving          2010 TEU volumes: 1,511,378
infrastructure as they vie for future market share. As companies seek to diversify their port
strategies to mitigate the risk of supply chain disruptions caused by natural disasters, terrorism and
labor disruptions, they are expanding their options to alternative ports, which has helped to further       Growth Drivers: Busiest cargo port in Mexico’ availability of entitled land; development of a
fuel growth at emerging ports.                                                                              new terminal that, alone, will be able to handle 2 million TEU and accommodate super post-
                                                                                                            Panamax ships
For this section, seaports whose annual cargo volumes exceed 150,000 TEUs and enjoyed YoY                   •    Only port in Mexico capable of double-stacking containers onto railcars, providing
growth of 10 percent or higher are considered. Additionally, substantial infrastructure projects                 efficient movement of cargo throughout the country and as far as the Texas border, which
underway at a respective port and its interconnectivity to/with the U.S. influenced the selection                is 1,000 miles away.
criteria as well.

   Canada                                                                                                   Lazaro Cardenas

   Prince Rupert                                                                                            2011 TEU volumes: 953,497
                                                                                                            (19.8% YoY growth)
   2011 TEU volumes: 410,476                                                                                2010 TEU volumes: 796,023
   (19.5% YoY growth)
   2010 TEU volumes: 343,366                                                                                Growth Drivers: Alternative to busy U.S. West Coast ports; railway and highway infrastructure
                                                                                                            upgraded in recent years; availability of entitled land; developing a new terminal whose first
   Growth Drivers: Deepest natural harbor in North American; shortest trade route with Asia;                phase includes seven super post-Panamax STS gantry cranes
   988 acres of available, entitled land; state-of-the-art facilities; all terminals have the capacity to   •    Located on the Pacific Coast of Mexico, Lazaro Cardenas is the deepest port in Latin
   increase volumes or expand their operations                                                                   America and has navigation channels of 55 and 60 feet that can handle ships with
   •      An alternative to congested U.S. west coast ports, supported by Canadian National                      capacities of up to 12,500 TEUs.
          Railroad connections across the top of North America (100 hours to Chicago).                      •    On-dock intermodal rail links directly into the southern U.S.
   •      The closest North American port to Shanghai. It is 36 hours closer to Shanghai than               •    Expected to handle over one million TEUs in 2012.
          Vancouver and is 68 hours closer than Los Angeles.
18 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




   U.S. Gulf Coast                                                                                  •   Largest break-bulk forest products port in the U.S. The Alabama State Port Authority’s
                                                                                                        McDuffie Terminal is the second largest coal terminal in the U.S. and the largest import
   New Orleans, LA                                                                                      coal terminal.
                                                                                                    •   Container, general cargo and bulk facilities have immediate access to two interstate
   2011 TEU volumes: 477,363                                                                            systems and five Class I railroads. The port authority and partners recently invested over
   (11.7% YoY growth)                                                                                   $340 million for its container terminal and turning basin which is capable of handling
                                                                                                        post-Panamax vessels in its 45 foot draft channel. In June, the U.S. department of
   2010 TEU volumes: 427,518
                                                                                                        transportation approved a $12 million TIGER grant to develop phase 1 of Garrows Bend
                                                                                                        Intermodal Container Transfer Facility.
   Growth Drivers: Connects international markets to America’s Midwest; port’s location
   provides faster transit time to the industrial Midwest markets of Memphis, Kansas City and
   Chicago; steel imports are the port’s primary break-bulk commodity
   •      The Port of New Orleans is ideally located on a 14,500 mile inland water system. It is
                                                                                                    U.S. East Coast
          the nation’s number one port for importing natural rubber from Indonesia, Malaysia and
          Thailand. In addition, it is also ranked among the top ports in the nation for imported   Port Everglades, FL
          steel, coffee, forest products, London Metal Exchange cargo and frozen poultry.
   •      Three capital improvement projects totaling nearly $100 million were completed earlier    2011 TEU volumes: 880,999
          this year. These improvements will help the port to capture new cargo anticipated         (11.1% YoY growth)
          with the Panama Canal expansion in 2015. In addition to the above, construction of        2010 TEU volumes: 793,227
          the Mississippi River Intermodal Terminal is expected to begin in fall 2012. This 12
          acre freight rail yard is planned to be built adjacent to the Napoleon Avenue Container
          Terminal and will provide rail access to the six Class I railroads serving the port.      Growth Drivers: Proximity to the Panama Canal, ICTF under construction, availability of
                                                                                                    entitled land, proposed inland projects located within 50 miles from the port
                                                                                                    •   Port Everglades is strategically located to serve the Atlantic trade routes connecting Latin,
                                                                                                        Caribbean and South American countries to the U.S. In addition to being the second
   Port of Mobile, AL                                                                                   busiest cruise port in the world, it is South Florida’s main seaport for receiving
                                                                                                        petroleum products.
   2011 TEU volumes: 169,282
                                                                                                    •   The port in collaboration with Florida East Coast Railways plans to develop an
   (15.3% YoY growth)
                                                                                                        approximately $72 million Intermodal Container Transfer Facility at Port Everglades.
   2010 TEU volumes: 146,761                                                                            This facility which will reduce the need for trucks to transfer containers to and from port
                                                                                                        terminals is scheduled to be completed by 2014 and will be used to directly transfer cargo
   Growth Drivers: One of the largest metropolitan areas along Gulf of Mexico; growth sectors           from ships via rail.
   include the offshore natural gas, shipbuilding and ship repair industry; as growth in offshore
   drilling increases, shipbuilders are increasingly building offshore supply and rig-tending
   vessels and repairing rigs at their facilities on Mobile river; Airbus selected Mobile to
   assemble, aircraft
19 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Seaport property clock


                                                         Port of Miami


                                                       Port of Seattle,
                                                       Port of Tacoma
                                                                                  Peaking                      Falling
                                                                                  market                       market




                                                                                   Rising                                                        Port of Baltimore
                                                                                                         Bottoming market
                                                                                   market

                                                      Port of Oakland


                                                      Port of Virginia
                                                                                                                                                 Port of Long Beach,
                                                                                                                                                 Port of Houston,
                                                Port of Jacksonville                                                                             Port of Los Angeles,
                                                                                                                                                 Port of New York /
                                                   Port of Charleston                                                                            New Jersey
                                                                                                                                                 Port of Savannah


   Reading the clock                                                                                   that favor tenants. Pricing upswings can slow or reverse, as is indicated by what could be a
   Our seaport property clock shows an interesting shake-up since this time last year. Overall, the    temporary stall in a few markets, while others have surged in the past year as leasing velocity
   seaport markets continue to lead the broader industrial real estate market, but some individual     picked up.
   ports have now slipped. Notably, momentum has slowed near the Los Angeles and Long Beach
   ports while Jacksonville, Miami, Seattle and Tacoma have swung significantly into landlord-         Historically tight, land-constrained markets like the Southern California ports did not see run-up
   favorable territory.                                                                                in leasing activity in their immediate seaport vicinity, which kept rent appreciation relatively
                                                                                                       flat, although the Inland Empire benefited immensely throughout the course of the year. Other
   The Jones Lang LaSalle seaport property clock shows the relative positions in their rental growth   markets with extremely low vacancy and blocks of space available, like Seattle and Tacoma, saw
   cycle of industrial warehouse and distribution markets that are adjacent to major U.S. seaports.    that excess space get taken down and rents more rapidly rise. Outside of the west coast, some
   Markets generally move clockwise around the clock, with markets on the left side of the clock       of the markets that were overbuilt heading into the recession have had the greatest opportunity
   typically indicate landlord leverage while those on the right are more suggestive of conditions     for recovery, while others like Oakland are now entering a new development cycle.
20 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Select top U.S. seaports and property market indicators
                                  2011                                                        Immediate                              YTD       Average
                                Volumes           2011        2012 YTD           TEU            market                2011 net     2012 net     asking
                                 (TEUs)          Annual        (TEUs)           change           size      Current   absorption   absorption     rents
                                   ▼             change                          2012           (m.s.f.)   vacancy     (m.s.f.)     (m.s.f)     (NNN)    Terminal operators and comments
                                                                                                                                                         APM Terminals; California United Terminals; Eagle Marine Services; Port of Los Angeles; Seaside
 Port of Los Angeles*           7,940,511         1.4%        4,010,204          6.4%           100.1       7.1%        -0.1         -0.7       $6.60    Transportation Services LLC; TraPac, Inc.; West Basin Container Terminal LLC (2); Yusen
                                                                                                                                                         Terminals Inc.

                                                                                                                                                         International Transportation Service, Inc.; Long Beach Container Terminal Inc.; Pacific Maritime Services;
 Port of Long Beach*            6,061,091         -3.2%       2,889,600          -2.6%          152.4       6.7%         0           -0.5       $6.12    SSA Terminals; SSAT Long Beach, LLC; Total Terminals International

 Port of New York /                                                                                                                                      American Stevedoring Inc.; Maher Terminals LLC; New York Container Terminal; Global Terminal &
                                5,503,485         4.0%        2,720,790          1.5%                211    7.6%        0.6           1         $5.58
 New Jersey**                                                                                                                                            Container Services LLC; Port of NewYork/New Jersey


 Port of Savannah               2,944,678         4.2%        1,508,367          2.4%            39.2      17.9%         4           0.1        $3.70    Georgia Ports Authority


                                                                                                                                                         APM Terminals; TransBay Container Terminal Co.; TransPacific Container Service Corp; Seaside
 Port of Oakland                2,342,504         0.5%        1,148,853          0.6%           104.1       6.2%        -0.6         0.9        $6.96    Transportation Services; Total Terminals, Inc. LLC; SSA Terminals, Inc.; Eagle Marine Services


 Port of Houston                1,866,450         9.3%        1,087,315*         0.3%            52.5       7.7%        0.2          1.3        $4.20    Port of Houston Authority


 Port of Virginia               1,918,029         1.2%         994,727           5.4%            50.8       7.3%        -0.1         -0.1       $4.56    Virginia International Terminals; APM Terminals


 Port of Seattle*               2,033,535         4.9%        1,006,390          -0.1%           35.7       3.0%        0.8           0         $7.05    Eagle Marine Services; SSA Terminals; Total Terminals International; Port of Seattle; Northland Services


                                                                                                                                                         APM Terminals; Husky Terminal & Stevedoring; Olympic Container Terminal; Pierce County
 Port of Tacoma*                1,488,790         3.9%         729,767           1.3%            23.6       6.6%        0.3          0.1        $5.10    Terminal; Totem Ocean Trailer Express; Washington United Terminals


 Port of Charleston**           1,381,349         1.3%         743,384           7.4%            26.9      12.9%        1.6          -0.2       $3.80    South Carolina State Ports Authority


                                                                                                                                                         Seaboard Marine; South Florida Container Terminal; Port of Miami Terminal
 Port of Miami                   906,607          6.8%         455,001           -0.5%           97.6       8.2%        0.9          0.6        $4.60    Operating Company

                                                                                                                                                         Jaxport; Ceres Terminals Inc.; Costal Maritime; Marine Terminal Corp; SSA Marine (SSA Cooper
 Port of Jacksonville            899,258          8.9%         437,660           2.4%            68.1      12.6%         1           0.1        $3.49    LLC); APM; Global Stevedoring / ICS Logistics; TraPac Marine Terminal


 Port of Baltimore               631,802          16.0%        325,852           5.0%            97.7      10.8%        -0.4         -0.1       $4.48    Balterm; Mid-Atlantic Terminal; Ports America; Maryland International Terminals, Inc.

* *Jan-July **Estimated
Source: American Association of Port Authorities, individual ports and Jones Lang LaSalle Research
Seaports                                                    $1257.0
 53       of the 281
 containerships, set to be delivered in
                                                                    the current cost to ship a
 2013 will be post-Panamax, ships with                       container according to the China
 capacity between 10-18,000 TEUs                                 Containerized Freight Index
           Demand for cargo throughput is
           projected to    double      at all major
           U.S. international ports between
           2010 & 2020.
                                          Between 2002 & 2010 vessel capacity
                                          calling on U.S. ports is up by

                                                           38.6%
                                                                                   $13.0
                                                                           billion in public infrastructure
                                                                          investment has been planned
                                                                         and/or completed this decade.
 32 Seaport Outlook ● Fall 2012

22 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of New York / New Jersey
Port of New York / New Jersey                                                                          Property clock
                                                           Port Area       Terminal
      114.2                                               Market Score   Operating Score                                            Port of Miami


                                                           88.0          106.5                                                     Port of Seattle,
                                                                                                                                                             Peaking        Falling




                                                                                                        Landlord leverage
                                                                                                                                   Port of Tacoma




                                                                                                                                                                                                                           Tenant leverage
                                                                                                                                                             market         market

                                                                                                                                                             Rising       Bottoming            Port of Baltimore
                                                                                                                                                             market        market
   Summary                                                                                                                        Port of Oakland                                              Port of Long Beach,
                                                                                                                                  Port of Virginia                                             Port of Houston,
                                                                                                                                                                                               Port of Los Angeles,
   Capital investments                                                                                                      Port of Jacksonville                                               Port of New York / New Jersey
   • The Bayonne Bridge is being raised from a clearance height of 151 feet to 215 feet to                                      Port of Charleston
                                                                                                                                                                                               Port of Savannah

      facilitate access by post-Panamax cargo vessels. The $1 billion project is projected to be
      completed in the Fall of 2015.
                                                                                                       TEUs versus port-market occupancy
   • The Kill Van Kull and Newark Bay channels are being dredged to 50 feet by 2014.
   • The ExpressRail project, which will allow for double-stacked rail service between the port            TEUs                                       TEUs                 Port-market occupancy
      and the Midwest, will also increase rail shipping capacity through the addition of new tracks.   6,000,000                                                                                                          100%
      The project includes raising overpasses and increasing tunnel clearances to support              5,000,000                                                                                                          98%
      double-stacked trains. The project is also expected to be completed in 2014.
                                                                                                       4,000,000
   • Global Terminal & Container Services will expand Global Terminal Port Jersey in Bayonne                                                                                                                              96%
      by developing 70 acres to accommodate a new container terminal. This new terminal will be        3,000,000
      able to handle 1.7 million TEUs per annum, and will be delivered in 2014.                                                                                                                                           94%
                                                                                                       2,000,000
                                                                                                       1,000,000                                                                                                          92%
   Market conditions
   • The tight port submarket has exhibited low vacancy rates – its current vacancy of 7.6                                  0                                                                                             90%
      percent is now slightly lower than the rate of 7.7 percent it has averaged since the first                                       2007           2008        2009          2010          2011        YTD 2012
      quarter of 2010.
   • Leasing volumes have fallen off compared to last year; transactions by square footage have        Port vital facts
      decreased 77.2 percent. However, total net absorption has rebounded from a flat 2010-            2012 YTD volume:                                      2,720,790 (June)
      2011 to 1.0 million square feet.                                                                 2011 volume:                                          5,503,485
   • The current rate of $5.58 per square foot is 4.1 percent higher than the asking rental rate as
                                                                                                       Main routes:                                          Kill Van Kull, Newark Bay, Upper New York Bay
      of the third quarter of 2011.
                                                                                                       Trading partners:                                     China, India, Italy, Germany, Brazil
   Development                                                                                         Cranes/post-Panamax Cranes:                           59 | 45
   • Development in the immediate area, spurred by demand for Class A space and Urban                  Current channel depth:                                40 – 50 feet at mean low water
      Transit Hub as well as Grow New Jersey state incentives, has increased in the past year.
   • Three projects totaling 934,000 square feet were under construction as of the second              Container terminals:                                  6 | APM Terminal, Maher Terminal, Port Newark Container
                                                                                                                                                             Terminal, Global Marine Terminal, New York Container
      quarter (80 percent preleased), and two additional spec facilities totaling 614,000 square
                                                                                                                                                             Terminal, Red Hook Container Terminal
      feet were recently announced.
   • The development pipeline remains significant, as about 14 facilities amounting to about 7.1       Post-Panamax ready:                                   No
      million square feet are proposed in the port submarket.                                          Class I Rail Operators:                               Canadian-Pacific Railway, CSX Intermodal, Norfolk Southern
           32 Seaport Outlook ● Fall 2012
23 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port New York New Jersey
Port ofof New York/ /New Jersey


                                                                                                                                       Newark Liberty International Airport


    Port Newark Container Terminal
                                                                                                                                                                   Red Hook Container Terminal

   Maher Terminal



    APM Terminal
                                                                                                                                                                        Global Marine Terminal



   Bayonne Bridge
                                                                                                                                                                        Kill Van Kull


                                                                                                                                                                  New York Container Terminal




                                                                                                                                                                                           N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)    Immediate      Current   Total availability    2011 Net    YTD 2012 net        Absorption as %         Average asking     Port
     (TEU's)▼                 change                 As of June 2012   market size    vacancy                        absorption    absorption            of stock              rents (NNN)       rank
        5.5 m                    4.0%                       2.7 m      211.0 m.s.f.    7.6%          25.5%           0.6 m.s.f.    1.0 m.s.f.              0.5%                   $5.58          1st
 32 Seaport Outlook ● Fall 2012

24 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Los Angeles
Port of Los Angeles                                                                                  Property clock
                                                           Port Area       Terminal
      112.1                                               Market Score   Operating Score                                           Port of Miami


                                                           89.8            98.0                                                  Port of Seattle,
                                                                                                                                                       Peaking         Falling




                                                                                                      Landlord leverage
                                                                                                                                 Port of Tacoma




                                                                                                                                                                                                                      Tenant leverage
                                                                                                                                                       market          market

                                                                                                                                                       Rising      Bottoming              Port of Baltimore
                                                                                                                                                       market       market
   Summary                                                                                                                       Port of Oakland                                          Port of Long Beach,
                                                                                                                                 Port of Virginia                                         Port of Houston,
                                                                                                                                                                                          Port of Los Angeles,
   Capital investments                                                                                                      Port of Jacksonville                                          Port of New York / New Jersey
   • The port will invest $1 billion over the next five years to expand and modernize facilities.                             Port of Charleston
                                                                                                                                                                                          Port of Savannah

      Projects include: a new terminal for TraPac, doubling the size of China Shipping’s terminal,
      and infrastructure improvements to the Pier A Replacement Yard (rail switching and             TEUs versus port-market occupancy
      storage). Additionally, other general rail improvements will be implemented.
                                                                                                                          TEUs                      TEUs                         Port-market occupancy
   • BNSF will create a near-dock facility adjacent to the port with direct access to the Alameda    10,000,000                                                                                                       100%
      Corridor. Containers will be loaded on trains just four miles from the docks.
   • Union Pacific is modernizing its near-dock Intermodal Container Transfer Facility, which will                                                                                                                    98%
      allow the operator to double its cargo throughput.                                              7,500,000
   • Potential labor disputes and future regulations/fees are potential challenges for the port.                                                                                                                      96%

   Market conditions                                                                                  5,000,000
                                                                                                                                                                                                                      94%
   • Total TEU counts at the Ports of Los Angeles & Long Beach remain flat, which impact the
      demand for additional industrial space.                                                         2,500,000                                                                                                       92%
   • Los Angeles industrial leasing momentum has slowed over the past five quarters, and rents                                          2008         2009          2010               2011          2012 YTD
      are generally stagnate. Though, the market-wide vacancy rate is a healthy 5.1 percent.
      “Maintaining” as opposed to “growing” sums up current conditions.
   • The vacancy rate in the immediate area is 200 basis points higher than the county’s. This       Port Vital Facts
      can be attributed to the nature of currently available product, which averages 100,000         2012 YTD volume:                                        4,010,204 (June)
      square feet with a 1976 construction date; smaller, older buildings are not as desirable as    2011 volume:                                            7,940,511
      newer, big-box inventory in today’s economy.
                                                                                                     Main routes:                                            San Pedro Bay
   • Functionally superior product is enjoying strong absorption momentum. This, when
      considering the market vacancy rate, makes a case for new development.                         Trading partners:                                       China/Hong Kong, Japan, South Korea
   • Velocity is expected to improve when the economy does; most believe by 2014.                    Cranes/post-Panamax Cranes:                             77 (32 Super Post Panamax Plus)
                                                                                                     Current channel depth:                                  53 feet
   Development
   • Prologis and Watson Land Company are among those developers who have buildings                  Container terminals:                                    9
      under construction within a 15-mile radius of the port.                                        Post-Panamax ready:                                     Yes
                                                                                                     Class I Rail Operators:                                 UP, BNSF
           32 Seaport Outlook ● Fall 2012
25 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Los Angeles
Port ofof LosAngeles



                                                        Pier A Replacement Yard

                                                                                                                 Main Line Rail Improvements
    TraPac Terminal Expansion


                                                                                                                                             Container Terminal Redevelopment


    China Shipping Terminal Exp.
                                                                                              TICTF Expansion
                                                                                              (Rail Upgrades)




                                                                                                            Pier 400 ICTF Expansion
                                                                                                            (Rail Upgrades)



                                                                                                                                                                                                           N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)       Immediate      Current       Total availability       2011 Net             YTD 2012 net       Absorption as %   Average asking   Port
     (TEU's)▼                 change                 As of June 2012      market size    vacancy                               absorption             absorption           of stock        rents (NNN)     rank
        7.9 m                    1.4%                       4.0 m         100.1 m.s.f.    7.1%               11%               -0.1 m.s.f.             -0.7 m.s.f.              0%            $6.60        2nd
 32 Seaport Outlook ● Fall 2012

26 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Long Beach
Port of Long Beach                                                                                    Property clock
                                                           Port Area       Terminal
     109.1                                                Market Score   Operating Score                                            Port of Miami


                                                           93.0            85.0                                                   Port of Seattle,
                                                                                                                                                        Peaking      Falling




                                                                                                       Landlord leverage
                                                                                                                                  Port of Tacoma




                                                                                                                                                                                                                    Tenant leverage
                                                                                                                                                        market       market

                                                                                                                                                        Rising      Bottoming           Port of Baltimore
                                                                                                                                                        market       market
   Summary                                                                                                                        Port of Oakland                                       Port of Long Beach,
                                                                                                                                  Port of Virginia                                      Port of Houston,
                                                                                                                                                                                        Port of Los Angeles,
   Capital investments                                                                                                       Port of Jacksonville                                       Port of New York / New Jersey
   • The port will invest $4.5 billion over the next decade to modernize its facilities. Projects                              Port of Charleston
                                                                                                                                                                                        Port of Savannah

      include: replacement of the aging Gerald Desmond Bridge (a critical component of the
      port’s transportation network); consolidating and updating two aging container terminals in     TEUs versus port-market occupancy
      Middle Harbor (which will double TEU-handling capacity there); improving Pier G’s
                                                                                                                           TEUs                      TEUs                      Port-market occupancy
      capabilities; potentially building a new terminal, Pier S; the Green Port Gateway, which will    8,000,000                                                                                                    100%
      increase the port’s on-dock rail capacity; and local, surrounding roadwork.
   • BNSF will create a near-dock facility adjacent to the port with direct access to the Alameda                                                                                                                   98%
      Corridor. Containers will be loaded onto trains just four miles from the docks.                  6,000,000
   • Union Pacific is modernizing its Intermodal Container Transfer Facility, which will allow the                                                                                                                  96%
      operator to double its cargo throughput.
   • Challenges: The Port of Los Angeles, potential labor disputes and future regulations/fees.        4,000,000
                                                                                                                                                                                                                    94%

   Market conditions                                                                                   2,000,000                                                                                                    92%
   • Although inventory is attracting tenants, Los Angeles continues to face competition from the                                        2008         2009          2010            2011          2012 YTD
      Inland Empire to the east, particularly when it comes to big-box, warehouse product.
   • Tenants most active in the basin’s market include 3PLs, cold storage operators, e-
      commerce and automobile-related companies.                                                      Port Vital Facts
   • Institutional buyers continue to purchase, including Prologis, KTR Capital Partners and          2012 YTD volume:                                        2,889,660 (June)
      TIAA-CREF. Similar to last year, portfolio sales remain common.                                 2011 volume:                                            6,061,085
                                                                                                      Main routes:                                            San Pedro Bay
   Development
   • The average building size of construction in the immediate vicinity is 158,000 square feet.      Trading partners:                                       China, South Korea, Japan
   • The time-to-lease-average for buildings within a 15-mile radius of the port is 14 months.        Cranes/post-Panamax Cranes:                             66 Post Panamax Cranes
      Given tenant appetites for first-generation space, new construction is expected to be           Current channel depth:                                  76 feet (main channel)
      absorbed at an expedited pace.
                                                                                                      Cargo terminals:                                        6
                                                                                                      Post-Panamax ready:                                     Yes
                                                                                                      Class I Rail Operators:                                 UP, BNSF
           32 Seaport Outlook ● Fall 2012
27 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Long Beach
Port ofof Long Beach


                                                                                                                                                      Anaheim / Santa Fe Intersection Improvement




                                                                                Pier S Development                                    Gerald Desmond Bridge



                                                                                                                                                                Middle Harbor
                                                                                                                                                                Terminal Consolidation Project


                                                                                                                                                                      Pier G Improvements




                                                                                                                                                                                                         N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)    Immediate         Current     Total availability    2011 Net             YTD 2012 net        Absorption as %     Average asking   Port
     (TEU's)▼                 change                 As of June 2012   market size       vacancy                          absorption             absorption            of stock          rents (NNN)     rank
        6.0 m                    -3.2%                      2.9 m      152.4 m.s.f.        6.7%           16.3%            0 m.s.f.               -0.5 m.s.f.             0%                 $6.12       3rd
 32 Seaport Outlook ● Fall 2012

28 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Savannah
Port of Savannah                                                                                            Property clock
                                                           Port Area       Terminal
        85.8                                              Market Score   Operating Score                                                  Port of Miami


                                                           60.0            84.5                                                         Port of Seattle,
                                                                                                                                                                  Peaking         Falling




                                                                                                             Landlord leverage
                                                                                                                                        Port of Tacoma




                                                                                                                                                                                                                                 Tenant leverage
                                                                                                                                                                  market          market

                                                                                                                                                                  Rising      Bottoming              Port of Baltimore
                                                                                                                                                                  market       market
   Summary                                                                                                                              Port of Oakland                                              Port of Long Beach,
                                                                                                                                        Port of Virginia                                             Port of Houston,
                                                                                                                                                                                                     Port of Los Angeles,
   Capital investments                                                                                                             Port of Jacksonville                                              Port of New York / New Jersey
   • The Georgia Ports Authority has focused its efforts on improving the efficiency and flexibility                                 Port of Charleston
                                                                                                                                                                                                     Port of Savannah

      of its Garden City Terminal. Investments in manpower, technology and specialized crane
      equipment have been made to reduce load / unload times and expand the port’s ability to               TEUs versus port-market occupancy
      accommodate a variety of cargo.
                                                                                                                                 TEUs                       TEUs                            Port-market occupancy
   • The process for approval to begin dredging a 32.7-mile length of the Savannah River from 42             3,500,000                                                                                                           100%
      to 47 feet at mean low water is well underway. A U.S. Army Corps of Engineers’ record of
                                                                                                             3,000,000
      decision is expected late 2012, with construction to take five years to complete.                                                                                                                                          90%
   • The four-lane, 3.1-mile continuation of Jimmy DeLoach Parkway will tie I-95 to Bourne                   2,500,000
      Avenue, Garden City Terminal’s primary artery. The $140.0 million project is expected to               2,000,000
                                                                                                                                                                                                                                 80%
      relieve traffic on the heavily travelled local state roads. Additionally, a 6,000-foot extension of    1,500,000
      the Mason Intermodal Container Transfer Facility is planned, allowing trains to enter the rail         1,000,000                                                                                                           70%
      yard from the Northwest, improving efficiency.                                                           500,000
                                                                                                                     0                                                                                                           60%
   Market conditions                                                                                                                         2007          2008        2009           2010          2011        2012 YTD
   • Despite significant vacancy rates, Savannah’s fundamentals reflect a balanced market.
      Asking rents are increasing while concessions dissipate.
   • Currently, warehouse buildings within a close proximity to the port are similarly occupied             Port vital facts
      when compared to those beyond a five-mile radius. Long term, however, port-centric                    2012 YTD volume:                                            1,508,363 (June)
      properties will likely average greater occupancy rates due to access the dense transportation         2011 volume:                                                2,944,684
      infrastructure and relatively limited development sites.
                                                                                                            Main routes:                                                Savannah River
   • A two-year average $0.60 cent per square foot premium has been asked for space near the
      port, supporting its desirability.                                                                    Trading partners:                                           Northeast Asia, Mediterranean, Southeast Asia, North
                                                                                                                                                                        Europe
   Development                                                                                              Cranes/post-Panamax Cranes:                                 33 | 23
   • Savannah is working off an oversupply of industrial space. Although absorption has been                Current channel depth:                                      42 feet at mean low water
      positive for several of the previous quarters, availabilities are plentiful, minimizing the
                                                                                                            Container terminals:                                        2 | Garden City & Ocean
      likelihood of new speculative construction.
   • Build-to-suits for manufacturing and cold storage space, however, are currently underway.              Post-Panamax ready:                                         No, Estimated delivery 2017
      Mitsubishi and Nordic are two such examples.                                                          Class I Rail Operators:                                     CSX & Norfolk Southern
           32 Seaport Outlook ● Fall 2012
29 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Savannah
Port ofof Savannah
                                                                                                                                                                                    N

             Argyle Island Turning Basin


                                                                                                                                                      Garden City Terminal



                                                                                                                                                     Savannah / Hilton Head
                                                                                                                                                     International Airport

             Mason Intermodal Container
             Transfer Facility




            International Paper company                                                                                                               Savannah River




            Ocean Terminal                                                                                                                            Talmadge Memorial Bridge -
                                                                                                                                                      185’ MHW air draft




   2011 Volumes             2011 Annual             2012 YTD (TEUs)    Immediate     Current   Total availability    2011 Net    YTD 2012 net   Absorption as %    Average asking   Port
     (TEU's)▼                 change                 As of June 2011   market size   vacancy                        absorption    absorption       of stock         rents (NNN)     rank
        2.9 m                    4.2%                       1.5 m      39.2 m.s.f.   17.9%          19.1%           4.0 m.s.f.    0.1 m.s.f.         0.0%              $3.70            4th
 32 Seaport Outlook ● Fall 2012

30 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Jacksonville
Port of Jacksonville                                                                                 Property clock
                                                           Port Area       Terminal
        81.3                                              Market Score   Operating Score                                           Port of Miami


                                                           60.8            72.0                                                  Port of Seattle,
                                                                                                                                                           Peaking        Falling




                                                                                                      Landlord leverage
                                                                                                                                 Port of Tacoma




                                                                                                                                                                                                                          Tenant leverage
                                                                                                                                                           market         market

                                                                                                                                                           Rising        Bottoming            Port of Baltimore
                                                                                                                                                           market         market
   Summary                                                                                                                       Port of Oakland                                              Port of Long Beach,
                                                                                                                                 Port of Virginia                                             Port of Houston,
                                                                                                                                                                                              Port of Los Angeles,
   Capital investments                                                                                                      Port of Jacksonville                                              Port of New York / New Jersey
   • In the past 10 years, JAXPORT has invested more than $400 million to improve the port’s                                  Port of Charleston
                                                                                                                                                                                              Port of Savannah

      infrastructure, and over the next five years, it plans to invest further $1.25 billion in
      infrastructure improvement projects.                                                           TEUs versus port-market occupancy
   • Of the total $1.25 billion, they plan to invest $600 million in harbor improvement projects,
                                                                                                                          TEUs                       TEUs                           Port-market occupancy
      which will resolve the crosscurrent concerns and deepen the harbor to a controlled depth of     1,000,000                                                                                                           100%
      50 feet. Analyzing the costs and benefits of deepening the St. Johns River is expected to be
      completed by 2013 and we expect the port to be post-Panamax ready by 2016 – 2018.                      800,000
   • Last December, the U.S. Department of Transportation granted $10 million for the                                                                                                                                     94%
                                                                                                             600,000
      development of an intermodal container transfer facility at Dames Point Marine Terminal.
      The project is expected to be completed by 2014 and will complement the existing on-dock               400,000
      rail facilities at Talleyrand Marine Terminal and Blount Island Marine Terminal.                                                                                                                                    88%
                                                                                                             200,000
   Market conditions                                                                                                        0                                                                                             82%
   • In 2008, over 4.8 million square feet of new industrial buildings were delivered in the                                          2007          2008          2009        2010          2011         2012 YTD
      market. Lack of substantial demand from tenants had pushed the vacancy rates to as high
      as 14.0 percent.
   • Although market conditions have improved in the past few quarters, vacancy rates are still      Port vital facts
      the highest in the state of Florida at 12.6 percent. For the next few quarters, we expect      2012 YTD volume:                                        437,660 (June)
      vacancy rates to continue to remain flat.                                                      2011 volume:                                            900,433
   • Recently an increased number of Third Party Logistics firms and shippers of specific goods
                                                                                                     Main routes:                                            21-mile stretch of the St. Johns River connects to all
      have selected Jacksonville for their operations.
                                                                                                                                                             terminals
   • Rental rates are likely to remain flat through the year while landlords are expected to
      increase concessions to retain and sign new tenants for long term.                             Trading partners:                                       Brazil, Argentina, Russia, Columbia, Canada and Bahamas
                                                                                                     Cranes/post-Panamax Cranes:                             18 | 2
   Development                                                                                       Current channel depth:                                  36 - 40 feet at mean low water
   • Pattillo Industrial Real Estate, Ash Properties, EastGroup Properties and GEM Realty
                                                                                                     Cargo terminals:                                        3 | Tallyrand, Blount Island, Dames Point
      Capital are some of the biggest land owners in the area.
   • As considerable large blocks of spaces are available for lease and sale, it is unlikely that    Post-Panamax ready:                                     No
      any new speculative buildings will break ground anytime soon.                                  Class I Rail Operators:                                 CSX, Norfolk Southern, Florida East Coast Railway
           32 Seaport Outlook ● Fall 2012
31 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




             Port of Jacksonville
Port of Jacksonville


   Cruise Terminal
                                                                                                                                                            Blount Island Marine Terminal

   TracPac Container Terminal at
   Dames Point


   JAXPORT Blount Island and
   Dames Point Operation




                                                                                                                                                                    Jacksonville Downtown
  Talleyrand Marine
  Terminal



                                                                                                                                                                                N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)    Immediate     Current   Total availability    2011 Net    YTD 2012 net   Absorption as %    Average asking      Port
     (TEU's)▼                 change                 As of June 2012   market size   vacancy                        absorption    absorption       of stock         rents (NNN)        rank
        0.9 m                    8.9%                       0.4 m      68.1 m.s.f.   12.6%          12.8%           1.0 m.s.f.    0.1 m.s.f.         0.2%               $3.49           5th
 32 Seaport Outlook ● Fall 2012

32 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Baltimore
Port of Baltimore                                                                                      Property clock
                                                           Port Area       Terminal
        78.1                                              Market Score   Operating Score                                             Port of Miami


                                                           57.0            70.5                                                    Port of Seattle,
                                                                                                                                                             Peaking        Falling




                                                                                                        Landlord leverage
                                                                                                                                   Port of Tacoma




                                                                                                                                                                                                                           Tenant leverage
                                                                                                                                                             market         market

                                                                                                                                                             Rising      Bottoming             Port of Baltimore
                                                                                                                                                             market       market
   Summary                                                                                                                         Port of Oakland                                             Port of Long Beach,
                                                                                                                                   Port of Virginia                                            Port of Houston,
                                                                                                                                                                                               Port of Los Angeles,
   Capital investments                                                                                                        Port of Jacksonville                                             Port of New York / New Jersey
   • Ports America Chesapeake is upgrading the Seagirt Marine Terminal in preparation for                                       Port of Charleston
                                                                                                                                                                                               Port of Savannah

      post-Panamax vessels. Berth 4 was dredged to a depth of 50 feet and four 14-story cranes
      designed to reach across the width of large container ships recently arrived from China.         TEUs versus port-market occupancy
   • CSX is working with the state of Maryland to build a new state-of-the-art intermodal facility
                                                                                                                            TEUs                       TEUs                           Port-market occupancy
      that will be incorporated into CSX’s National Gateway network. The facility will integrate the           700,000                                                                                                     100%
      Seagirt Marine Terminal and the Port of Baltimore to CSX’s double-stack system.
                                                                                                               600,000
   Market conditions                                                                                           500,000                                                                                                     95%
   • Leasing and investment activity has focused in the Baltimore / Washington corridor to the                 400,000
      southwest of the port itself.                                                                            300,000
   • Positive net absorption on the year has come from submarkets outside the immediate port                   200,000                                                                                                     90%
      area with several major move-in’s in Howard and Anne Arundel counties.                                   100,000
   • Rental rates have not shown a great deal of growth in the overall Baltimore market. One                         0                                                                                                     85%
      contributing factor is a large glut of outdated space that remains chronically vacant.                                            2007          2008        2009          2010          2011        YTD 2012
   • Investors continue to show interest along the I-95 corridor as investment activity continued
      through the summer. Institutional REITs, such as First Industrial Income Trust, have been
      actively purchasing.                                                                             Port vital facts
                                                                                                       2012 YTD volume:                                            325,852 (June)
   Development                                                                                         2011 volume:                                                631,806
   • Duke Realty holds a major parcel of developable land: Chesapeake Commerce Center. The
                                                                                                       Main routes:                                                Chesapeake Bay
      site has 122 acres of remaining land available for development with the potential to
      accommodate up to 2.8 million square feet of warehouse space. No construction is                 Trading partners:                                           China, Japan, Canada, S Korea, Brazil, Netherlands
      currently underway at the park.                                                                  Cranes/post-Panamax Cranes:                                 33 | 4
   • No speculative construction near the port is anticipated in the next year.                        Current channel depth:                                      50 feet at mean low water
   • Current speculative development in the Baltimore metro region is limited to the I-95 North
      market at Ryan Commercial’s Mid-Atlantic Distribution Center.                                    Container terminals:                                        4 | Seagirt, Dundalk, Fairfield, Rukert
                                                                                                       Post-Panamax ready:                                         Yes
                                                                                                       Class I Rail Operators:                                     CSX, Norfolk Southern
           32 Seaport Outlook ● Fall 2012
33 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Baltimore
Port ofof Baltimore


                                                                                                                                                                    Locust Point


                                                                                                                                                                    Rukert Marine Terminal




                                                                                                                                                                   CSX Marine Terminal



                                                                           Seagirt Marine Terminal



                                                                           Dundalk Marine Terminal


                                                            Fairfield Marine Terminal




                                                                                                                                                                                             N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)          Immediate          Current   Total availability    2011 Net     YTD 2012 net   Absorption as %    Average asking    Port
     (TEU's)▼                 change                 As of June 2012         market size        vacancy                        absorption     absorption       of stock         rents (NNN)      rank
        0.6 m                   16.0%                       0.4 m             97.7 m.s.f.       10.8%          15.4%           -0.4 m.s.f.    -0.1 m.s.f.       -0.1%               $4.48        6th
32 Seaport Outlook ● Fall 2012

34 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Houston
Port of Houston                                                                                         Property clock
                                                          Port Area       Terminal
       72.4                                              Market Score   Operating Score                                               Port of Miami


                                                           52.0           65.0                                                      Port of Seattle,
                                                                                                                                                              Peaking         Falling




                                                                                                         Landlord leverage
                                                                                                                                    Port of Tacoma




                                                                                                                                                                                                                             Tenant leverage
                                                                                                                                                              market          market

                                                                                                                                                              Rising      Bottoming              Port of Baltimore
                                                                                                                                                              market       market
   Summary                                                                                                                          Port of Oakland                                              Port of Long Beach,
                                                                                                                                    Port of Virginia                                             Port of Houston,
                                                                                                                                                                                                 Port of Los Angeles,
   Capital investments                                                                                                         Port of Jacksonville                                              Port of New York / New Jersey
   • The Port Authority expects to commit $206 million in capital improvement projects.                                          Port of Charleston
                                                                                                                                                                                                 Port of Savannah

      Approximately $146 million will be allocated to our container terminals for continuing
      development of Bayport and modernization at Barbour’s Cut.                                        TEUs versus port-market occupancy
   • Additionally, $5.0 million has been reserved for maintenance dredging and other related
                                                                                                                             TEUs                       TEUs                            Port-market occupancy
      improvements.                                                                                      2,500,000                                                                                                           100%
   • Approximately $500,000 is reserved for constructing a west-bound bypass lane that will
      provide two dedicated, right-hand turn lanes for container trucks leaving Bayport.                 2,000,000                                                                                                           95%
   • The Houston Port Authority has approved a project to deepen the shipping channel to 45
                                                                                                         1,500,000
      feet and widen it to 530 feet, while using the dredged material to create approximately 4,250                                                                                                                          90%
      acres of wetlands in Galveston Bay.                                                                1,000,000
                                                                                                                500,000                                                                                                      85%
   Market conditions
   • There are currently five significant distribution centers located near the Port of Houston.                               0                                                                                             80%
      Distribution centers currently have a 60.3 percent vacancy with no plans for future                                                2007          2008        2009           2010          2011        2012 YTD
      deliveries.
   • Despite a high percentage of institutional ownership, investment activity has tended to be
      light, driven recently by corporate users and private local investors.                            Port vital facts
   • Manufacturers make up nearly a quarter of current tenant demand. Wal-Mart is by far the            2012 YTD volume:                                            1,084,353 (July)
      largest tenant and owner in the port-proximate submarket.                                         2011 volume:                                                1,866,439
   • Institutional investor interest is strong in this dynamic market with nine landlords controlling
                                                                                                        Main routes:                                                Gulf of Mexico
      500,000 square feet or more.
   • Nearly half of the total square footage leased is by tenants who occupy more than 250,000          Trading partners:                                           Mexico, Venezuela, Saudi Arabia, Germany, Brazil,
      square feet.                                                                                                                                                  China, Belgium, Algeria and Netherlands
                                                                                                        Cranes/post-Panamax Cranes:                                 41 | 13
   Development                                                                                          Current channel depth:                                      40 feet at mean low water
   • Half of the inventory near Barbour’s Cut Terminal was built over the past decade. One-third
                                                                                                        Container terminals:                                        2 | Barbours Cut, Bayport
      of it is newer, large-scale product in the range of 100,000-500,000 square feet, with clear
      heights and dock configurations is suitable for modern distribution.                              Post-Panamax ready:                                         Limited access, no current plans for deep dredge
                                                                                                        Class I Rail Operators:                                     Union Pacific, BNSF Railway, Kansas City Southern
           32 Seaport Outlook ● Fall 2012
35 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Houston
Port ofof Houston
                                                        Barbour’s Cut Container Terminal
                                                                                                                                                                                                     N
                                                                                              La Porte Municipal Airport




                                                                                                                            UP Rail




                                                                         Bayport Container Terminal                                                               Port of Houston Authority
                                                                                                                                                                  Cruise Terminal

   2011 Volumes             2011 Annual             2012 YTD (TEUs)        Immediate         Current         Total availability        2011 Net     YTD net     Absorption as %     Average asking   Port
     (TEU's)▲                 change                 As of July 2011       market size       vacancy                                  absorption   absorption      of stock          rents (NNN)     rank
        1.8 m                    9.3%                       1.1 m           52.5 m.s.f.        7.7%                8.1%               0.2 m.s.f.   1.3 m.s.f.        2.5%                $4.20       7th
 32 Seaport Outlook ● Fall 2012

36 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Tacoma
Port of Tacoma                                                                                        Property clock
                                                           Port Area       Terminal
        66.5                                              Market Score   Operating Score                                            Port of Miami


                                                           41.5            68.5                                                   Port of Seattle,
                                                                                                                                                            Peaking         Falling




                                                                                                       Landlord leverage
                                                                                                                                  Port of Tacoma




                                                                                                                                                                                                                      Tenant leverage
                                                                                                                                                            market          market

                                                                                                                                                            Rising      Bottoming              Port of Baltimore
                                                                                                                                                            market       market
   Summary                                                                                                                        Port of Oakland                                              Port of Long Beach,
                                                                                                                                                                                               Port of Houston,
                                                                                                                                  Port of Virginia                                             Port of Los Angeles,
   Capital investments                                                                                                       Port of Jacksonville
                                                                                                                                                                                               Port of New York /
                                                                                                                                                                                               New Jersey
   • The Port of Tacoma has been investing not only in infrastructure such as rail grade                                       Port of Charleston                                              Port of Savannah
      separation and berth extensions, but has also had a vested interest in the improvement for
      the port’s habitat. For the Place of Circulation Waters habitat restoration project, the port   TEUs versus port-market occupancy
      restored 26 acres of habitat at the mouth of the Hylebos Creek, which features a valuable
                                                                                                                           TEUs                       TEUs                            Port-market occupancy
      intertidal marsh, stream channels and forested open space.                                       2,500,000                                                                                                      100%
   Market conditions                                                                                   2,000,000                                                                                                      98%
   • Much like the Port of Seattle, the port does have industrial distribution centers in its
                                                                                                       1,500,000                                                                                                      96%
      immediate vicinity, but a majority of the commodities are delivered east to Sumner and
      north to the Kent Valley’s distribution centers.                                                 1,000,000                                                                                                      94%
   • The warehouse vacancy in the immediate vicinity of the port is less than 7.0 percent and
      land constraints are halting any new industrial construction. Regionally, port-driven areas             500,000                                                                                                 92%
      such as the Sumner, Puyallup and the Kent Valley are benefiting with declining vacancy                                 0                                                                                        90%
      and increasing demand.                                                                                                           2007          2008        2009           2010          2011        2012 YTD
   • Rental rates have been on a continual incline over the last six quarters across the market.
   • Leasing volumes have remained steady; however, as limited supply hinders the demand in
      the market, new developers are beginning speculative projects in the region.                    Port vital facts
   • Investment capital has been primarily coming from the port, Pierce County and the city           2012 YTD volume:                                            875,777 (June)
      of Tacoma.                                                                                      2011 volume:                                                1,488,795
   • The most active industries which have been leasing space have been distribution, logistics
                                                                                                      Main routes:                                                Puget Sound
      and transit orient business lines.
                                                                                                      Trading partners:                                           Asia, South America, North America, Europe
   Development                                                                                        Cranes/post-Panamax Cranes:                                 31 | 27
   • Port of Tacoma is the primary land owner in the port land and waterfront areas.                  Current channel depth:                                      50 feet at mean low water
   • The Port of Tacoma has been scrambling to keep pace, as it has seen a substantial
      increase in container-shipping businesses during the summer of 2012.                            Cargo terminals:                                            6 | APM, Husky, Olympic Container, Pierce, TOTE, WA
   • Currently, Prologis has 240,000-square-foot distribution center under construction just a few    Post-Panamax ready:                                         Yes
      miles south of the port, set to deliver in 2013.                                                Class I Rail Operators:                                     BNSF, UPRR
           32 Seaport Outlook ● Fall 2012
37 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Tacoma
Port ofof Tacoma
               Commencement Bay

                                                                                                                                                         TOTE Terminal
               Olympic Container Terminal

                                                                                                                                                         Husky & Stevedoring Terminal
               APM Terminal

                                                                                                                                                         North Intermodal Rail Yard

               South Intermodal Yard
                                                                                                                                                         Huydai Intermodal Rail Yard

               Tacoma Rail Yard
                                                                                                                                                         Washington United Terminal


                                Downtown                                                                                                                 Evergreen Terminal
                                Tacoma
               BNSF Tacoma Rail Yard                                                                                                                     Evergreen Intermodal Rail Yard



                                                                                                                                                         UPRR Fife Rail Yard




                                                                      Interstate 5                                                                                                                 N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)             Immediate     Current   Total availability    2011 Net    YTD 2012 net       Absorption as %      Average asking   Port
     (TEU's)▼                 change                 As of June 2011            market size   vacancy                        absorption    absorption           of stock           rents (NNN)     rank
        1.5 m                    3.9%                        .9 m               23.6 m.s.f.    6.6%           9.3%           0.3 m.s.f.    0.1 m.s.f.              1.0%                 $5.10      8th
 32 Seaport Outlook ● Fall 2012

38 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Virginia
Port of Virginia                                                                                         Property clock
                                                           Port Area       Terminal
        66.0                                              Market Score   Operating Score                                               Port of Miami


                                                           34.3            80.0                                                      Port of Seattle,
                                                                                                                                                           Peaking        Falling




                                                                                                          Landlord leverage
                                                                                                                                     Port of Tacoma




                                                                                                                                                                                                                         Tenant leverage
                                                                                                                                                           market         market

                                                                                                                                                           Rising      Bottoming             Port of Baltimore
                                                                                                                                                           market       market
   Summary                                                                                                                           Port of Oakland                                         Port of Long Beach,
                                                                                                                                     Port of Virginia                                        Port of Houston,
                                                                                                                                                                                             Port of Los Angeles,
   Capital investments                                                                                                          Port of Jacksonville                                         Port of New York / New Jersey
   • The $1.3 billion Craney Island expansion will boost TEU capacity to 2.5 million.                                             Port of Charleston
                                                                                                                                                                                             Port of Savannah
   • Midtown Tunnel and MLK Freeway expansions, proposed I-460 expansion.
   • Both CSX’s National Gateway and Norfolk Southern's Heartland Corridor have completed over
      $1.0 billion in rail upgrades, which reduced bottlenecks and added double-stack capacities.
                                                                                                         TEUs versus port-market occupancy
                                                                                                                              TEUs                      TEUs                        Port-market occupancy
   • There is a shortage of truck drivers, skilled laborers and managerial candidates.                    2,500,000                                                                                                      100%
   • The in-land vehicular transit system is outdated and heavily congested at peak hours.
   • APM’s recent 40-year lease proposal could generate over $4 billion in state and local revenue.       2,000,000                                                                                                      95%
   Market conditions
   • A major distribution hub is developing in the South Suffolk submarket near the I-460 and Route
                                                                                                          1,500,000
                                                                                                                                                                                                                         90%
      58 interchange; both roadways offer direct access to I-95.                                          1,000,000
   • Occupancy levels have remained relatively stable, hovering between 91 and 92 percent over
                                                                                                                 500,000                                                                                                 85%
      the past three years.
   • Despite a lack of large blocks, rental rates have remained relatively flat due to a market fueled
      by renewals rather than true growth.
                                                                                                                                0                                                                                        80%
   • Recent capital investments have been made by the areas’ top manufacturers such as Stihl,                                               2008         2009          2010              2011          YTD 2012
      which purchased the largest block of distribution space in the immediate market, citing the
      need for future expansion.
   • Institutional divestment has been limited; most dispositions have been owner-occupied facilities.   Port vital facts
      However, Rubicon America Trust and W.P. Carey have liquidated assets ranging from fully            2012 YTD volume:                                        1,175,111 (July)
      leased to 100 percent vacant properties.                                                           2011 volume:                                            1,918,029
   • Northrup Grumman, Ace Hardware, Navy Exchange and Dana Limited have all recently signed
      large renewals or build-to-suits.                                                                  Main routes:                                            James River, Chesapeake Bay, Atlantic Ocean
   Development                                                                                           Trading partners:                                       North Europe, Northeast Asia, South America,
   • CenterPoint, Prologis and Liberty Property Trust are the market’s major landowners.                                                                         Mediterranean
   • CenterPoint’s Intermodal Park has generated the most interest with two, 300,000-square-foot         Cranes/post-Panamax Cranes:                             30| 27
      build-to-suits underway and an additional 120,000-square-foot deal in progress.
                                                                                                         Current channel depth:                                  50 feet at mean low water, authorized to 55
   • Construction has been concentrated 15 miles outside the ports in South Suffolk, due to its close
      proximity to I-460 and Route 58, both routes offer the quickest access to I-95                     Container terminals:                                    4| NNMT, NIT, APMT, PMT
   • Due to flat rental rates and lack of new demand, developers anticipate speculative development      Post-Panamax ready:                                     Yes
      in the next 14-18 months, as port activity increases and subsequent distribution volumes rise.
                                                                                                         Class I Rail Operators:                                 CSX, Norfolk Southern
           32 Seaport Outlook ● Fall 2012
39 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Virginia
Port ofof Virginia
                                                                                                                                                                    Newport News Marine Terminal
                                                                                                                                                                    (NNMT)
                                                                      James River
                                                                                                                                                                         CSX Downtown rail station




      APM Terminal (APMT)                                                                                                     Craney Island Expansion



     Portsmouth Marine Terminal
     (PMT)                                                                                                         Norfolk International Terminal
                                                                                                                   (NIT)
       Midtown Tunnel Expansion
                                                                                          Norfolk Southern Rail Depot




                                                                                                                                                                                                                 N
                                                                                                                                                Chesapeake Bay


   2011 Volumes             2011 Annual             2012 YTD (TEUs)         Immediate     Current        Total availability           2011 Net           YTD 2012 net          Absorption as %       Average asking   Port
     (TEU's)▼                 change                 As of July 2012        market size   vacancy                                    absorption           absorption              of stock            rents (NNN)     rank
        1.9 m                    1.2%                       1.2 m           50.8 m.s.f.    7.3%                5.7%                   -0.1 m.s.f.          -0.1 m.s.f.               0.2%                $4.56        9th
 32 Seaport Outlook ● Fall 2012

40 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Charleston
Port of Charleston                                                                                     Property clock
                                                           Port Area       Terminal
        65.1                                              Market Score   Operating Score                                             Port of Miami


                                                           35.0            76.5                                                    Port of Seattle,
                                                                                                                                                             Peaking         Falling




                                                                                                        Landlord leverage
                                                                                                                                   Port of Tacoma




                                                                                                                                                                                                                            Tenant leverage
                                                                                                                                                             market          market

                                                                                                                                                             Rising      Bottoming              Port of Baltimore
                                                                                                                                                             market       market
   Summary                                                                                                                         Port of Oakland                                              Port of Long Beach,
                                                                                                                                   Port of Virginia                                             Port of Houston,
                                                                                                                                                                                                Port of Los Angeles,
   Capital investments                                                                                                        Port of Jacksonville                                              Port of New York / New Jersey
   • Designed to deliver all-tide access for post-Panamax ships, deepening of the Charleston                                    Port of Charleston
                                                                                                                                                                                                Port of Savannah

      Harbor from 45 to 50 feet at mean low water has the potential to significantly increase
      container volume to port terminals.                                                              TEUs versus port-market occupancy
   • President Obama called for both funding and a fast track schedule to study the project’s
                                                                                                                            TEUs                       TEUs                            Port-market occupancy
      economic and environmental impact on the area. Although actual dredging is some time in           2,000,000                                                                                                           100%
      the future, the prospect of being called on by some of the world’s largest vessels has drawn
      increased attention to the area’s industrial real estate market.                                  1,500,000
   • The former Charleston Naval Complex is being redeveloped to handle increasing                                                                                                                                          95%
      containerized cargo demand. The 280-acre site near Downtown Charleston is the only new            1,000,000
      container terminal permitted on the East and Gulf Coasts. Demolition and preparation
      activities are well underway to prepare the site and critical path construction projects are                                                                                                                          90%
                                                                                                               500,000
      advancing. A dedicated port access road connects to I-26, and is within five miles of both
      Norfolk Southern and CSX’s intermodal yards. First phase delivery is expected in 2018.                                  0                                                                                             85%
                                                                                                                                        2007          2008        2009           2010          2011        2012 YTD
   Market conditions
   • Warehouse occupancy in the immediate vicinity of the port is greater than the broader
      Charleston market. Vacancies will remain limited due to the dense network of infrastructure      Port vital facts
      and relatively few sites for new development.                                                    2012 YTD volume:                                            743,384 (June)
   • Corresponding to demand, two year average asking rental rates within five miles of the port       2011 volume:                                                1,381,352
      have commanded a $0.15 per square foot premium to date.
                                                                                                       Main routes:                                                Cooper & Wando Rivers via Charleston Harbor
   • Capital markets activity in the second quarter was muted. Sales of investment grade
      properties totaled only $2.9 million, less than half that posted in the previous two quarters.   Trading partners:                                           Northern Europe, Northeast Asia and India
                                                                                                       Cranes/post-Panamax Cranes:                                 20 | 20
   Development                                                                                         Current channel depth:                                      45 feet at mean low water
   • Childress Klein Properties and Jamestown are jointly developing a 189,000-square-foot
      speculative distribution facility at Crosspoint, a 305-acre development within Palmetto          Container terminals:                                        4 | Wando Welch, N Charleston, Columbus St, Union Pier
      Commerce Park. JAS Forwarding has leased 80,000 square feet to date. Expected delivery           Post-Panamax ready:                                         Access limited to 2 hour high tide window
      is February 2013.                                                                                Class I Rail Operators:                                     CSX & Norfolk Southern
           32 Seaport Outlook ● Fall 2012
41 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Charleston
Port ofof Charleston

                                                                                                                                                     North Charleston Terminal

             Charleston Air Force Base
                                                                                                                                                     James B. Edwards Bridge,
                                                                                                                                                     air draft 155 feet


            CSX & Norfolk Southern
            intermodal rail yard


           Veterans Terminal

                                                                                                                                                     Future container terminal



                                                                                                                                                      Wando Welch Terminal




                                                                                                                                                      Arthur Ravenel Jr. Bridge,
                                                                                                                                                      air draft 186 feet
            Columbus Street Terminal


             Union Pier Terminal



                                                                                                                                                                                   N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)    Immediate     Current   Total availability    2011 Net    YTD 2012 net   Absorption as %     Average asking     Port
     (TEU's)▼                 change                 As of June 2011   market size   vacancy                        absorption    absorption       of stock          rents (NNN)       rank
        1.4 m                    1.3%                       0.7 m      26.9 m.s.f.   12.9%           5.5%           1.6 m.s.f.    -0.2 m.s.f.       -0.8%                $3.80         10th
 32 Seaport Outlook ● Fall 2012

42 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Oakland
Port of Oakland                                                                                         Property clock
                                                           Port Area       Terminal
        64.7                                              Market Score   Operating Score                                              Port of Miami


                                                           35.0            75.5                                                     Port of Seattle,
                                                                                                                                                              Peaking         Falling




                                                                                                         Landlord leverage
                                                                                                                                    Port of Tacoma




                                                                                                                                                                                                                         Tenant leverage
                                                                                                                                                              market          market

                                                                                                                                                              Rising      Bottoming          Port of Baltimore
                                                                                                                                                              market       market
   Summary                                                                                                                          Port of Oakland                                          Port of Long Beach,
                                                                                                                                    Port of Virginia                                         Port of Houston,
                                                                                                                                                                                             Port of Los Angeles,
   Capital investments                                                                                                         Port of Jacksonville                                          Port of New York / New Jersey
   • Since 1962, the port has spent more than $1.4 billion to construct 1,210 acres of marine                                    Port of Charleston
                                                                                                                                                                                             Port of Savannah

      terminals, intermodal rail facilities and maritime support areas.
   • In 2009, the port completed a dredging project that deepened its channel from 42 to 50 feet.       TEUs versus port-market occupancy
   • In May of 2011, the port secured $18 million in federal funding for operations and
                                                                                                                             TEUs                         TEUs                   Port-market occupancy
      maintenance from the Army Corps of Engineers.                                                      3,000,000                                                                                                       100%
   • The Oakland City Council approved development plans for the conversion of the 366-acre
      former Oakland Army Base. When completed, the redevelopment could bring up to two                  2,500,000                                                                                                       98%
      million square-feet of Class A logistics, distribution and manufacturing space to the port.        2,000,000
                                                                                                                                                                                                                         96%
                                                                                                         1,500,000
   Market conditions                                                                                                                                                                                                     94%
   • Distributors and third party logistics firms are at the forefront of rising demand. With large      1,000,000
      block availabilities in short supply, development activity is underway.                                   500,000                                                                                                  92%
   • Occupancy within the port’s immediate vicinity is tight. Occupiers in need of institutional-                              0                                                                                         90%
      grade, Class A product are forced to look south down the 880-Corridor.                                                             2007          2008        2009           2010      2011         2012 YTD
   • Rental rates have steadily risen in recent quarters as availability of Class A product
      dwindled. New speculative development by Prologis at the Oakland Army Base could
      generate lease rates well above current market levels.                                            Port vital facts
                                                                                                        2012 YTD volume:                                            1,350,846 (July)
   Development                                                                                          2011 volume:                                                2,342,504
   • There has been an influx of new capital to the Oakland / East Bay market in recent
                                                                                                        Main routes:                                                Asia / Pacific
      quarters, supporting a broader recognition that the region’s industrial sector is recovering.
   • Goodman-Birtcher is on track to break ground on a 375,000-square-foot, Class A                     Trading partners:                                           China, Japan, South Korea, Taiwan
      speculative warehouse / distribution facility in close proximity the Port of Oakland and          Cranes/post-Panamax Cranes:                                 36 | 30
      Oakland International Airport. This will be the first project of this size and quality to break   Current channel depth:                                      50 feet at mean low water
      ground in the market in at least a decade.
   • Additional development, in conjunction with the City’s efforts at the Oakland Army Base, will      Container terminals:                                        8 | STS/Evergreen, Hanjin, SSAT
      be necessary over the next 18-24 months to meet the growing need for Class A bulk                 Post-Panamax ready:                                         Yes
      distribution space.                                                                               Class I Rail Operators:                                     Burlington Northern Santa Fe (BNSF), Union Pacific
           32 Seaport Outlook ● Fall 2012
43 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Oakland
Port ofof Oakland
                                                                                                                                                                    Oakland Army Base
                                                                                                                                                                     Redevelopment

                                                                                                                                                                       Berths 33-34

                                                                                                                                                              Ports America Outer Harbor
                                                                                                                                                                      Terminal

                                                                                                                                                                     TraPac Terminal

                                                                                                                                                                 Ben E. Nutter Terminal
                                                                                                                                                                   (STS/Evergreen)

                                                                                                                                                              Union Pacific Intermodal Yard




                   BNSF Intermodal Yard


                Total Terminals International
                          (Hanjin)

              Oakland International Container
                    Terminal (SSAT)

             Global Gateway Central Terminal
                         (APL)

                Charles P. Howard Terminal
                         (Matson)


   2011 Volumes             2011 Annual             2012 YTD (TEUs)    Immediate      Current   Total availability    2011 Net     YTD 2012 net   Absorption as %     Average asking      Port
     (TEU's)▼                 change                 As of July 2012   market size    vacancy                        absorption     absorption       of stock          rents (NNN)        rank
        2.3 m                    0.5%                       1.4 m      104.1 m.s.f.    6.2%        7.2 m.s.f.        -0.6 m.s.f.    0.9 m.s.f.         0.9%                $6.96          11th
 32 Seaport Outlook ● Fall 2012

44 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port of Seattle
Port of Seattle                                                                                          Property clock
                                                           Port Area       Terminal
        64.6                                              Market Score   Operating Score                                               Port of Miami


                                                           36.3            73.0                                                      Port of Seattle,
                                                                                                                                                               Peaking         Falling




                                                                                                          Landlord leverage
                                                                                                                                     Port of Tacoma




                                                                                                                                                                                                                              Tenant leverage
                                                                                                                                                               market          market

                                                                                                                                                               Rising      Bottoming              Port of Baltimore
                                                                                                                                                               market       market
   Summary                                                                                                                           Port of Oakland                                              Port of Long Beach,
                                                                                                                                     Port of Virginia                                             Port of Houston,
                                                                                                                                                                                                  Port of Los Angeles,
   Capital investments                                                                                                          Port of Jacksonville                                              Port of New York / New Jersey
   • Recently, the port has purchased and begun the installation of additional super post-                                        Port of Charleston
                                                                                                                                                                                                  Port of Savannah

      Panamax cranes, adding to their already numerous post-Panamax crane inventory. The
      installation of the these cranes will allow the port to handle some of the largest ships in the    TEUs versus port-market occupancy
      world.
                                                                                                                              TEUs                       TEUs                            Port-market occupancy
                                                                                                          2,500,000                                                                                                           100%
   Market conditions
   • While the port does have industrial distribution centers in its immediate vicinity, a majority of    2,000,000                                                                                                           98%
      the commodities are delivered further south into the Kent Valley’s distribution network.
                                                                                                          1,500,000                                                                                                           96%
   • The warehouse vacancy in the immediate vicinity of the port is less than 2.0 percent and
      land constraints are halting any new industrial construction. Regionally, port-driven areas         1,000,000                                                                                                           94%
      such as the Kent Valley are benefiting, with declining vacancy and increasing demand.
   • Rental rates have been on a continual incline over the last six quarters across the market                  500,000                                                                                                      92%
   • Leasing volumes have remained steady; however, as limited supply hinders demand in the                                     0                                                                                             90%
      market, new developers are beginning speculative projects throughout the region.                                                    2007          2008        2009           2010          2011        2012 YTD
   • Investment capital has been primarily coming from the port and the city of Seattle.
   • The most active industries leasing space have been distribution, logistics and transit-
      oriented business lines.                                                                           Port vital facts
                                                                                                         2012 YTD volume:                                            1,167,093 (July)
   Development                                                                                           2011 volume:                                                2,033,535
   • Port of Seattle / City of Seattle is the primary land owner in the port.
                                                                                                         Main routes:                                                Puget Sound
   • Port jobs have been pressured by the talks of a new arena in the port area. A recent new
      article titled, “Jobs in the Balance: SoDo Jobs, Small Businesses, Industry squeezed by            Trading partners:                                           Asia, South America, North America, Europe
      proposed arena location,” shed light on the controversy.                                           Cranes/post-Panamax Cranes:                                 27 | 27
   • There is currently office, multifamily and potentially a basketball arena under development.        Current channel depth:                                      50 feet at mean low water
   • There is no forecast speculative industrial construction near the port, as land is scarce and
      development is focused further south.                                                              Container terminals:                                        4 | 5,18,30,46
                                                                                                         Post-Panamax ready:                                         Yes
                                                                                                         Class I Rail Operators:                                     BNSF, UPRR
           32 Seaport Outlook ● Fall 2012
45 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Seattle
Port ofof Seattle
      Puget Sound
                                                                                                                  Downtown Seattle
                                                                 Elliott Bay
                                                                                                                                                          Interstate 5



                                                                             Terminal 46

                                                                                                                                                          Terminal 30


                         Terminal 18
                                                                                                                                                           BNSF Intermodal Yard




                                       Terminal 5                                                                                                           Terminal 30




                                                                                                                                                                                           N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)     Immediate          Current   Total availability    2011 Net    YTD 2012 net   Absorption as %     Average asking   Port
     (TEU's)▼                 change                 As of June 2011    market size        vacancy                        absorption    absorption       of stock          rents (NNN)     rank
        2.0 m                    4.9%                       1.2 m       35.7 m.s.f.         3.0%           4.7%           0.8 m.s.f.    0.0 m.s.f.         0.0%               $7.05        12th
 32 Seaport Outlook ● Fall 2012

46 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012



 Port of Miami
Port of Miami                                                                                         Property clock
                                                           Port Area       Terminal
        63.4                                              Market Score   Operating Score                                          Port of Miami


                                                           38.0            67.5                                                 Port of Seattle,
                                                                                                                                                           Peaking          Falling




                                                                                                       Landlord leverage
                                                                                                                                Port of Tacoma




                                                                                                                                                                                                                          Tenant leverage
                                                                                                                                                           market           market

                                                                                                                                                           Rising         Bottoming           Port of Baltimore
                                                                                                                                                           market          market
   Summary                                                                                                                     Port of Oakland                                                Port of Long Beach,
                                                                                                                               Port of Virginia                                               Port of Houston,
                                                                                                                                                                                              Port of Los Angeles,
   Capital investments                                                                                                     Port of Jacksonville                                               Port of New York / New Jersey
   • Currently under construction with completion set for 2014, a new 3,900-foot tunnel would                                Port of Charleston
                                                                                                                                                                                              Port of Savannah

      link the U.S. Interstate Highway System directly with port facilities. This will remove cargo
      traffic from Downtown Miami and improve transit times.                                          TEUs versus port-market occupancy
   • The channel, which is currently 42 feet deep, now has received approvals to dredge to a                        TEUs
                                                                                                                                                               TEU Volume         Occupancy
      depth of around 50 feet. This will allow fully-laden post-Panamax vessels to call at the port    1,000,000                                                                                                              94%
                                                                                                         900,000
      following the widening of the Panama Canal. Estimated completion is in 2014.                                                                                                                                            93%
                                                                                                         800,000
   • The port is also restoring its freight rail service between the Hialeah rail yard and the           700,000
                                                                                                                                                                                                                              92%
      seaport network. Under a TIGER II grant, the U.S. Department of Transportation has                 600,000                                                                                                              91%
      awarded $23 million for this project.                                                              500,000                                                                                                              90%
                                                                                                         400,000                                                                                                              89%
                                                                                                         300,000
   Market conditions                                                                                                                                                                                                          88%
                                                                                                         200,000
   • In anticipation of growth in international trade after the Panama Canal expands its locks in        100,000                                                                                                              87%
      2014, thus far three ‘inland port’ projects have been proposed in southern Florida.                      0                                                                                                              86%
   • Occupancy rates have hovered over 90 percent for more than three years. As market                                           2007              2008            2009         2010           2011           2012 YTD
      fundamentals continue to stabilize, we expect this rate to escalate toward 95 percent.
   • Rental rates in the industrial market of Miami-Dade County (the Port of Miami’s primary          Port vital facts
      market) have consistently been rising over the past two years. Rents for Class A space has      2012 YTD volume:                                    455001 TEUs (June)
      increased by approximately 4.5 percent since last year.
                                                                                                      2011 volume:                                        906,000 TEUs
   • Miami is considered by institutional investors as one of the top ten investment markets in
      the country. This increased buyer demand will drive average sales price per square foot to      Main routes:                                        Main Ship Channel, Fisherman’s Channel, Government Cut
      trend higher than the current, prevailing price of $85 per square foot.                         Trading partners:                                   China, Honduras, Hong Kong, Guatemala, Dominican Republic
                                                                                                      Cranes/post-Panamax Cranes:                         12 | 2
   Development
   • Prologis, AEW Capital Management, TA Associates Realty, Seagis Property Group and                Current channel depth:                              At MLW 28 - 42 feet
      IndCor Properties are some of the major asset owners in the region.                             Cargo terminals:                                    3 | Seaboard Marine, South Florida Container Terminal, Port of
   • Six speculative projects are under construction in industrial markets of Miami-Dade and                                                              Miami Terminal Operating Company
      Broward County, and additional speculative and build-to-suit projects are expected to break     Post-Panamax ready:                                 No
      ground in the next 12 months.                                                                   Class I Rail Operators:                             Florida East Coast Railways
           32 Seaport Outlook ● Fall 2012
47 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




  Port Miami
Port ofof Miami



                                                                       395




                                                                                                                                                 Underground Tunnel
     Rail Restoration Project
                                                                                                                                                 Construction



                                                                                                                                                 Cruise Terminals
    Seaboard Marine Terminal


                                                                                                                                                 SFTC Terminal
    Downtown Miami




                                                                                                                                                 Deep Dredge




                                                                                                                                                  POMTOC Terminal
                                                                                                                                                                                        N
   2011 Volumes             2011 Annual             2012 YTD (TEUs)     Immediate     Current   Total availability    2011 Net    YTD 2012 net       Absorption as %   Average asking   Port
     (TEU's)▼                 change                 As of June 2012    market size   vacancy                        absorption    absorption           of stock        rents (NNN)     rank
        0.9 m                    6.8%                       0.5 m         97.6 m       8.2%        11.5 m.s.f        0.9 m.s.f      0.6 m.s.f              0.8%            $4.60        13th
48 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012
49 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Port, Airport & Global Infrastructure report authors


                         John R. Carver                                                  Craig S. Meyer, SIOR                          Aaron L. Ahlburn                     Daniel Fenton
                         Director - Port, Airport &                                      President                                     Vice President                       Research Manager
                         Global Infrastructure                                           Americas Brokerage Leader                     Director of Research,                Americas Industrial
                         +1 305 423 4713                                                 Logistics and Industrial Services             Industrial                           +1 404 995 2353
                         john.carver@am.jll.com                                          +1 424 294 3460                               +1 424 294 3437                      daniel.fenton@am.jll.com
                         License #: 00780358                                             craig.meyer@am.jll.com                        aaron.ahlburn@am.jll.com
                                                                                         License #: 00586344




  Dain Fedora                                               Ryan Harchar                                   Taylor Odegard                      Mehtab Randhawa              Elliot Williams
  Research Analyst                                          Research Analyst                               Research Analyst                    Research Analyst             Research Analyst
  +1 213 239 6262                                           +1 404 995 6509                                +1 425 974 4013                     +1 305 728 7397              +1 916 491 4322
  dain.fedora@am.jll.com                                    ryan.harchar@am.jll.com                        taylor.odegard@am.jll.com           mehtab.randhawa@am.jll.com   elliot.williams@am.jll.com




Contributors
  Patrick Latimer                                           Craig Leibowitz                                Amber Schiada                       Geoff Thomas                 Jennifer Young
  Research Analyst                                          Research Analyst                               Research Manager                    Research Analyst             Research Analyst
  +1 410 878 4888                                           +1 201 393 6844                                +1 415 395 4924                     +1 804 200 6527              +1 713 888 4061
  patrick.latimer@am.jll.com                                craig.leibowitz@am.jll.com                     amber.schiada@am.jll.com            geoff.thomas@am.jll.com      jennifer.young@am.jll.com


  Lee Fittipaldi
  Research Analyst
  +1 610 263 5823
  lee.fittpaldi@am.jll.com
50 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012
51 Jones Lang LaSalle • United States • Seaport Outlook • Fall 2012




Despite differing layers of connections between port throughput
performance and leasing or development fundamentals, most
of the prime U.S. industrial real estate in the trade areas around
major seaports continues to outperform the market in general.
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