According to Jones Lang LaSalle's third annual Port, Airport and Global Infrastructure (PAGI) report, the air freight industry is having a bumper year from a surge in global trade and higher cargo volumes. This surged has spurred additional demand for warehousing space around many U.S airports.
This year the Jones Lang LaSalle PAGI report features the first Airport Real Estate Index which measures the nation's top 12 airports against criteria including cargo volumes, infrastructure plans and real estate conditions.
Positive economic conditions coupled with infrastructure improvements made for a major pickup in airport real estate
Outlook positive for airport real estate in 2012
New Airport Index reveals LAX is top airport for real estate conditions
"The Index is an indicator of how well the real estate markets around top U.S. airports are performing," said John Carver, head of the PAGI group at Jones Lang LaSalle. "Markets such as LAX and New York JFK have held strong with low vacancy rates owing to high demand and a lack of new construction. Whereas airport submarkets that saw a rise in new development before the recession, such as Dallas-Fort Worth and Miami, suffered higher vacancy rates during the recession and are taking longer to recover."
The report finds that cargo volumes through the nation's airports increased by 11 percent in 2010 to 28.2 million metric tons, just short of the 2007 peak of 30.4 million tons. While Memphis airport is listed as the world's second largest airport for cargo volumes in 2010, behind Hong Kong, it is ranked sixth on the Jones Lang LaSalle's Airport Index. Topping the Index is Los Angeles' LAX, which has strong cargo volumes, a low 3.8 percent industrial real estate vacancy rate, and several multi-million-dollar investment plans in the works.
New York JFK airport falls in second place. With high demand for warehouse space in the metropolitan area driving vacancy rates to a low 3.4 percent; JFK is also one of the most space-constrained airports with the highest rents at $12.31 per square foot in its delineated trade area.
While Chicago O'Hare Airport has a relatively high vacancy rate of 14.2 percent, it ranks third on the Index because it serves as a hub for major airlines such as United Airlines and American Airlines, and has a vigorous modernization program in place. It also has one of the largest annual cargo volumes of 1.376 million tons, third behind Memphis, which has the most at 3.916 million tons and Miami at 1.835 million tons.
Miami also ranks high on the Index with an average vacancy rate of 9.9 percent, reasonable rents at $5.83 per square foot and high cargo volumes. In fact, Miami International Airport handles 83 percent of all imports and exports to and from Latin America and the Caribbean.
Following Los Angeles (LAX), New York JFK (JFK), Chicago O'Hare (ORD) and Miami International (MIA) is Anchorage (ANC), Memphis (MEM), Newark-Liberty (EWR), Atlanta (ATL), Dallas Forth-Worth (DFW), Louisville (SDF), Indianapolis (IND) and Oakland (OAK).
"For airports to rank higher on our Index they must seek to raise their cargo levels and through traffic as well improve infrastructure to improve the vitality of their real estate markets," concluded Carver.