Maybe it comes from watching my son’s football team, but I’ve been spending a lot of time lately talking to people about yards.
The fact is, a week rarely goes by without a client – sometimes desperately – inquiring about available yard space in the greater Puget Sound. They are asking because, like the last few yards before the goal line, yards have become tougher and tougher to get.
So what happened to all the yard space that was so readily available just a few years ago? And why has the price per foot essentially doubled? The answer goes beyond the basics of supply and demand. The underlying reason is a sea change in the very ships that now serve our ports.
Not long ago, the largest container ships mooring at the Ports of Seattle and Tacoma typically carried 8,000 full-size containers. Drive down to the ports today and you’ll see mammoth vessels that make their predecessors look like Chris Crafts on Lake Union. Today, massive ships carrying upwards of 18,000 containers dock at the ports. And all that cargo has got to go somewhere and fast … like yards.
In fact, speed of transfer is another X factor in the battle for yards.
Amidst the fanfare that greets the arrival of these colossal ships is the additional burden of cost. Users must utilize all available resources to receive and transport their wares on schedule or pay dearly for the delay. This means more manpower. More vehicles. More space. In short, more dollars.
Today, the Ports of Seattle and Tacoma are charging upwards of $250 per day per container for stowage at the ports. Needless to say, at that rate, securing reasonably-priced yard space can spell the difference between profit and peril.
So, what does this mean for 2018 and beyond?
One thing is clear: Today’s gigantic ships are here and they’re not going back into some super-sized bottle. As a result, the need for yard space will continue to grow and, without additional storage options, so will rental rates.
For this reason, port users and industrial developers should deeply consider this new normal in the Puget Sound region and put investment strategies into place to develop, expand, exercise lease options and otherwise secure yard and reasonably-priced mass storage space in the region.
Those who do will find themselves in a winning position. Those who don’t will be the ones stuck on the five yard line with time running out on the clock.
Matt McGregor is Executive Vice President at Colliers International in Seattle, handling leasing and transactional management for logistic and manufacturing companies.