The mess of the supply chain crisis and the pandemic-induced surge in e-commerce activity has led to ports running out of space to store shipping containers, drastically altering a once-niche real estate sector into one of the most sought-after property types. The demand for idle land suitable for shipping container storage has risen to the point where it now costs the same as renting a building, according to The Wall Street Journal.
As logistics companies are trying to get containers out of ports as fast as possible, logistics firms and port operators are vying for spare land near container terminals, driving up rents and property values and encouraging additional investment in coastal outdoor storage. Before the onset of the pandemic, loaded shipping containers would sit at the port for only a few days. However, things like rising demand and personnel shortages are causing loaded containers to sit for nearly twice as long.
The availability of appropriate land is a tricky situation. Local zoning regulations sometimes restrict heavy industrial usage and make it illegal to stack containers on top of one another, so rents for those few sites that meet all of the criteria are rising as a result. Since demand for space has exploded and there are so few options to acquire it, companies who need space are finding alternative ways to get it such as snatching up vacant parking lots nearby or tearing down buildings in the vicinity to make room. Since the problems which resulted in the land rush, like the supply chain backlog and shortage of usable land, aren’t going away any time soon, it’s likely that sky-high rents are going to persist too.