August 30, 2016
By: Jason Ovadia, Managing Director, Industrial and Logistics
Logistics and the supply chain are critical to the success of companies that produce or distribute goods. In Northern California, technology and the growth of advanced manufacturing have boosted the region’s position as a top distribution market and greater scrutiny is being focused on the region’s port, rail and road infrastructure as well as the availability of modern warehouse distribution and industrial facilities.
JLL recently ranked Northern California fifteenth among the top 18 distribution markets in the country. Despite the region’s population and employment growth and a strong score for overall transportation infrastructure, a higher-than-average cost of living and high labor costs in the logistics sector makes the region less dynamic as a distribution market than the “usual suspects” such as New York-New Jersey, Central Pennsylvania or Los Angeles.
Nevertheless, Northern California has core supply chain strengths that will continue to make it an attractive option from a logistics and operating cost perspective.
Some of the region’s sub-markets in the North Bay, the Central Valley, Sacramento, (emerging markets due to a lower barrier to entry) have lower land values than other major markets and warehouse-distribution facilities in those markets can compete price-wise against other U.S. markets. Another positive factor is the Port of Oakland, which is one of the busiest ports on the West Coast. Almost 100 percent of the container traffic moving through Northern California passes through the port and Oakland witnessed its busiest month in more than a decade this past June/July.
The Port and City of Oakland are making great strides to increase container flow by investing in infrastructure like rail, via intermodal, and road improvements. Prologis recently broke ground on a state of the art logistics development at the army base that should provide additional capacity for large container distributors. The Port is also finalizing plans for a development of their own that will allow an additional +/- one million square feet of large logistics development.
You can read more about the top distribution markets here.