By Todd Karpovich
The record amount of cargo that has passed through the Port of Baltimore is having a positive effect on industrial markets throughout the metropolitan area.
Further expansion plans by the Maryland Department of Transportation Maryland Port Administration (MDOT MPA) will help meet the demand for additional space.
Baltimore is an attractive location because one-third of the U.S. population can be reached by an overnight drive from the Port.
In addition, the Port offers easier access to the Midwest than any of its East Coast competitors. As a result, the areas around the Port have a growing network of warehouses, distribution facilities and fulfillment centers ready to help companies also grow their businesses.
The Baltimore industrial market shattered the previous yearly net absorption record by 44 percent, reaching 9.5 million square feet for 2019, following 3.4 million square feet of occupancy gains during the fourth quarter, according to research by CBRE.
Industrial sales volume increased to $524.8 million, closing out 2019 with $1.06 billion in total sales and exceeding the billion-dollar mark for the second consecutive year.
The Baltimore City warehouse submarket excelled during 2019, with the vacancy rate falling 60 basis points during the fourth quarter and 270 basis points year-over-year to 3.2 percent, CBRE analysts reported.
Construction activity continues to reflect immense confidence in the local market, with six warehouses totaling 2.8 million square feet, delivering at 81 percent preleased, according to CBRE. There are 4.2 million square feet remaining under construction, with groundbreaking for 1 million square feet of space in 2019’s fourth quarter.
Brooks Royster, Vice President for International Supply Chain Solutions, MTC Logistics, credited both the public and private sectors for the industrial growth around the Port. “Specifically, for MTC Logistics, it has been the professionalism of and the willingness to invest in Baltimore by Ports America Chesapeake,” Royster said. “The MDOT MPA staff has been very helpful as well.”
MTC Logistics has expanded its temperature-controlled distribution facilities adjacent to the Port due to growth at its container terminal. The firm is always looking at additional opportunities.
“The majority of MTC Logistics’ business is international and the fact that we are located in close proximity to the Port of Baltimore is a very important component in our sales and marketing efforts,” Royster said.
The growth has continued at a remarkable pace.
The Port’s state-owned public marine terminals had another record year in 2019, exceeding 11 million tons of autos and light trucks, containers, roll on/roll off (farm, mining and construction equipment), forest products and breakbulk cargo for the second consecutive year.
Containers once again had a record year as well, as the Port welcomed its largest container ship and saw the results of key investments designed to improve efficiencies. Autos and light trucks excelled as well, once again propelling the Port into the top spot among all U.S. ports for that commodity. Roll-on/roll-off equipment had another year of double-digit growth, continuing a positive trend. The Port remains one of Maryland’s leading economic engines.
The Port went over the 1 million Twenty-foot Equivalent Unit (TEU) container threshold for the second consecutive year. Previously made strategic investments allowed for easy vessel access and cargo fluidity through the Seagirt container terminal as the Port had six 14,000-TEU vessels call in just the last seven months of the year.
Ace Logistics uses six strategic locations near the Port to develop key partnerships within a variety of product lines. The proximity to the Port has made Ace one of Baltimore’s premier metal warehouses.
In addition to the company’s recent expansion (over 1 million square feet), Ace has focused on developing several value-added services: drayage, rail service, cross dock, transportation and kitting/packaging, among others. In addition to food imports, Ace is now one of the Mid-Atlantic’s premier distribution hubs for metals, minerals and lumber.
“Our objective is to provide a superior level of services to our clientele and to grow with the Port for years to come,” said Alec Hajimihalis, who owns and operates Ace Logistics with his brother, Gus Hajimihalis. “The key is proximity to the Port and access to I-95. It’s a huge selling point since many of our clients are importers/exporters who need to be close to the Port.”
Further expansion to help logistics firms and other companies is on the way.
Ports America Chesapeake (PAC), which operates Seagirt Marine Terminal for MDOT MPA, is developing a second 50-foot-deep berth. That work is being done through a $6.6 million grant from the U.S. Department of Transportation’s Better Utilizing Investment to Leverage Development (BUILD) program. Maryland contributed $7.8 million and PAC will add $18.4 million for a project cost of $32.7 million.
Four additional Neo-Panamax cranes and pieces of yard-handling equipment will complement this effort. The Port also received a huge boost in its overall container-handling capabilities when final funding was secured recently for the Howard Street Tunnel railroad project. This will enable double-stacked containers to move by rail from the Port to key Midwestern markets and allow the Port to leap over a long-standing hurdle.
Baltimore is also the number-one auto port in the nation, which adds volume to the Port. The geographic location allows cars to be shipped to and from the middle of the country in a more cost-effective and efficient manner.
Furthermore, the Port offers auto manufacturers choices, with four on-dock auto processors, many haul-away trucking companies and all major ocean carriers. With a unique quality-control program, Baltimore guarantees each vehicle leaving or arriving is handled with top-notch care. Considering these benefits in its back pocket, it’s easy to see why Baltimore continues to have great success in autos.
While the state-owned public marine terminals last year nearly surpassed their 2018 record for autos and light trucks, the entire Port of Baltimore, including the private terminals, did set a new record and handle more of this commodity than any other U.S. port for the ninth consecutive year. In total, the Port of Baltimore handled 857,890 cars and light trucks, surpassing its previous record of 850,147 set in 2018.
Honda, Mazda, Mitsubishi, Nissan, Subaru and Volvo all had volume increases through the Port in 2019. GM had a strong import year from Mexico, as did Ford from India. Luxury vehicle customers, such as Lamborghini, McLaren and Aston Martin, had increased volumes as well. The Port’s used-vehicle market to Africa once again proved successful in 2019.
The total U.S. auto sales in 2019 were 17.1 million units, with light trucks and SUVs accounting for a rising 70 percent of the market.
In addition, construction is scheduled to begin in 2021 to renovate the Howard Street Tunnel in Baltimore to accommodate double-stack container rail cars, with completion targeted for 2024. The project will create thousands of construction jobs, plus jobs to handle the anticipated 100,000 additional containers that could come through the Port.
To further accommodate the growth, MDOT MPA purchased 70 acres at the Point Breeze Business Center, located directly behind the Seagirt Marine Terminal on Broening Highway. The new space will be used for additional cargo opportunities and other enhancements.
“This land expansion will give Seagirt Marine Terminal the necessary capacity to maintain its operational productivity to accommodate the ultra-large container vessels and related increases in cargo volumes, which is an economic win for the region,” PAC General Manager Bayard Hogans said after the acquisition.
Tradepoint Atlantic is a prime destination for some of the region’s biggest distribution centers because of its state-of-the-art facilities, easy access to U.S. markets and proximity to the Port. The sprawling site has 337 acres under construction, representing 3.4 million square feet. Tradepoint, built at the former home of Bethlehem Steel, which once employed tens of thousands of steel workers, is carrying on that tradition of providing jobs for the local economy.
Tradepoint has met environmental commitments, prepared the site for additional development and modernized Port facilities. Tradepoint has also been working to expand infrastructure for water, sewer and electrical capacity.
Some of Tradepoint’s tenants include an 855,000-square-foot fulfillment center for Amazon; 1.2 million square feet of space in two new distribution warehouses for Home Depot; a 1.5-million-square-foot distribution center for Floor & Décor that will create 150 full-time jobs by the end of 2023; and a 166,000-square-foot import-processing facility for Volkswagen Group of America on 115 acres. It will provide 100 full-time jobs.
The expansion is also spreading to other parts of Maryland.
In Hagerstown, Dallas-based Trammell Crow Company opened a $75-milllion, 1.2-million-square-foot distribution center. The firm plans to attract a wide array of tenants because of its access to the Eastern U.S., favorable labor force dynamics and 15-year property tax abatement and other incentives, courtesy of its location in a Maryland Enterprise Zone.
Trammell Crow is also developing North East Gateway, which is a 716,490-square-foot, speculative
distribution facility north of Baltimore in the town of North East. Scheduled to open in May 2020, the project is also within an enterprise zone and sits only a miIe from I-95, easily serving the large population centers of the Eastern seaboard.
In Elkton, Trammell Crow is also planning a 2.8-million-square-foot, $200 million distribution and logistics park with three buildings. The company will break ground on the first building, totaling 765,000 square feet, in fall 2020, with plans to open it in fall 2021. The project will benefit from many of the same characteristics as the company’s other Maryland projects — excellent access to major thoroughfares, favorable labor dynamics, local and state economic incentives and state-of-the-art design and project amenities.
Merritt Properties is developing Tower Logistics Center, an 860,000-square-foot distribution center in Perryman, about 30 miles north of the Port. It features 40-foot clear ceiling height, 60-foot speed bays,130-foot-deep truck courts,190 dock positions and approximately 300 trailer drops. The building will also include four drive-in doors.
The Perryman area is popular among other Port clients, such as Rite Aid, Electrolux, Bob’s Discount Furniture and Disney.
Chesapeake Real Estate Group (CREG) is also helping clients find needed space that is easily accessible to the Port. James P. Lighthizer, who co-founded CREG with his partner Matthew Laraway, noted that the new cranes, deeper berths and road improvements along Holabird Avenue and Broening Highway have helped the flow of goods through the Port.
“We have recently completed 750,000 square feet [of distribution space] in White Marsh, which could serve Port users well,” Lighthizer added.