Port volumes continue to soften in Los Angeles and the Inland Empire

Port volumes have decreased from their peak levels observed during the Covid-19 pandemic. During that time, consumer spending reached unprecedented heights, and businesses adopted a cautious approach by stockpiling inventories in anticipation of potential future disruptions. However, as of 2023, consumer spending has declined, leading to a shift away from the cautious approach, and consequently reducing the demand for additional storage space for inventories. In the second quarter of 2023, the leasing of distribution centers sized at 50K square feet and above within the Los Angeles and Inland Empire regions has experienced a decline of 21.4% compared to the previous quarter. Notably, occupiers are actively seeking to shed any excess space that was acquired during the pandemic period. This trend is evident as the net absorption rate reported a negative value of 3.4 million square feet in the second quarter. Projections indicate that the Port of Los Angeles is expected to handle a total of 8.5 million TEUs (twenty-foot equivalent units) by the end of the year. This figure marks a decrease from the record-setting volumes seen in 2021 and 2022.