From Port to Property

Cargo Volumes Hold Steady. Why Haven’t Port Vacancies?

Trade headlines this year have focused on tariffs, sourcing shifts and a pullback from China. At the ports, however, the story has been more stable: Cargo continues to arrive. The 10 largest U.S. ports handled more than 14.5 million imported twenty-foot equivalent units (TEUs) through July, and monthly volumes have exceeded 2 million TEUs every month since May, well into peak shipping season. The National Retail Federation expects import volumes to finish the year approximately 1% above 2025 levels. 

Canadian ports have performed slightly better, handling 1.5% more laden TEUs YOY through July, led by Vancouver and Prince Rupert. Halifax is the exception; volumes are down nearly 13% as geopolitical pressures, changes in shipping alliances and economic uncertainty weigh on activity at the port. Halifax’s deep water harbor and ability to accommodate large vessels should make the decline short-lived. 

Cargo throughput has been a key driver of demand, but strong import volumes have not translated into higher occupancy in port markets. More goods now move by truck or rail to inland distribution hubs, where labor, rents and energy costs are often lower. That shift, combined with rising import volumes from Mexico, pushed the inland share of industrial absorption to 83%, the highest level since 2010. There are bright spots, however, with some port markets stabilizing after occupancy losses. Net demand was particularly strong in New Jersey (6.3 msf) and Los Angeles (5.9 msf) over the past 12 months. 

Port markets also continue to work through the effects of an exceptional period of rent growth, which led to a surge in construction. Over the past year, new supply outpaced demand in nine of the 14 largest North American port markets, preventing vacancy from tightening in those locations. U.S. port industrial vacancy rose 20 bps from year-end 2025 to a record 7.7%, while the rate across the rest of the U.S. fell 20 bps due to stronger demand and disciplined new supply.  

Where Did Demand Go? 

Inland U.S. markets captured 83% of industrial demand in the first half of 2026, their highest share since 2010. These markets often offer occupiers lower labor, rent and energy costs. Additionally, a growing share of goods has arrived via Mexico, moving directly into inland distribution networks by rail or truck without stopping at a coastal facility. 

Looking Ahead 

A 70% YOY increase in new leasing activity among big-box users (300,000 sf or more), led by 3PL and manufacturing companies in the first half of 2026, points to healthy absorption across port markets in the years ahead. Seven of the 13 key select North American port industrial markets are forecast to record rent growth above 5% through 2028, led by Hampton Roads, Los Angeles, Savannah and Charleston, as demand strengthens and vacancy begins to tighten. As net absorption is expected to remain modest in Miami, Montreal and Oakland-East Bay, rents are expected to either decline further or remain largely flat through 2028. 

Key Changes in Trade to Watch 

• U.S. trade partners are shifting. Every major U.S. port saw its share of Chinese imports decline in 2025, with the steepest drop on the West Coast. This trend has continued into 2026 as companies diversify suppliers to control costs and reduce supply chain risk. The pullback has been uneven, with high-tech products, computers and electronics posting the sharpest decline at 31%. Overall, imports from China are down more than 23%, while volumes from Mexico, Taiwan, Vietnam and Thailand have risen notably. 
  
  
• Canada is also diversifying supply chains. Through July 2026, Canadian merchandise exports to the UK increased 85% YOY, while exports to China rose by approximately 35%. Imports from the EU, Mexico and Japan all increased by over 15% YOY. Together, these trends suggest efforts to expand export markets and diversify import sources amid ongoing trade tensions with the U.S. Nevertheless, Canadian imports from and exports to the U.S. both increased by approximately 5% YOY, underscoring the scale and resilience of the deeply integrated supply chains between the two countries. 
  
  

• AI appetite is reshaping imports. The surge in AI investments, particularly in data centers, has driven strong growth in U.S. imports of computers, electronics, accessories and components, while other imports of most other products have declined modestly this year. Through July, these imports totaled $355 billion, a record high and an 85% YOY increase. Semiconductor imports rose 71% over the same period. Some of this growth reflects companies securing key components before supplies tighten and prices climb further. 
  
  

Impact on Occupiers and Investors 

• Availability of new logistics product is tightening. With most port markets past or near peak vacancy and leasing activity accelerating, prime Class A options are becoming more limited.  
  
  
• AI is influencing leasing decisions. Occupiers continue to consolidate into facilities that support automation and AI. Inland markets still capture most large-format leasing activity, but some port markets are seeing demand accelerate for new, automation-ready big-box space. 
  
  
• Downside risks remain. Higher inflation, elevated interest rates and rising energy prices could weigh on consumer spending and occupier demand. 
  
  
• Development activity is increasing. Construction volume has climbed in recent quarters but remains disciplined, particularly for speculative projects. New supply in many port markets is well below 2023-2024 peaks, allowing space to be absorbed and market fundamentals to strengthen.