Guide to Warehousing and Industrial Real Estate
Special Report
LTL carriers are preparing for the next cycle of demand growth now by buying or building terminals . Shutterstock . com
“ I ’ ve been in trucking for 38 years and I ’ ve never had so many conversations centered around real estate ,” Barry Blakely , president and COO of Tennessee-based Averitt , a regional LTL carrier , said in an interview . “ We have a lengthy list of properties we ’ re searching for today .”
Shippers are the ultimate beneficiaries of this LTL expansion , which will create capacity in a sector where capacity has long been limited compared with its truckload competition . LTL capacity is based on land and dock doors , rather than numbers of trucks .
How shippers move freight within North America is changing , and LTL carriers that worked the same lanes for decades for industrial customers are branching out . They ’ re hauling more middle-mile e-commerce goods and building terminals near seaports .
‘ Significant ’ rise in costs
But the cost of LTL terminals and land is rising rapidly . “ We ’ ve seen significant increases in property valuations , with prices for terminals in some markets rising 30 % to 40 %, and even higher ,” Satish Jindel , president of SJ Consulting Group , said in an interview .
SJ Consulting Group research shows a marked increase in the cost per LTL dock door . In 2015 , for example , a Phoenix terminal was sold for a price equivalent of $ 66,000 per dock door , Jindel said . In early 2024 , a terminal in the same zip code sold for $ 156,000 per door .
An Evansville , Ind ., terminal that sold for $ 64,000 per door in 2022 commanded $ 148,000 per door this January , he said , citing similar price increases elsewhere .
“ You can ’ t grow if you don ’ t increase capacity .”
“ If you ’ re looking at property in hot markets , the increase in valuation has been significant ,” Jindel said . And that ’ s in a market where freight volumes have been depressed by declining industrial output and pricing is rising by low single-digit percentages .
Properties suitable for modern LTL facilities are also hard to find , especially in “ hot ” markets . “ When you look at
12 Journal of Commerce | March 25 , 2024 www . joc . com