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This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International | Savannah, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 404 offices throughout more than 68 countries worldwide.
SOUTHEAST REAL ESTATE BUSINESS - OCTOBER 2018 Though Savannah by all standards is a small industrial market, you would never know it from the activity in the area. At 58 million square feet, the Port City is poised to add an astounding 9.75 million square feet by mid-2019. The force behind all of this growth is attributed to one key factor: The Georgia Ports Authority.
The Georgia Ports Authority (GPA) is an economic giant in Georgia supporting 1 of every 11 jobs in the state and accounting for 8% of its GDP. Home to the largest single container terminal in North America, GPA moved ±4.2 million TEUs in fiscal year 2018, an 8% increase over 2017 and an all-time record for the Port. With both CSX and Norfolk Southern on terminal, GPA also handled a record ±435,000 rail lifts in FY 2018 which was a 16.1% increase over 2017. As the fastest growing port in the country, one might be concerned about congestion becoming an issue for the Port, but reinvestment remains a top priority for the Port, and it recently opened its second inland port to move more containers towards population centers via CSX rail. It doesn’t hurt either that Savannah, geographically speaking, is at a logistical advantage to many of its east coast competitors. As one of the most western points on the eastern seaboard, containers are able to stay on ships longer before coming to Port. Once off the ship, trucks have a mere ±6 mile drive to I-95 (north/south) and ±9 miles to I-16 (east/west) with access to Atlanta, Charlotte, and Orlando within a 4 hour drive time. With numbers like these it’s no wonder the industrial world has taken notice.
As the Port continues to grow, so does demand for industrial space within close proximity to the Port. In the 3rd quarter, Colliers reported a vacancy rate of 0.69%. With this dual combination of Port growth and lack of available space, developers have taken action. As noted, ±9.28 million square feet is currently under construction; ±4.5 million square feet of that is build-to-suit and the balance is spec. Market veterans such as Duke Realty, Centerpoint Properties, and Scannell Properties are all expanding their portfolios. Duke purchased a ±65 acre tract for future development, Centerpoint is going vertical on new spec, and Scannell has both spec and build-
HISTORICALLY LOW VACANCY, PORT GROWTH DRIVE SAVANNAH’S INDUSTRIAL DEVELOPMENT
THE GEORGIA PORT AUTHORITY
INDUSTRIAL DEMAND AND DEVELOPMENT Savannah
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Dallas
Atlanta
Nashville
St. LouisKansas City
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MobileBirmingham
RichmondWichita
Omaha
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1 Day2 DaysCharlotte
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MemphisLittle Rock
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of the U.S. population can be reached from Savannah within a two-day driveSource: Savannah Economic Development Authority70%
This market report is a research document of Colliers International. Information herein has been deemed reliable and no representation is made as to the accuracy thereof. Colliers International | Savannah, is an independently owned and operated business and a member firm of Colliers International Property Consultants, an affiliation of independent companies with over 404 offices throughout more than 68 countries worldwide.
to-suit projects underway. The current conditions have also attracted a flurry of new investors with groups like MDH, CTR (Crane Transportation Realty), Capital Development Partners, Chesterfield, Rooker with Solution Property Group, McCraney and PNK all developing buildings within ±10 miles of the Port. Chesterfield has begun construction on a ±1.2 million square foot fee development project for JLA Home. This is JLA’s 2nd development over 1 million square feet in 3 years.With nearly no available existing space on the market, and many of the projects under construction delivering late 2018 or early 2019, there have been a limited number of leasing transactions in 2018. Most recently, PNK leased 356,800 SF to GoPlus. Duke leased 322,500 square feet to Home Furniture International, which is new to the Savannah market in mid-August. Keen Transport expanded its Savannah footprint by leasing 157,500 square feet from Sentinel in June. Additionally, Floor & Décor moved into its new 1.4 million square foot facility developed by Duke and Shaw moved into its ±1 million square foot building developed by CRG at Northport. Both deals were signed in 2017.
Investors are also on the hunt for Savannah properties and recent cap rates reflect the market’s strength. In June, GCP, LLC bought Duke’s 150 Portside Court. The building is 800,000 square feet and occupied by Home Depot. Earlier in the year, CRG sold its two buildings both of which are occupied by Shaw Industries. Its 1,001,508 square foot building sold to Griffin Capital Essential Asset REIT, and its 831,764 square foot building sold to Monmouth Real Estate.
Between existing market tenants discussing expanding and big name newcomers circling, 2019 is guaranteed to be an interesting one for the Savannah market. Ultimately, how quickly the market can absorb the ±5.5 million square feet of spec slated for delivery will determine the next wave of development, but if the Port continues to expand at the rate it has, the Savannah industrial market won’t be too far behind it.
HISTORICALLY LOW VACANCY, PORT GROWTH DRIVE SAVANNAH’S INDUSTRIAL DEVELOPMENT
By: Hilary ShipleyAssociateColliers International
MARKET OUTLOOK
TOP 5 GROWTH MARKETS NATIONAL STATS | RECORD BREAKING
203.6MSF
YTD OverallNet Absorption
11.3% higher than this time last year
$5.91PSF/YR NNN
WHSE/DistributionDirect Asking Rents
All-time record high
4.9%Overall
Vacancy Rate
All Time Record Low
267.6MSF
ProductUnder Construction
All-time record highNet Absorption as a % of Inventory