Savannah Tops Nation for Industrial Construction

With construction ramping up, the Savannah Industrial market continues to lure developers to its rapidly growing port. The Savannah Port Logistics Center (SPLC) recently broke ground on 2.3 million square feet of logistics space over two buildings that are proceeding without an anchor tenant. The SPLC is the newest project from Atlanta-based Capital Development Partners.

The port city has experienced a boom in industrial warehouse space construction, and is looking to increase its existing inventory by more than 15 percent this year, or roughly 9.5 million square feet. This expansion of industrial space leads the nation as a percent of inventory, and even falls in the top 10 for gross square footage. Developers have been drawn by a drum-tight industrial market that offers less than 800,000 square feet of vacant space, or just 1.3 percent of the existing stock.

Savannah is the nation’s fastest growing container facility, and already is the fourth-busiest port in the country. This growth largely has been driven by a 2014 initiative to deepen the port to allow Post-Panamax ships to make call. It will be complemented by new Super-Post-Panamax cranes that will be installed by 2020. Further, the port has announced development of the Mason Mega Rail Terminal, which will extend the reach of the port’s rail facilities to points in the Midwest, shaving a full day off train travel times to major hubs such as St. Louis.

Developers currently have four buildings under construction that offer more than a million square feet of space, all of which are spec. The largest building on offer is Bldg. 2 in the SPLC. 88 percent of the industrial product under construction lacks a tenant. Industrial developers have clustered much of this new product around I-95, with 97 percent of the under-construction pipeline within six miles of the major north/south corridor.

Savannah is certainly staying busy currently, with more space under construction than major metros like New York and Philadelphia. Further, with commercial capital Atlanta, Georgia is witnessing its own industrial revolution of sorts. The state is the third busiest nationally for industrial construction, trailing only the much larger states of California and Texas. With 318 million square feet under construction nationally, these top three states account for nearly 40 percent of that pipeline.

Although 9.5 million square feet might sound like a daunting amount of space, Savannah has shown it is desperate for the additions. On the back of the supply expanding by another 13 percent in 2017, the metro saw positive logistics absorption of 5.3 million square feet. The last quarter of 2017 saw more than 4 million square feet of positive absorption alone. Even with this massive supply addition, logistics rent jumped by 5.7 percent in 2017, and finally bested national growth rates during the first quarter of this year.

Source: CoStar Market Insights by Bradley Raber July 24, 2018

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