Savannah’s industrial market has a symbiotic relationship with the ships that navigate the city’s much-debated river channel. In the fiscal year of 2011, $54.1 billion in value and 8.7 percent of U.S. containerized cargo moved through the port of Savannah. This makes Savannah the fourth largest container port in the nation.
The U.S. Army Corps of Engineers gave its final recommendation to deepen the channel to 47 feet and the president recently signed an executive order fast-tracking approvals by no later than November. This will keep the port competitive for larger Post-Panamax ships that will need to access the Savannah port after the Panama Canal is widened. The channel deepening project will not be completed prior to the completion of the Panama Canal widening, but Panama officials just announced the opening has been delayed by at least six months to April 2015.
With port activity continuing to improve, so goes the area economy and warehouse occupancies. Market-wide, vacancy rates have ticked down to around 15 percent from highs in the low 20s just two years ago. There is a good supply of high-quality distribution space, thanks to the building boom started in 2005, which nearly doubled the inventory. There is 44 million square feet of space across Chatham, Bryan, Effingham and Liberty counties. The current vacancy is 6 million square feet, with five buildings larger than 400,000 square feet immediately available. Occupancy will continue to slowly improve during the next 24 months as no speculative development is expected.
Several major retailers have local distribution centers, including Home Depot (1.4 million square feet), Target (3.5 million square feet), Ikea (750,000 square feet) and Pier 1 Imports (783,000 square feet).
Recently, third-party logistic companies have driven absorption and development. In January, The Judge Organization opened its 266,700-square-foot rail-served distribution center in the CenterPoint Intermodal Center, which was developed by Oakbrook, Illinois-based CenterPoint Properties. Savannah-based Coastal Logistics Group opened a 320,000-square-foot rail-served facility next door in 2011. Both were build-to-suits. Matson Logistics took 605,000 square feet of existing space in Bryan County’s Interstate Centre, bringing its area footprint to 1.7 million square feet. We continue to tour third-party logistics companies in the market; these companies have requirements ranging from 250,000 to 1 million square feet.
The Port of Savannah, being the largest U.S. exporter of containerized chicken, sparked a recent demand for freezer/cooler space. Georgia Cold Storage will open a 176,000-square-foot facility in Pooler. Nordic Logistics and Warehousing just announced a 400,000-square-foot, build-to-suit facility just off Interstate 95 at Jimmy Deloach Parkway that will handle 15 million pounds of chicken per week.
Though the Pooler megasite lost its bid for the recent Caterpillar project, the 1,500-acre, state-owned parcel and home to manufacturer Mitsubishi Power Systems continues to attract suitors. Several manufacturers in the 50,000- to 100,000-square-foot range are researching the market. Mitsubishi and other area manufacturers are adding jobs and growing. Gulfstream Aerospace, Savannah’s largest manufacturer, is in the middle of a seven-year, $500 million expansion, acquiring and constructing multiple facilities. In April, Great Dane opened a 450,000-square-foot refrigerated trailer production facility in Statesboro. JCB, which manufactures tractors and construction vehicles, and the EFACEC transformer plant have also announced they will be hiring. The port supports 55,000 jobs in the surrounding counties and 350,000 jobs statewide.
— Rex Benton is a principal & industrial advisor with NAI Savannah