From Plastic Express expanding operations with two new manufacturing facilities at the Savannah Port Logistics Center in Pooler to A&R Logistics leasing 600,000 square feet at the Savannah Gateway Industrial Hub in Effingham County, the area industrial market showed no signs of slowing in 2019.
“(Last year) was a banner year with over 9.2 million square feet of net absorption, which is by far the most that we’ve ever had,” said David Sink, principal at Colliers International in Savannah.
“I think (in 2018), we had 4.3 million square feet of net absorption and that’s a lot for any market.”
In the first quarter of 2019 total inventory was 63,746,517 square feet, during the second and third quarters inventory rose to 67,698,123 square feet and 67,915,987, respectively, before ending the fourth quarter with 71,875,992 square feet of inventory.
“I think Savannah will be far away the No. 1 growth market in the country in terms of absorption as a percentage of total inventory that was worked out to 12.9%,” he said.
“I think a typical good year would be 3% to 4%, maybe 5%.”
Sink said Colliers has been tracking the local industrial market for about 20 years and the average absorption as a percentage of total inventory has been 5.19%, which is strong.
Overall, the year ended with 5,983,554 square feet of space under construction and a 3.8% vacancy rate.
The vacancy rate dropped to a staggering low of 1.46% in the second quarter and 2.05% in the third quarter, before rising slightly before the end of the year.
“It’s because we had over 4 million square feet of new construction be completed and 2.4 million square feet of absorption,”he said.
“We don’t count something as being absorbed or leased until a building is completed. And then they start to occupy.”
Of the space currently under construction, Sink said it’s split almost evenly between built-to-suit with 2,993,310 square feet and speculative construction with 2,990,244 square feet.
“We’ve always been pretty balanced as far as spec versus build-to-suit construction but not perfectly balanced,” he said
Growth continues
Sink said along with the boom in construction the growth is also starting to push outwards towards the Highway 21 corridor in Effingham County, Interstate 16 to the west and Interstate 95 to the south.
A few sites are expanding outside the central Savannah area, including the 2,700-acre the Savannah Gateway Industrial Hub in Effingham County, which broke ground in November.
The first tenant on the site will be A&R Logistics, which will lease 600,000 square feet of a 1-million-square-foot building being constructed by OmniTRAX on McCall Road near Rincon. OmniTRAX is a private transportation management company that partnered with the Effingham County Industrial Development Authority to develop the property.
Another site, known as the Savannah Port Logistics Center and located west of Pooler Parkway off U.S. 80, will add more than 2 million square feet of warehouse space to the area.
The park will use 185 acres and feature 2.3 million square feet of space for lease with modern specifications, transload, cross-dock, high-cube and trailer storage facilities.
Plastic Express, a California-based plastics resin company, will be one of the park‘s first tenants, investing more than $172 million and creating more than 100 new jobs. The company plans to use the Port of Savannah to export 25,000 containers of the plastic-making product in its first year.
Other sites like the Savannah Manufacturing Center, Belfast Commerce Park and the Georgia International Trade Center are also fueling the growth, Sink said.
“As far as capacity to continue to build, we have it,” he said.
“There’s so many good fundamentals in place with the port and the market and the cost to operate here versus other markets like New Jersey and and West Coast is substantially cheaper.”
Attracting development
It should come as no surprise that the Georgia Ports Authority plays a major role in attracting industrial developers and investors to the are. With several major port expansions on the horizon that momentum is expected to continue.
In September the GPA announced plans for the new Savannah Container Terminal, a nearly 200-acre facility to be built across the Savannah River on Hutchinson Island. The new facility will have a capacity of 2.5 million TEUs when fully developed. Phase I is projected to come online in 2025.
Earlier this week GPA Executive Director Griff Lynch announced the acquisition of 145 contiguous acres to the Port of Savannah, enough land to accommodate more than 1 million twenty-foot-equivalent container units in annual capacity.
“That’s a really big deal,” Sink said of the latest expansion.
“Capacity of the port is very important and they’ve been addressing that with Hutchinson Island and the other things that they’re doing long term and then very long term with the Jasper terminal.”
Partnerships between area economic development authorities such as the Savannah Economic Development Authority, Development Authority of Bryan County and Effingham County Industrial Development Authority are also a major player when it comes to securing investment in the area, Sink said.
“As far as economic development authorities are concerned, I think we‘re pretty unique in that they’re all working together,” he said.
Looking ahead Sink said the interest in the Savannah market shows no signs of slowing.
“We continue to see a lot of interest in the market from tenants as well as developers who don’t yet have a stake here. We also are fielding a lot of calls and meeting with analysts that are with some of the private equity behind the developers. So there’s still a very high level of interest,” he said.
“The market is being looked at and the year has started off very strongly on the leasing front, as well as on the development front in the form of land acquisitions and then just further entitlement of additional tracts of land. So we think this will be another very solid year.”
Colliers International Savannah 2019 Industrial Market4th Quarter3rd Quarter2nd Quarter 1st QuarterTotal Inventory71,875,99267,915,08767,698,12363,746,517Under Construction5,983,5547,710,4006,318,7046,948,384Vacant2,733,4741,398,033991,5902,420,280Vacancy Rate3.80%2.05%1.46%4.49%
