Savannah Commercial Real Estate: Big Box Boom

Demand at the Port of Savannah, thanks to its capacity and excellent efficiencies, has industrial developers from around the United States turning their sights on Savannah. This attention sparked a land grab over the last few years that, in 2007, resulted in the delivery of the first of several large distribution centers.

According to the latest Savannah Economic Development Authority (SEDA) data, 4,800,000sf of new space will have been delivered in Chatham County by 2nd Quarter ‘08. Between the I-16/I-95 interchange and the Savannah River, there is approximately 19,000,000sf (2,700 Acres) that has been locked up for industrial/distribution center development. That is amazing considering the existing space prior to this boom was approximately equal to that amount. These numbers do not include joint venture projects outside the immediate area.

National developer, IDI has rights to build 10,000,000sf at Tradeport East in Liberty County. Atlanta based, TPA Realty Services has rights to build 7,000,000sf at Interstate Centre II in Bryan County. Some bets have already paid off. Solution Property Group, LLC sold its 491,000sf shell building in Crossroads Business Park for $20,000,000. Oakmont Development sold a 1,000,000sf complex at Morgan Business Center in Bloomingdale for $50,000,000. IDI leased 112,000sf to Gulfstream Aerospace Corp. at Crossroads Business Center for 5 years.

Several deals have been done with State/County Authorities and local developers. Tire Rack and Target Corp (1,500,000SF) have DC’s at Tradeport East (Liberty County Development Authority). IKEA (700,000 SF w/ 1MM SF of expansion) and Target (2,300,000 SF) have DC’s at sites controlled by the Georgia Ports Authority (GPA). Oneida opened its 500,000sf facility in ‘07 at Bryan County Development Authority’s Interstate Centre I. Local developers building a somewhat similar product, but probably with lower land costs (read: they bought before the boom), have done projects for Wal-Mart and other nationals plus multiple 100,000sf to 400,000sf+ projects for local companies. Knowing this in 2006, Duke Realty strategically purchased 5,100,000sf of leased industrial buildings from local developers with the option to buy future projects. They recently purchased an additional 789,000sf at Northpoint II & III.

Photo: Courtesy of GA Ports Authority.

As impressive as all these deals may be, it will be interesting to see if we maintain our industrial vacancy rates of 8% as the spec projects come on line. National developers I work with that do not have stakes here, are watching closely while pursuing build-to-suit projects in our area. In the big picture, there are excellent opportunities to invest in future real estate projects in our region.

Thanks to improvements to the Panama Canal, larger cargo ships and the proposed deepening of the Savannah River to support them, volume will continue to grow. GPA’s capacity is planned to triple by 2017. This, combined with the potential Jasper County Port and improved logistics infrastructure, will bode well for these developments in the long run. A strong military presence (with announced local troop increases) and continued gains in tourism, higher education and local Industry will drive retail, office & residential projects over time.
-------------------------------------------------

Rex Benton is a Commercial Real Estate Advisor for Mopper-Stapen, Realtors. He can be reached at the downtown office of Mopper-Stapen, Realtors at 912-238-0874 or via email.