Savannah’s office and industrial markets ended the first quarter of 2015 with lower vacancy rates, helped along by absorption of existing space, according to commercial real estate information company CoStar.
The metro area’s office market ended March with a vacancy rate of 6.3 percent, down from 6.6 percent at the end of the fourth quarter and 7 percent in the third.
“It’s definitely healthier, and it’s getting healthier every quarter,” said Adam Bryant, a partner with commercial real estate firm Sperry Van Ness.
Net absorption of office space was positive, at 26,200 square feet, compared to negative results in the third and fourth quarters. Because there isn’t much new product in this sector, Bryant said, positive absorption helped bring vacancy rates down.
“There’s stuff in the pipeline, both in office and industrial, but it’s not out of the ground yet,” said Bryant. “It’s in the pre-development phase, so you’re still competing with what’s existing.”
Bryant said Savannah also tends to be a smaller office market, unlike Atlanta, with most professional firms seeking spaces no bigger than 3,500 square feet.
“You’re really competing against the same product over and over again,” he said.
The largest office lease signings this quarter included an 11,030-square-foot space by Gentiva Home Health at 2280 E. Victory Drive, a 5,000-square-foot deal by Morgan Stanley at Savannah Financial Center and a 2,433-square-foot lease by Rahimi Law Firm at the SunTrust Bank in downtown Savannah.
The average rental rate for available office space for all classes, A, B and C, was $17.23 a square foot, down about 1 percent from December 2014. In Savannah’s central business district, however, the asking price rose from $19.76 to $20.48.
In Savannah’s suburbs, the rental rate rose about 50 cents to $16.86 per square foot.
The industrial market meanwhile ended the first quarter of 2015 with a vacancy rate of 5.2 percent, down from 5.5 percent at the end of 2014.
Large industrial sector lease signings in the north Savannah/Garden City area included a 317,880-square-foot space signed by DSI at Georgia Commerce City and a 33,721-square-foot space signed by Savannah Hilton Head Portable Moving and Storage at 5510 Export Blvd.
A 24,000-square-foot lease was signed by Bimbo Bakeries USA at 20 Triple B Trail.
“Personally, what I’m seeing is more activity from newcomers to the market from the industrial side,” said Bryant.
Net absorption for the overall Savannah market was positive at 212,209 square feet while asking rental prices rose about 1 percent to $4.05 per square foot.
Total inventory, including the flex and warehouse sectors, totaled 1,262 buildings at the end of the first quarter, amounting to about 50.9 million square feet.
“The industrial market is much healthier than it has been,” said Bryant.