As the Port of Savannah continues to grow its container volume, developers and logistics operators continue to scramble to catch up to the demand for warehouse and distribution space around the nation’s fourth-largest port.
Colliers International in Savannah released its first quarter 2016 industrial market snapshot on Friday and, while vacancy rates were fractionally better than the last half of 2015, they aren’t even close to meeting the growing demand, said Colliers principal David Sink.
At the end of March, the overall industrial vacancy rate was at 3.2 percent, up from 3 percent in the fourth quarter of 2015. The bulk vacancy rate — for buildings 100,000 square feet and larger — was at 3 percent, up from 2.7 percent at the end of last year.
“Basically, we’re still out of space,” he said, noting that the speculative building now underway is getting snapped up pretty quickly.
A 315,000-square-foot cross-dock warehouse completed earlier this year at CenterPoint Intermodal Center off Dean Forest Road is already fully leased as are most of the 18 buildings in the Pooler Distribution Complex off U.S. 80.
“There is some speculative space under construction that hasn’t been leased yet, but I don’t think it will stay on the market past completion,” he said.
Among those is a 475,000-square-foot building at NorthPort Industrial Park that is two or three months from completion and a 312,000-square-foot warehouse in WestPort just getting started with an August completion date.
How it happened
Much like the residential real estate market, Savannah’s industrial building business was rolling along for years before it ran head-first into the Great Recession, which catapulted vacancy rates from a healthy 8 percent in 2007 to nearly 19 percent by the end of 2009, leaving many developers with cavernous new warehouses and cross-docks they couldn’t lease or sell.
“There were a number of developers who got stung pretty badly,” Sink said. “Putting up a 300,000 to 400,000 square foot building is a major financial commitment and they had buildings completed in 2008 — many of them in that half-million-square-foot range — that stood vacant for four to five years.
“After that, it was easy to understand why toes were going back in the water very cautiously, even after the demand began to grow again.”
More and more developers are beginning to take the plunge now, but, even so, it takes time to rebuild the kind of inventory the growing port needs.
“Building from the ground up takes longer and can cost more,” Sink said. “It’s a slow process, averaging a year to 18 months to put up a building, depending on the type and size.”
The good news is that, unlike many large, congested ports, there is land on which to build.
“Fortunately, we do have several industrial parks that are fully entitled and ready to go in Chatham, Bryan, Effingham, Liberty and now Jasper, with RiverPort, he said.
“The need is for more developers to get in the game, and they’re starting to get closer,” he said.
BY THE NUMBERS
3.22 percent — Overall industrial vacancy 1Q 2016
3.04 percent — Overall industrial vacancy 4Q 2015
3.03 percent — Bulk vacancy 1Q 2016 (100,000 square feet and up)
2.73 percent — Bulk vacancy 4Q 2015 (100,000 square feet and up)