SEA ISLAND - As container volumes at the Port of Savannah continue to expand, so does the demand for warehouse and distribution space around the country’s fourth-largest and fastest-growing port.
Despite an addition of more than 1 million square feet in inventory in the fourth quarter of 2016, the Savannah market absorbed more industrial square footage than it gained, dropping the year-end vacancy rate to a precarious 2.43 percent.
That’s way too low for comfort, according to Georgia Ports’ executive director Griff Lynch.
After watching developers, hard-hit by the Great Recession, ease cautiously back into the market, then scramble to catch up to demand, Lynch and his board decided to lead by example.
At Monday’s opening session of the 2017 Georgia Foreign Trade Conference on Sea Island, Lynch announced the sale of some 500 acres of property for commercial development to accommodate growing customer demand for warehousing, distribution and transload facilities near the Port of Savannah.
The new development, located on four parcels of land at GPA’s Savannah River International Trade Park on Ga. 21, is less than five miles from the Garden City Container Terminal and can accommodate up to 5 million additional square feet of logistics space.
The industrial park, just a mile from Interstate 95, is already home to massive Target and Ikea distribution centers. The sale of the remaining property to four different developers “will help fill a growing need to service a larger range of customers stretching all the way to the Midwest and firmly establish Savannah as a gateway port for the U.S. Southeast and beyond,” Lynch said.
“With an increased demand for reliable, cost-effective logistics opportunities, this development is another example of GPA’s focus on supply chain solutions for our customers.”
Promises to keep
GPA issued a Request for Proposals in November of last year to determine if there was substantial commercial interest in acquiring and developing the parcels for port-related operations. The request generated multiple proposals with each respondent agreeing to construct one or more warehouse or distribution facility to accommodate port related cargo.
Each of the developers will lease, improve and subsequently purchase their parcel. Each also has agreed that at least 75-percent of the cargo handled on the property will be imported or exported through GPA terminal facilities.
Parcels and purchasers are as follows:
Solution RP SAV LLC has agreed to lease Parcel 2, consisting of approximately 89 acres. Solution will construct a 300,000-square-foot warehouse facility on the property during the lease term, to be completed no later than Dec. 31, 2018. Following completion of the improvements, GPA will sell the property to Solution for $8.6 million.
Chesterfield LLC has agreed to lease Parcel 3, consisting of approximately 138 acres. Chesterfield will construct a 1 million-square-foot warehouse facility on the property during the lease term, to be completed no later than Dec. 31, 2018. Following completion of the improvements, GPA will sell the property to Chesterfield for $11.3 million.
CRG Acquisitions LLC has agreed to lease Parcel 4, consisting of approximately 138 acres. CRG will construct a 200,000-square-foot warehouse facility on the property during the lease term, to be completed no later than Dec. 31, 2018. Following completion of the improvements, GPA will sell the property to CRG for $11.6 million.
Rounding Third LLC (doing business as CTR Real Estate Partners) has agreed to lease Parcel 5, consisting of approximately 70 acres. Rounding will construct a 228,000-square-foot warehouse facility on the property during the lease term, to be completed no later than Dec. 31, 2018. Following completion of the improvements, GPA will sell the property to Rounding for $4.33 million.
The new logistics space can’t come soon enough.
January was the third consecutive month of record performances for the Savannah container port at Garden City, where GPA moved 331,468 twenty-foot equivalent container units, or TEUs, an improvement of 16.2 percent year-over-year.
November’s container traffic hit 300,671 TEUs, up 5.8 percent; while December’s 292,172 TEUs marked a 12.3 percent increase over December 2015.
“The expansion we’re seeing in our container volumes constitutes a strong vote of confidence from our new and longtime port customers,” said Jimmy Allgood, GPA board chairman.
“Staying ahead of demand requires infrastructure development in both the public and private sector. The new facilities destined for our trade park are part of that equation. The GPA is also making the on-terminal improvements necessary to stay ahead of demand.”
Among those are a rail expansion at Garden City Terminal that will double the Port of Savannah’s rail lift capacity to 1 million containers per year. A part of GPA’s Mid-American Arc initiative, the expansion will better accommodate 10,000-foot-long unit trains, providing more efficient use of rail infrastructure and making routes running deep into the American Midwest more attractive to rail providers.
The Mid-American Arc enhances global trade options for manufacturers in cities such as St. Louis and Chicago. Partly funded by a $44 million federal grant, the project will be complete in 2021.
The GPA also broke ground in December on its new inland terminal in Northwest Georgia – the Appalachian Regional Port. GPA estimates the CSX rail route will reduce Atlanta truck traffic by 50,000 moves annually, and expand GPA’s target market in Alabama, Tennessee and Kentucky.
Georgia’s deepwater ports and inland barge terminals support more than 369,000 jobs throughout the state annually and contribute $20.4 billion in income, $84.1 billion in revenue and $2.3 billion in state and local taxes to Georgia’s economy. The Port of Savannah handled 8.2 percent of the U.S. containerized cargo volume and 10.3 percent of all U.S. containerized exports in CY2015.