06 Oct Port of Savannah’s growth driving industrial CRE activity in Southeast Georgia
The strain on the global supply chain shows few signs of easing and nowhere is this more evident than in traffic-jammed ports all over the world. In May 2022, according to a Reuters report, one-fifth of the global container ship fleet was backed up.
One of the bright spots in this ongoing crisis is the Port of Savannah, says Chris Tomasulo, executive managing director on JLL Atlanta’s industrial brokerage team. “It’s a star within the U.S. supply chain. A lot of companies started diverting ships to Savannah because of the congestion at other ports. But they keep coming back because it’s easier and faster.”
Savannah’s operational efficiency and capacity and the port’s unique geographic location — it’s further removed from commuter traffic routes than other ports — are fueling growth not only at the port, but also in the industrial market surrounding it.
Speed, size, and location
As of July, the Georgia Ports Authority (GPA) had added 1.2 million TEUs (standard-size shipping container) of annual capacity to Savannah’s Garden City Terminal. In March 2022, the GPA announced it will expand storage space in Savannah to accommodate an additional 1 million containers a year. Most recently, the GPA announced a record-breaking fiscal year for 2022 in which they handled 5.76 million TEUs, an increase of 8% over fiscal year 2021.
As the Port’s capacity grows, warehouse and other industrial space users are gobbling up nearby property, Tomasulo says. “It’s insane what’s happening right now. Developers can’t build fast enough. Virtually every building that is under construction is leased before it delivers.” Among the most notable recent tenants is Hyundai, which is building a $6.5 billion electric vehicle assembly and battery plant on 2,200 acres in Bryan County, just south of Savannah. It’s expected to open in 2025, creating 8,500 jobs.
Other numbers bear out this increased demand — in Savannah’s nearly 89 million-square-foot industrial market, only 0.1% of the space is vacant and there’s no class A space available, according to JLL’s most recent Industrial Insight report. More than half of the 18.1 million square feet under construction is already leased and the market has a record year-to-date absorption of 6.2 million square feet.
Where credit is due
“Much of the credit for this activity has to go to the Georgia Ports Authority,” says Bennett Rudder, an executive vice president on JLL’s industrial brokerage team. “The port had the foresight to anticipate this growth and has been able to scale.”
Rudder points to such innovative infrastructure improvements as a new intermodal rail yard that GPA built to put boxes on trains, which keeps them off the local highways. The Authority also opened an inland rail terminal in Northwest Georgia and six “pop-up” yards to store containers, cutting congestion at the Port of Savannah. Another inland rail terminal is being built near Gainesville.
GPA also has a strong relationship with the state of Georgia and the state department of transportation, Tomasulo says, “which means key officials are on the same page about the importance of the Port.”
“The Georgia Ports Authority is proud to support economic development across the state, and particularly in the Savannah area, which features one of the hottest industrial real estate markets in the country,” said Stacy Watson, director of economic and industrial development at GPA. “The infrastructure improvements we’ve implemented, combined with the unprecedented levels of industrial activity we’re seeing in the market, will drive opportunity and prosperity for decades to come.”