Future Cities
2023 North America Industrial Big Box Review & Outlook: Savannah
April 4, 2023 5 Minute Read
Savannah is still one of the country’s most rapidly-growing industrial markets. The Port of Savannah, the nation’s fastest-growing and fourth-busiest port, has fueled a decade of regional growth. Savannah has the country’s largest single terminal, on-terminal efficiencies, surrounding infrastructure, easy major interstate access, and more affordable rents than the Northeast and West Coast. Record spec construction is underway while vacancy remains minimal. Savannah’s average five-year deal size remains over 400,000 sq. ft.
Demographics
While Savannah does not have a large nearby population, an occupier can reach over 25 million people or 10 million households within 250 miles of the market core. This is expected to grow by 3.1% over the next five years.
Figure 1: Savannah Population Analysis
Source: CBRE Location Intelligence, Q4 2022.
According to CBRE Labor Analytics, the local warehouse labor force of 11,385 is expected to grow 15% by 2032, the seventh largest for any market in this report. The average wage for a non-supervisory warehouse worker is $16.91 per hour, on par with the national average.
Figure 2: Savannah Warehouse & Storage Labor Fundamentals
Source: CBRE Labor Analytics, Q4 2022.
*Median wage (1 year experience); non-supervisory warehouse material handlers.
Location Incentives
Over the past five years, there have been eight publicly known economic incentives deals at an average of $3,484 per new job in metro Savannah, according to Wavteq.
CBRE’s Location Incentives Group reports that the top incentive programs offered in metro Savannah is the Regional Economic Business Assistance (REBA) program, offering a discretionary cash grant to enhance Georgia’s competitiveness in attracting economic development projects. REBA funds may be used for any fixed-asset costs, including infrastructure, construction, real estate and personal property.
Another incentive program available in metro Savannah is the Job Tax Credit, which awards businesses for creating net new full-time jobs. These credits can be applied toward a company’s corporate income tax liability or reduce the company’s payroll withholding requirements. To qualify, companies must have local headquarters or R&D operations in one of the following industries: manufacturing, warehousing/distribution/logistics, software development, contact centers, data centers, telecommunications or financial technology.
Figure 3: Savannah Top Incentive Programs
Source: CBRE Location Incentives Group, Q4 2022.
Note: The extent, if any, of state and local incentive offerings depends on location and scope of the operation.
Logistics Driver
The Port of Savannah is the primary demand-driver in the region. Savannah is the fourth-largest port in the U.S., with the largest single terminal. A multitude of improvements and strong labor dynamics make it the East Coast’s fastest-growing port. It also provides direct access to I-26 (East/West) and I-95 (North/South). Key cities and growing manufacturing points along the coast can be reached with a one-to-two-day drive.
Savannah is the fourth-largest port in the U.S., with the largest single terminal.
Capital Markets
Savannah is one of the country’s most unique industrial markets, doubling in size over the last 6 years, driven by The Port of Savannah. The biggest economic deal in the state’s history was recently announced: the Meta Plant for Hyundai in Bryan County, at approximately 3,000 acres. The investment is over $5.5 billion. Surging institutional investor demand for this market drove cap rates to the lowest we have seen for any U.S. secondary market.
Supply & Demand
At 72 million sq. ft., Savannah is the smallest but one of the fastest growing big-box markets in this report. Lease transactions have doubled to a record 11.6 million sq. ft. in 2022. This volume helped net absorption reach 8.9 million sq. ft., with a growth rate (net absorption/existing inventory) of 12.3%, North America’s second-highest. 3PLs are the dominant force in the market, accounting for 55.7% of total transactions. Strong transaction volume kept vacancy rates low at 0.9%, the fourth-lowest in North America.
Savannah’s big story is development. 25.6 million sq. ft. is under construction, equal to 35.4% of current inventory. While 37% of this is pre-leased, the 14 million sq. ft. of available space under construction to be delivered over the next six quarters will significantly alter vacancy rates, at least temporarily. Occupiers are looking for new inventory near points of import and population growth. Savannah is one of the few markets providing this. The pause in construction starts will give the market time to absorb new construction. 2023 could see volatile vacancy rates though.
Figure 4: Share of 2022 Leasing by Occupier Type
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 5: Lease Transaction Volume by Size Range
Note: Includes new leases and renewals 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Figure 6: 2022 Construction Completions vs. Overall Net Absorption by Size Range
Source: CBRE Research, 2022.
Figure 7: Direct Vacancy Rate by Size Range
Source: CBRE Research, 2022.
Figure 8: Under Construction & Percentage Preleased
Source: CBRE Research, 2022.
Figure 9: First Year Taking Rents (psf/yr)
Note: Includes first year taking rents for leases 200,000 sq. ft. and above.
Source: CBRE Research, 2022.
Explore Big Box Insights by Market
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Over 5 million people live within 50 miles of the region’s core, with a 5.1% expected five-year growth rate—the second-highest of any region in the Southeast.
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