Since Savannah was founded in 1733, it has grown to be a bustling city with an ever-growing economy.
Located in Georgia’s southeastern corner, Savannah offers an exciting, vibrant economy, and it’s home to an array of industrial real estate properties.
From the start of 2020 to the end of Q3 2022, the Savannah industrial real estate market has seen significant changes.
This report will look at the latest developments in the Savannah industrial real estate market.
Savannah Economic Overview
Savannah’s economy has seen steady growth since the turn of the century, with a current population of 150,078 and an average household income of $63,984.
As the oldest city in Georgia, Savannah holds a pride of place as the state’s industrial center, which is reflected in its strong industrial real estate market.
Savannah’s seaport is the 4th busiest in the United States and plays an integral role in its economy. Its vital shipping and logistics industry has been the backbone of Savannah’s economy, making it a prime location for investment in industrial real estate.
Savannah’s GDP report
Savannah has long been an important port city for the United States. The economic activity generated in Savannah is a major driver of the regional economy.
Over time, Savannah’s GDP per Capita has continued to grow by leaps and bounds.
The most recent data indicates that the GDP per capita in Savannah Metro Area (GA) was $40,388 back in 2017.
Forecasting into the future, it is predicted that the GDP per capita will be about $41,210 by 2022.
So, from 2001 to 2022, the local GDP increased from $37,758 to over $41,210. Considering the past trends, the average growth rate for this area is 0.44%.
This growth was fueled by population growth, job creation, and high demand for industrial real estate properties from companies looking to establish a presence in Savannah.
With the Hyundai EV and battery factories coming to Bryan County, Savannah and its surrounding areas have also had an additional boost. If the provision of 8,100 jobs and $20 per hour is fulfilled, the economic growth in the Savannah-Metro area may exceed even the current predictions.
Savannah Industrial Real Estate Overview
The Savannah industrial real estate market has experienced significant growth over the past few years and continues to be an attractive option for investors.
With a total of 94,086,970 square feet, Savannah industrial real estate has seen a positive trend in market activity since the beginning of 2020.
Because of the thriving economy and strong local demand, there has been an increase in industrial real estate properties constructed to meet the needs of businesses.
The Port of Savannah, being the fourth busiest port in the United States, is also a major factor in the growth of industrial real estate properties. With this strategic location and its many attractions, Savannah is ideal for industrial real estate properties.
Savannah has seen a surge in demand for commercial space, with Q3 2022 already surpassing the 2021 total annual absorption of 10.5 million square feet. Despite the rising rates and drop in vacancy, investors and developers have retained their attraction to the market due to the increasing popularity of owning property in Savannah.
Even with tenant requirements exceeding 30 million square feet and rising asking rates, there is still demand from investors to buy property and developers wanting to build in this market—making it one of the most appealing markets across the U.S.
From all indications, the Savannah industrial real estate market shows no signs of slowing down in Q4 2022 and beyond.
Savannah Industrial Vacancy Rates
As businesses continue to flock to Savannah, the industrial vacancy rate has dropped and is expected to fall even further.
The overall industrial vacancy rate within the Savannah Metro Area is currently at 2.8% for Q3 2022.
This indicates the strong demand for industrial real estate properties in this region, and the trend will likely continue in the near future.
As e-commerce pushes up the volume of goods that need to be moved around and stored, industrial real estate has become increasingly desirable within the Savannah Metro Area. It will continue to be a sought-after asset class in the Savannah region.
Savannah Industrial Asking Rates
For the Savannah Industrial Market, the average asking rate for industrial real estate properties is currently hovering around $6.13 per square foot. This rate has been steadily increasing as more businesses continue to move into the area.
Further, as of Q3 2022, the average sublease asking rent stands at $6.25 per square foot. This indicates the healthy demand for second-hand industrial spaces in this region. Warehouse properties and industrial parks are particularly sought after and command higher rents.
This accounts for Savannah achieving its highest-ever annual asking rent growth in Q3 2022, as rates rose 25.3% year-on-year. Little wonder it surpassed the $6.00 mark for the first time!
Even at these higher asking rates, about 15.6 million square feet worth of deals have been signed over the past four quarters demonstrating that tenants still view Savannah as an attractive market.
Savannah Industrial Assets Under Construction
In response to the growing demand for industrial real estate, the Savannah industrial market saw a significant uptick in the number of industrial assets under construction from Q1 2022 to Q3 2022.
About 22,023,589 square feet worth of industrial real estate is currently under construction in the Savannah metro area, with approximately 5,423,693 square feet completed and delivered quarterly.
Most industrial assets under construction are Class A warehouses and distribution centers, with tenants ranging from technology companies to manufacturers.
The construction boom is expected to continue into Q4 2022 and beyond as investors look to capitalize on the rising demand for industrial real estate in the Savannah metro area.
At the end of Q3 2022, there are over 11,252,727 square feet of total net absorption in Savannah. This includes various properties, from warehouses and storage facilities to manufacturing sites and corporate offices.
Additionally, over 22,023,589 square feet of industrial assets are currently under construction in Savannah, most of which are warehouses, corporate offices and light manufacturing sites.
This increase in development activity shows strong investor confidence. It will drive the industrial real estate market in Savannah even further as companies are still looking to the area for future business expansion.
With the rise of e-commerce and the continued demand from tenants, Savannah is set to be one of the hottest markets in industrial real estate for a long time to come.
Conclusion
The Savannah industrial real estate market remains a highly sought-after asset class in Q3 2022. Asking rates continue to rise, and vacancy rates have dropped due to many industrial assets under construction.
The market is expected to remain strong into Q4 2022 and beyond, and as activities in the Port of Savannah increase, coupled with the rising demand from tenants, industrial real estate is poised to be a very lucrative investment.
Add that to the influx of manufacturing companies like Hyundai and other businesses looking to expand in the region, and you have a real estate market that is sure to remain robust.
From the foregoing, it’s clear that the Savannah industrial real estate market is in a strong position, and it’s expected to remain that way for the foreseeable future.
It’s an exciting time for Savannah, and this report has provided an overview of the principal statistics and updates for Q3 2022.