While major industrial and logistics markets capture most of the headlines, industrial occupiers and investors know that dozens of secondary markets are essential to supply chains in the U.S.
Of the 81 industrial markets Cushman & Wakefield tracks, the firm selected five emerging industrial real estate markets outside of primary markets that are markets to watch are based on key metrics from 2019 through 2021, including net absorption, new tenant demand, vacancy, rent growth, construction pipeline and deliveries.
Included in the five is Savannah, Georgia, which feeds the ever-growing industrial market in Atlanta – located approximately four hours away. From 2019-2021, Savannah ranked No. 12 for absorption, No. 11 for construction completions and No. 5 for average vacancy rate.
Savannah’s GDP has reached almost $22 billion, up by 46% over the last 10 years (versus 19.0% for the nation). A major contributor to growth has been the Port of Savannah, which has recorded increasing trade volumes since 2017. As both the cumulative impacts of rapidly rising trade flows met limited supply, vacancy was already compressed prior to COVID-19 and the emergence of global supply chain issues.
While the Georgia Port Authority has seen congestion starting to ease as the number of ships waiting to dock started to decline late last year, the market remains extremely stretched. Future expansions at the Georgia ports will help ease delays as they open in the coming years. Meanwhile, with a declining unemployment rate (which currently stands at 2.4%, well below the national rate of 3.6%) and a growing labor force, Savannah’s population has risen by 7.7% since 2016. This is compared to 3.7% for the nation and 4.9% for Georgia.
As port activity surged, the local industrial market experienced unprecedented growth. Over the last three years, Savannah absorbed more than 24 million square feet (msf) of product while the inventory grew by another 25 msf. Amid the robust absorption totals, Savannah’s vacancy rate has dwindled to a mere 0.5%, one of the lowest in the nation. Developers have attempted to alleviate some of the pressure brought on by expanding construction, which now stands at a healthy 23 msf.
With the ongoing expansion of the Port of Savannah helping to push fundamentals, the industrial market should continue to see further growth well into the future.
The other four emerging industrial markets included:
For more, check out our “Five Industrial Markets to Watch.”