Port of Savannah critical to the recovery of Atlanta’s industrial market

Port of Savannah critical to the recovery of Atlanta’s commercial real estate market.By Steve Grable

Make no mistake about it: 2014 was a banner year for the metro Atlanta industrial real estate market.  Although it’s located nearly four hours away, the Port of Savannah has played an undeniably important role in the recovery of Atlanta’s industrial market. Much of the material passing through the port is also housed in the metro area’s warehouses and distribution centers as it makes its way through shippers’ supply chains. And the port’s now-underway expansion is one of several reasons industrial activity in Atlanta is poised to accelerate even further in the years ahead.

At December’s end, the industrial vacancy rate stood at 8.7 percent, the lowest rate in almost 15 years, according to JLL. Annual net absorption reached a total not seen since 2000, and of the 16.3 million square feet of industrial properties under construction in the area when 2015 began, nearly 60 percent of that space was speculative, a powerful indication of developers’ confidence in future demand.

Steady Growth

If you want to understand an important component of the revitalization of Atlanta’s industrial market, look no further than the steady growth in activity at the Port of Savannah. In its 2010 fiscal year, the port moved 2.6 million 20-foot equivalent container units (TEUs); by the 2014 fiscal year, the total had increased 19 percent, to 3.1 million TEUs, according to the Georgia Ports Authority. Grocers, retailers and providers of household consumables are among the shippers that have been particularly active at the port in recent years.

The good news for Atlanta’s industrial sector is that activity at the port should only increase in the future. One of the reasons is simple: an expanding U.S. economy.

But there are other factors at play, as well. First, the Savannah River is being deepened from 42 feet to 47 feet so that larger container ships using an expanded Panama Canal can come into the port (the completion of the Panama Canal expansion is currently slated for 2016).

Second, companies across the U.S. and the globe have begun to move away from West Coast ports in favor of East Coast ports that are closer to their customers (about two-thirds of the U.S. population lives in the eastern half of the country). They have also begun to diversify their supply chains, mitigating risk and avoiding the labor uncertainty that has plagued West Coast ports in recent years.

At the 13 U.S. seaports tracked by JLL in its 2014 PAGI Seaport Outlook, total TEU volume increased by 3.3 percent from 2007 to 2013. However, the volume at West Coast seaports decreased by 6.8 percent during that timeframe, while East Coast seaports experienced an increase of 19.1 percent. This shift is likely to continue and will undoubtedly benefit the Port of Savannah and Atlanta’s industrial market.

Suffice it to say, the future of industrial real estate in Atlanta is very bright. Brokers and developers should expect to be plenty busy in the years ahead – and the Port of Savannah is a big reason why.

On March 5, CREW Atlanta will present a panel discussion, “ImPORTant Developments – Port of Savannah & Panama Canal.” Steve Grable is one of our guest panelists.

Steve Grable is a senior vice president at JLL. He specializes in the industrial market with a particular focus on port and inland port properties. He is an active member of the Port, Airport and Global Infrastructure (PAGI) international JLL team; in particular, he focuses on PAGI projects at mid- and south-Atlantic U.S. ports.

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Author: CREW Atlanta

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