Savannah continues to show significant growth in many areas of the commercial sector. Even though Savannah could be classified as a second- or third-tier city, expanding growth corridors and sectors of opportunity are emerging as a result of progressive regional leadership and an increasing population shift to the southeastern United States. A good quality of life, recreational amenities and improved infrastructure continue to attract developers and retirees to the area.

The Commercial Sector and Main Growth Corridors

For many years, Abercorn Street was the main growth corridor for commercial and retail opportunities. With the addition of more infrastructure on the Westside and along Highway 17 south in Chatham County, new development opportunities are emerging for these areas. Savannah’s fastest developing corridor of growth in the year 2001 will continue to be the Westside. Continued expansion of new retail and commercial development along Pooler Parkway and at the Branigar Organization’s Godley Station is expected. Harry Kitchen of Foxfield Development has completed plans for Town Center, an upscale, mixed-use development consisting of 165 acres. This phased commercial community is master-planned for the construction of regional retail, hotel, cinema and potentially 300,000 square feet of Class A office space over a 10-year period. Big box retail users located within this project will have exposure from Interstate 95.

Other commercial real estate initiatives at Godley Station include the Pooler Park of Commerce, a 65-acre mixed-use commercial development, and The Crossings, which consists of 20 acres of office and retail space. According to Harvey Gilbert, senior vice president of The Branigar Organization, “Godley Station has become a regional destination because of its strategic location, accessibility, excellent roads and overall infrastructure. This portion of Chatham County is evolving into a regional hub of shopping, office and distribution, healthcare and supportive services.”

Retail

Also in Savannah’s Westside, the new Super Wal-Mart at Godley Station is attracting an estimated 50,000 visitors each week and Home Depot is currently under construction on a contiguous site. The growth of new office and residential units in the Godley Station/ Pooler area will entice other retail development including new grocery-anchored shopping centers along Pooler Parkway by the end of 2001. There is also speculation that a regional mall developer is considering a location near Godley Station.

Of significant impact along Highway 17 toward Richmond Hill is the addition of a new Super Wal-Mart located near Highway 204. The superstore, with 275,000 square feet of retail space, will have a positive effect on land values and promote additional retail development opportunities in the immediate area.

In the Southwest quadrant of Savannah Quarters, the master plan allows the development of high-end residential homes, apartments, hotels and an entertainment complex. The close proximity to downtown, as well as the central location in the region, could provide an ideal location for the next regional mall. The combined residential and commercial development during the first phase could total more than $150 million.

According to Bridget Lidy of the Savannah Development and Renewal Authority, Broughton Street continues to attract national retailers including Starbucks, Banana Republic and the Gap. Galleries, restaurants and residential lofts now fill once vacant storefronts and upper-story spaces. Of great significance was the grand re-opening of The Lucas Theater last December, which joined the Savannah College of Art and Design’s Trustees Theater and the City Lights Theater. This eastern section of the Broughton Street corridor has become an important entertainment sector and will foster continued expansion of retail and upper-floor office and residential space.

Two of the industrial companies located on Hutchinson Island, Blue Circle Concrete and Powell Duffryn, have recently placed their properties on the market with efforts aimed at targeting high-end, high-density commercial users. There is a movement underway to rezone and master-plan the industrial properties (approximately 120 acres) west of The Westin to the Talmadge Bridge for high-end commercial use.

Office

Most of the new office growth in recent years has occurred along the Chatham Parkway corridor. This trend will continue in 2001, mainly because of the proximity to all areas of the region and the availability of utilities. Another area of recent office development is along Stephenson Avenue where approximately 40,000 square feet of office space has been successfully leased.

The office market consists of three sectors: the central business district, the Southside and the Westside. The total office market inventory consists of approximately 1.5 million square feet in buildings of Class A and B quality.

The CBD consists of 605,449 square feet with an overall occupancy level of 94.4 percent. Occupancy levels are slightly higher for Class A buildings and overall have increased approximatly 3.3 percent within the last six months. The rate within the CBD ranges from $15 to $20 per square foot for Class A buildings, with an average rate of $17.63 per square foot for full-service rent. This rate has increased approximately $0.30 per square foot from the previous six-month period. As evidenced from the occupancy figures, additional Class A office space could be absorbed within the CBD.

The Southside office market consists of approximately 579,557 square feet of significant Class A and B buildings with an occupancy level of 95.2 percent. Occupancy levels have increased about 2.8 percent within the last six months and are slightly higher for class A buildings. The rate within the Southside office market ranges from $13 to $20 per square foot, with an average rate of $17.75 for full service rents. The rate has increased $0.45 per square foot over the last six months. As evidenced by the occupancy rates, additional office product could be absorbed within the Southside.

The Westside office market rents range from $10 net to $18 for full service facilities. With the exception of Chatham Center, whose rates have increased, rents have remained constant. The higher vacancy rates take into consideration new office construction in progress, still indicating a high demand for office products on the Westside. Occupancy levels at Chatham Center are in the 96 percent range with a strong demand for additional space at the office park.

Of enormous significance to the Savannah region is the Savannah Economic Development Authority’s new Technology and Engineering Campus (TEC). TEC, which will span 170 acres within Crossroads Business Park, will include a multi-building campus geared toward servicing the growing technology sector. Academic and research facilities, incubator spaces, offices suitable for private sector technology companies, support facilities and parking will all be provided on the campus to create what the high-tech industry wants, a “campus within a campus” environment. It is anticipated the campus will create 4,000 new jobs and $150 million in investment. Georgia Tech Regional Engineering Program Facilities has announced its intention to become the anchor tenant in the campus.

Crossroads Business Park, a 1,700-acre park adjacent to I-95 and Savannah International Airport, provides an ideal location for the TEC. It has all the requirements already in place, including infrastructure, and is close to the heart of an urban center, downtown Savannah.
According to Richard Knowlton, president and CEO of the Savannah Economic Development Authority (SEDA), “The addition of the Technology Campus and the 4,000 jobs will create a business environment that has not been previously imagined in our community. This campus, with the regional exposure and high-tech capabilities, will create a work/live environment that could become the business showplace for the Southeast.”

Industrial

SEDA continues to accomplish ambitious goals at CrossRoads Business Park. The park is recognized in regional and national industrial development circles as being a state-of-the-art industrial park. It is entirely feasible that during 2001, the remaining land at CrossRoads could be absorbed by either high-end industrial or office users.

The Savannah industrial market is in a fast-growing mode. Buoyed by CrossRoads Business Park and the Georgia Ports Authority, industrial inventory grew over 7.5 percent during the first, second and third quarters of 2000. Total distribution and manufacturing inventory as of January 1, 2000, was 26 million square feet, and over one-third of this total was in the manufacturing sector. Vacancy in January of 2000 was 4.6 percent (1.2 million square feet). There were 2 million square feet added to the inventory during 2000. Although this is a very healthy increase, the vacancy decreased to less than 2 percent, or 444,650 square feet. Total inventory as of November 1, 2000, was 28.2 million square feet.

The build-to-suit market was very strong in 2000. The Dollar Tree stores (600,000 square feet), Wal-Mart Distribution (800,000 square feet) and Michael’s (250,000 square feet) represented over 80 percent of the increased inventory.

Multifamily

For several years the most significant multifamily development occurred on Savannah’s Southside, largely due to the availability of infrastructure, zoning and affordable land. Wilmington Island was also the “hotspot” for multifamily projects until residents instituted a land-use plan that limited commercial development and restricted the zoning for multifamily construction on the island area.

With the opening of Savannah’s second mall and the widening of the Abercorn Expressway, Georgetown, Savannah’s southernmost community, became the most desirable area for apartment developers. In recent years, significant new development, new schools, shopping centers and a golf course have added to the desirability of locations in the Georgetown area.

This influx of new development has also limited the availability of additional multifamily land. “In the past two to three years, high occupancies and favorable economic conditions in Savannah led to the development and construction of approximately 1,200 upscale apartment units along the Abercorn Street corridor,” says Maggie Gordon, associate broker with David Byck Realty and specialist in the sale of apartments and multifamily land. “These units were absorbed within a very short period of time and had very little effect on the vacancy rate.”

With the continued growth in the Southside resulting in the scarcity of land, the multifamily corridor was recently extended to Henderson Lake, a new residential area just south of Georgetown.

Continued development of garden-style apartments is still the preferred and most common type of project in the area with densities of 10 to 12 units per acre, according to Bill Saxman, director of development services with the Metropolitan Planning Commission. He also projects that the Westside area appears to be the area most recently sought after by apartment developers because of the availability of land and accessibility. “The entire Highway 17 corridor appears to be the upcoming commercial corridor for the future,” Saxman says. “The widening of Highway 17 to Richmond Hill is a significant step in opening up a significant land area for large-scale development.”

New developers to the Savannah area over the last few years include Merry Land Properties, which recently began the second phase of the Hammocks and is in the planning states of Phase II of The Preserve at Godley Station. The Spanos Group also completed approximately 230 units on Wilmington Island.

Savannah and the surrounding area continue to reap the benefits from investment in infrastructure in recent years for the Historic District, Hutchinson Island, the Westside and in surrounding counties. The investment is “paying off” and attracting individuals and companies to the area.

2001 should continue to be a good year for real estate in Savannah, especially if the city continues to develop and improve its infrastructure, stabilize real estate taxes and attract quality development.

Rhett Mouchet is vice president and broker-in-charge of Colliers Keenan, Inc. in Savannah, Georgia. Associate brokers Lynn Beam and Marian Smith also contributed to this article.


©2001 France Publications, Inc. Duplication or reproduction of this article not permitted without authorization from France Publications, Inc. For information on reprints of this article contact Barbara Sherer at (630) 554-6054.