There has been a great deal of anxiety in the Savannah, Georgia, real estate market as a result of the anticipation of the DaimlerChrysler announcement to locate its van assembly plant on 2,200 acres of land just west of downtown Savannah along Interstate 16.

DaimlerChrysler representatives announced in May a postponement of location decision until further notice. In September, it was announced that, in effect, DaimlerChrysler will not locate in Coastal Georgia. This announcement has not had any effect on the state of Georgia continuing to prepare the “mega site” for eventual occupancy by another entity. According to informed sources, several prospective users are interested in the site.

The lack of a positive announcement by DaimlerChrysler has not had any significant effect on the Westside real estate market. Residential and commercial activity continues to increase on Savannah’s Westside. Especially active are the South Godley and North Godley corridors that were master planned by International Paper and sold to various residential and commercial developers over the past few years.

Crossroads Business Park and Industrial Development

Development activity remains brisk at Savannah’s Crossroads Business Park. Located on Savannah’s Westside, Crossroads is the “crown jewel” of business parks for the entire region. Two major “assembly distribution” companies are considering locating facilities at or near the business park. Friedman’s Jewelers’ corporate headquarters and the Pier 1 Imports distribution facility are two entities that have opened at Crossroads during the past year. Other companies within Crossroads include The Home Depot, Lummus Corporation and Dollar Tree.

With the Savannah Port being the fourth busiest deep water container port in the United States and the second largest U.S. container port on the East Coast, it is little wonder that Savannah’s manufacturing/distribution base continues to grow. Crossroads Business Park is located only a short distance from the Georgia Port Authority and Interstate 95.

Peggy Jolly, executive vice president of the Savannah Economic Development Authority, states, “During the first 8 months [of this year], inquiries were up more than 25 percent from last year’s same timeframe for both office and industrial.”

She continues, “The increase of office inquiries is due to pent up demand for regional office space and the rising need for call centers and corporate headquarters. According to a national study of corporate office operating costs, Savannah is on the radar screen for many companies because of our low costs of doing business. In a comparison of 50 cities, Savannah’s costs were the lowest, including air service.”

Jolly remains optimistic that business inquiries coming through the development authority will continue to increase into 2004.

David Sink with Neely-Dales Industrial and Commercial Real Estate Company has seen the industrial sector becoming more active after a slow start to 2003. “A substantial amount of new construction of bulk distribution space over the past 3 to 4 years, coupled with an ample supply of vacant, older space, slowed new development in 2003. We had several new developments in ‘03, including the 250,000-square-foot build-to-suit for Kerr McGee along with the opening of Pier 1 Imports’ 780,000-square-foot facility.” Sink notes that several suppliers along with third-party warehousing entities accounted for more than 250,000 square feet of absorption of industrial space so far this year. A recent survey of Savannah’s industrial market noted approximately 32 million square feet of industrial space with vacancies averaging around 4 percent.

Sink is the project manager for the Westside Industrial Park and notes that the demand for good industrial building sites is so great that 56 percent of the sites within the park have been sold and the park is still months from completion of infrastructure. The park is strategically located on the west side near I-95 and the Georgia Port.

Anticipated Industrial Submarkets

Several of the counties surrounding Savannah within Coastal Georgia are preparing for significant manufacturing distribution entities, which will locate on the 2,200-acre site in Chatham County. The development authorities of Bryan, Liberty and McIntosh counties in Georgia and Jasper County in South Carolina are preparing for the anticipated demand from suppliers for the ultimate user of the Savannah mega-site. Land is being zoned and developed with infrastructure to be ready for the demand for industrial sites. All of these counties are within 1 hour’s drive of Savannah.

According to Fred Stregles, executive director of the McIntosh County Chamber of Commerce, “We are currently in the process of purchasing an additional 500 acres to expand our current industrial park in anticipation of enhanced and expanded opportunities for our market. Our proximity to the former DaimlerChrysler mega site, the Liberty County mega site, the ports of Savannah and Brunswick, and Interstate 95 make this park an ideal location for many first- and second-tier suppliers and other supporting businesses that prefer an environment that offers lower set-up and operating costs, along with a great quality of life for employees.”

Westside Residential and Commercial Growth Continues

Demand for single-family housing has continued to grow on the west side of Savannah with absorptions at Godley Station nearing 150 units per year. The Villages at Godley Station is an example of the housing boom that is occurring at Savannah Quarters, Pine Barren and Berwick Plantations. All of the residential development parcels in the 2,000-acre, 3,300-unit planned unit development (PUD) at Berwick have been sold to local homebuilders with residential construction activity at record levels.

This entire Westside corridor has experienced phenomenal retail growth since Wal-Mart and The Home Depot opened at Godley Station 3 years ago. Also at Godley Station, Sam’s Club is under construction and a major retail developer has 115 acres under contract for an 800,000-square-foot power center. On Highway 17 and Berwick Boulevard, the first phase of the Exchange at Berwick is under contract to an Atlanta developer for a major grocery-anchored shopping center slated for completion in fall 2004.

Major Office Development

In addition to the retail and residential growth at Godley Station, a 115-acre site fronting I-95 is being planned for a 1.1 million-square-foot corporate office campus with a full-service hotel. The office campus will be a phased development with the first building totaling approximately 60,000 square feet. There has been considerable interest in the project from several prospective regional tenants and construction on the first phase is anticipated in early 2004.

There is also 3.7 million square feet of development planned for the remaining 400 commercial acres at South Godley Station. Rental rates within the area for Class A space averages in the upper teens for full-service rental rates. While vacancy rates in Savannah’s three office sectors appear to be rising, there is still a lack of quality space with adequate parking that can accommodate the large user. The vacancy rate for the central business district has increased from 10 percent to almost 15 percent during the past year.

According to Harvey Gilbert of Gilbert Realty Company and formerly Savannah region manager for Branigar/International Paper Realty, “We have spent the last 8 to 10 years positioning projects and marketing West Chatham County, in general, and Berwick Plantation and Godley Station, in particular, to highly qualified national and regional developers. West Chatham is now universally recognized as a preferred location for developing regional retail, Class A office and multifamily products and all single-family residential price points serving a six-county region with more than 500,000 residents. The momentum is overwhelming and we have just begun to scratch the surface in terms of the depth of this regional market.”

Retail Growth on the South Side

The lack of available land for major retail development on the south side has limited significant expansion by major retailers to either Oglethorpe or Savannah Mall. Most recently, Bass Pro Shop opened at Savannah Mall (100,000 square feet plus) and Target has announced that it will open a 125,000-square-foot store by December of 2004.

Other significant retail development on the south side includes Abercorn Common, formerly known as Abercorn Plaza. The redevelopment of the center will encompass approximately 225,000 square feet of retail space. According to Robb Stanley, spokesman for Melaver Inc., “Abercorn Common will be developed utilizing the latest technology in environmental design and efficiency. In addition to being a beautiful and functional shopping center, we hope to accomplish the development of Abercorn Common in accordance with the U.S. Green Building Council’s Leadership in Energy & Environmental Design (LEED) Green Building Rating System. We believe that redeveloping Abercorn Common in accordance with LEED will result in a first-of-its-kind retail development that will be attractive to both retailers and consumers.”

All in all, the people of Savannah are optimistic that real estate markets will remain stable through the foreseeable future.

Rhett Mouchet, SIOR is president of Mouchet & Associates in Savannah, Georgia.


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