SOUTHEAST SNAPSHOT, NOVEMBER 2004

Savannah Retail Market

Retail activity within the Savannah, Georgia, metropolitan statistical area remains strong, as more and more retail developers and end users are being attracted to Savannah. This interest is driven by the increasing population growth and housing starts within a 35-mile radius of Savannah.

The economic outlook remains solid, and a recent feature in The Savannah Morning News said Savannah was one of the fastest growing cities in Georgia. According to Dr. Michael Toma, director for the Center for Regional Analysis at Armstrong Atlantic State University, “The Coastal Empire’s economy posted the fastest two-quarter period of growth in nearly 6 years.”

Savannah Mall

The Savannah Mall has experienced a resurgence with the soon-to-open Target. Another opening has been announced by Steve & Barry’s Apparel, a New York-based clothing store that will fill the 93,000-square-foot space formerly occupied by Montgomery Ward. These recent additions, along with the new Bass Pro Shop, have made the Savannah Mall a major destination for Savannah residents and regional shoppers.

Abercorn Street and Southside Redevelopments

Edens & Avant of Columbia, South Carolina, recently announced Abercorn Walk, a $13 million development to be located on 7 acres of land at Abercorn Street and Janet Drive. This retail development will be anchored by Fresh Market. It is located across the street from the midtown Publix, the most successful grocery store in the Savannah chain. Several high-end specialty shops are considering locating to this center. This site was formerly occupied by a church and a funeral home.

“The biggest challenge was to get the key tenant reps to see Savannah in our present age, not from 5 or 10, or 15 years ago,” notes Clay Hostetter of Pinnacle Real Estate. “The neighborhoods that were stagnant 10 or 15 years ago are now populated with young, relatively affluent professionals in the prime of their shopping years. Savannah is experiencing growth in job opportunities, as well as the quality of life.”

Abercorn Common

Abercorn Common is a $30 million shopping center redevelopment at the highest-traveled intersection in Savannah. The traffic count at Abercorn and White Bluff peaks at more than 90,000 vehicles per day. The 21-acre, 210,000-square-foot development will be a unique combination of lifestyle and power center shopping, including big box retailers and approximately 50,000 square feet of boutique space known as Shops on the Common. According to Marian Smith, leasing agent, “Rates range from $16 for big box space to $30 for outparcel and boutique space.”

The redevelopment is competing to become the first Leadership in Energy and Environmental Design (LEED) accredited retail center in the country. The U.S. Green Building Council’s guidelines will transform the center into a lush shopping area for tenants. This pedestrian-friendly center will include water features, gracious architecture and outdoor dining. The assemblage and deconstruction phases are now complete and construction is underway. Phase I will open March 2005, with occupancy projected to exceed 110,000 square feet.

“Retail rents are on the increase along the growth corridors such as Abercorn, Broughton Street and Savannah’s Westside,” says Hostetter. “While rents on the Westside in developing retail centers continue to average in the teens, rents along Abercorn Street and along the Broughton Street corridor are in the $20 per-square-foot range. It seems like only yesterday the only place to find rents north of $20 per square foot was the mall or River Street. Now there are countless examples of $20 per square foot-plus rents on Abercorn and Broughton Street. A seller/landlord with an end cap and Abercorn exposure can name his price and there will be more than one or two retailers vying for the space.”

Historic District and Broughton Street

Within the Historic District, the area between Broughton Street and Bay Street has rebounded with recent openings of national chains like Gap, Banana Republic and Starbucks Coffee. Many specialty boutiques and restaurants line the Broughton Street and City Market corridor, and a New Balance store is rumored to be added to the list of Broughton Street retailers.

Rents are averaging in the high teens and will probably increase with the rising demand for space. Properties available for sale are virtually non-existent along the Broughton Street corridor.

Driving up the demand for retail is the large number of residential loft units for rent and for sale on the upper levels above the retail stores. The number of available loft units continues to increase, as well as the number of new condominium units adjacent to the downtown area.

As tourism continues to increase within the district, hotel developers are keeping pace. A new 104-room Staybridge Suite hotel has just begun construction on Bay Street, and in August, a Charleston, South Carolina, developer was given the stamp of approval for a new Hampton Inn at the corner of MLK Boulevard and Oglethorpe.

Plans were recently unveiled for a new $570 million mixed-use development along the Savannah River on 19 acres east of the Savannah Marriott Riverfront. This includes office, retail, waterfront apartments and condos.

Midtown Redevelopment

The area between 31st Street and Victory Drive is undergoing redevelopment on the residential front, as well as in specialty retail. Many of the single-family residential units are undergoing conversions to student housing in order to accommodate the continued growth of the Savannah College of Art and Design. The increased residential activity is spurring neighborhood retail demand.

The most recent retail/office space is the conversion of a former A&P Grocery store from the 1950s era into The Shoppes on Abercorn. This development, which includes ample parking, will serve the neighborhood with coffee shops, restaurants, retail space and office condominium space. According to Ivan Smith, leasing agent with Mouchet & Associates, “Interest from national retailers in the pre-construction phase has been high, with ground floor retail rates ranging from $19 to $24 per square foot. The retail aspect of the project will be enhanced by the development of office condominiums on the second floor.”

Westside is the Hot Spot Growth Corridor

The west side of Savannah continues to experience rapid growth because of the increasing number of new housing units. Local and national homebuilders have contracted for all of the available land tracts in Berwick, South Godley Station and North Godley Station. Rumors have been circulating that a large mall developer has entered into negotiations on the remaining land tracts near Wal-Mart and The Home Depot. Several regional and national developers are competing to gain control of the available retail frontage along Pooler Parkway.

“The influx of rooftops in West Chatham County has continued at an accelerated rate over the last 12 months,” says Harvey Gilbert of Gilbert Realty. “The developers of the Highlands project have sold 500 acres of residential land to Genesis Designer Homes, D. R. Horton and Tidal Construction, where 1,700 houses will be built. A neighborhood shopping center has been announced at the entrance to Berwick Plantation, and discussions are underway on a power center at Godley Station, as well as several other neighborhood centers along the Pooler Parkway and Benton Boulevard corridors. Chatham County has not experienced this pace of development since Abercorn Street was extended in the early 1970s.”

The Exchange at Berwick Highway 17

RealtiCorp’s Charleston office, along with International Paper Realty, has announced the sale of 18 acres to Noro Capital Development for the construction of a Kroger-anchored neighborhood shopping center. The 70,000-square-foot Kroger will anchor the first phase of the commercial/retail portion of the 80-acre Exchange at Berwick Plantation, located on Highway 17 in southwest Chatham County. The Exchange at Berwick will have more than 108,000 square feet of retail space, including the 24-hour Kroger grocery and fuel center, along with various shop and restaurant spaces. A surge of activity with new home development has peaked the interest of several new tenant groups, and lease negotiations are currently in the works.

According to David Grubbs of RealtiCorp, “We are very excited that Kroger will anchor the first phase of commercial development at Berwick.” Grubbs says the proximity to more than 4,000 residential units, as well as the improved traffic corridor along U.S. 17, ensures the success of the commercial development. “We have signed contracts and are in the process of negotiating contracts for several of the outparcels. We are seeing a lot of increased interest in Phases II and III.”

Highway 21 and Rice Hope

Highway 21 continues to be the main connecting corridor between Savannah and Effingham County. The improvement of the infrastructure of Port Wentworth has enabled developers to accommodate the additional housing demands on Savannah’s Westside.

Rice Hope Plantation is a planned community by Sivica Communities and will consist of 4,500 residential units and 70 acres of retail/commercial frontage along Highway 21. The driving force for the demand is the heavy traffic and high-density residential developments along Highway 21, which has a daily traffic count of approximately 32,000 cars. Dave Odom, president of Sivica Communities, says, “Interest from grocery and retail chains is very strong. Interior roadway construction for the residential portion is already underway, and development of the retail/commercial acreage will begin in early 2005.”

— Rhett Mouchet, SIOR, president, Mouchet & Associates

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