Savannah Industrial Footprint Poised To Double Despite Headwinds

Savannah’s industrial real estate market, buoyed by the East Coast's second-busiest port and one of the nation's largest new electric vehicle plants, could look unrecognizable in a few years.

The Savannah industrial market has nearly doubled in size since 2020, growing from 80.7M SF to 153.7M SF by the first quarter of this year, according to Cushman & Wakefield, with the vast majority of that development coming before Hyundai Motor Group opened its $7.6B electric vehicle Metaplant America in Bryan County last year.

It could double again, developers and brokers said last month at Bisnow’s Savannah industrial event. The momentum is likely to deepen demand and push new warehouse and distribution projects farther from the Port of Savannah.

“You’re going to need to almost double the size of this market, and that doesn’t even take into account the effect of Hyundai,” JLL Senior Managing Director Britton Burdette said onstage at the Hyatt Regency Savannah. “There’s always going to be the next territory.”

The Georgia Ports Authority plans to spend in excess of $4B to grow container capacity at the port over the next decade, a program that will also fuel new industrial development, said Stacy Watson, the Ports Authority's director of economic and industrial development.

The Port of Savannah saw an explosion in the number of 20-foot containers, a standard of measurement for the shipping industry known as TEUs, through its facilities since the nearly $1B Savannah River dredging program finished in 2022 and deepened the river for a 40-mile stretch to allow larger cargo ships to come through.

The dredging had an almost immediate effect. The same year it was completed, Savannah saw a record 5.9 million containers shipped. After a dip in 2023, the port's volume again increased by 12.5% last year.

Other port projects underway now include the conversion of the Ocean Terminal to allow cargo ships to dock directly there to shorten the time cargo can get from ship to shore, a project that will become a container-only terminal in 2027, The Atlanta Journal-Constitution reported. The Port Authority also plans to build a third container terminal across the river from Ocean Terminal by 2030. Together, the terminals will accommodate 12 ships at once, five more than is currently allowed, according to the AJC.

By 2035, the Port of Savannah is expected to facilitate the shipping of 12.5 million TEUs annually, including up to 100,000 containers for Hyundai alone, Watson said. That growth will necessitate logistical companies and suppliers to Hyundai to look farther out from Savannah to establish facilities.

“We're seeing a lot of projects come through the pipeline, 200K SF to 500K SF, and we expect to grow over the last year,” Watson said. “We're getting away from this, you know, ‘30 mile radius is the perfect radius to be from the port,’ because in the past, Savannah was considered a one-trick pony, and Hyundai came along and gave us two tricks.”

Tenants absorbed 21.5M SF of Savannah warehouse space last year, up from 15.3M SF in 2023. After vacancy peaked in the third quarter of last year at 9%, Cushman & Wakefield is projecting it to steadily decline as user demand drives leasing. 

But Savannah’s regional industrial growth faces headwinds. President Donald Trump’s tariff war has raised market volatility and the specter of economic recession. While still early, experts warn the trade war could hammer port-area real estate markets with lower demand, falling rents and rising vacancies, The Wall Street Journal reported.

Derek Mathis, senior vice president with SunCap Property Group, said Trump's whipsawing tariff policies have left the commercial real estate market without its footing.

“The rate at which everything's changing, it's so fluid, so nobody can really get their arms around exactly how to deal with it or how to quantify what it's going to mean for developers or end users,” Mathis said.

Certain shifts in trade — like more imports from countries other than China, which is now subject to a 145% export tariff — could boost East Coast port business, Mathis said. But higher costs to manufacture goods could mean fewer materials that need to be stored in warehouses.

Panelists say the trade war uncertainty has made construction material prices volatile again, with contractors not guaranteeing their prices for longer than a matter of days before having to adjust the costs of items like steel coils, metal decking and bar joists, Becknell Industrial Senior Vice President Matt Neumann said. 

“We're now seeing again, like in Covid, where our pricing comes with a caveat, good for 14 days at best,” Scannell Properties Director Daniel Madrigal said. “Contractors are really struggling to hold pricing.”

Mathis said tariffs are the latest in a string of uncertainties that continue to weigh on tenants making real estate decisions. Prior to that, occupiers were holding off because of election concerns, rising interest rates and strikes at the ports.

“There's just uncertainty, and in our business, uncertainty is problematic,” he said. “So you talk to your occupiers, and they're like, ‘Yeah, we'll just wait a little bit longer.’”