In Q2, the Savannah industrial vacancy rate increased to 8.5% from 7.7% in the previous quarter of 2024, due to historically high levels of deliveries. Leasing demand has kept pace with building completions and Savannah continues to demonstrate itself as one of the top growth markets in the nation. The market’s net absorption remained strong with a YTD absorption of 6.5 million square feet (Atlanta at 6.2M YTD) and a quarterly net absorption of 3.8 million square feet. 5.2 million square feet of new inventory was delivered in Q2, increasing Savannah’s total inventory to nearly 137 million square feet.

The development pipeline has ticked down from 21.8 million square feet in Q1, with 20.6 million square feet currently under construction. Fewer new projects are in the early stages of development and land transactions were minimal in 2023. The average rental rate slightly decreased from $6.92 psf in Q1 to $6.84 psf in Q2 correlating with the new supply. The majority of the leasing demand is coming from international companies and West Coast users looking to diversify their supply chain.

The Port of Savannah has posted a YTD container volume of 2,701,136 TEUs, a 14% increase from the same period in 2023 (Q1+Q2). TEU volumes for June 2024 were up 19% over June 2023.

Savannah will absorb the above-average speculative deliveries in 2024 and early 2025. This is primarily due to land scarcity within 15 miles of the port, long-term land entitlement challenges, TEU volume growth, and strong international and West Coast user demand. The market will likely see a shortage of space again in mid-late 2025 through 2026. Rent growth is a given in the medium-long term for properties close to the port. Users looking for lower rental rates will also drive new construction further inland on I-16 toward Atlanta, and North and South along I-95 within a 30 to 40-mile range of the Port of Savannah.