On a national level, 2002 was not a banner year for the overall real estate market. It was a year of emotional recovery from September 11, 2001, economic instability in the stock market and public distrust for much of the corporate sector of our economy.

Savannah’s Citizens Determine the Destiny of Ellis Square Savannah, Georgia, is famous around the world for its elegant and historic plan, especially its public squares. Ellis Square is one of the oldest squares, famous for its vibrant public markets. This changed in 1954 when a parking garage was built on the site. On December 31, 2004, control of the site will return to the city of Savannah, and preparations have already begun to return the square to the public realm. In August 2002, The Center for Connective Architecture at Cooper Carry traveled to Savannah for a 3-day public charette, a collaborative design session, to develop concepts for the ground level of Ellis Square as a public space with parking placed underground. “This was not something where citizens came to hear people lecture on what Ellis Saquare is going to be,” says Christopher Morrill, assistant city manager. “It was for the public to come and really tell us their vision.” The charette team led a brainstorming session on the first night, a group critique of four basic design concepts on the second night and a group discussion of the concepts on the last night. “Cooper Carry’s ability to listen and translate the citizens’ ideas into conceptual designs played an integral part in making this process a success,” continues Morrill. “Deciding the fate of a place as historic as Ellis Square comes with tremendous responsibility,” states Rich Flierl, principal-in-charge of urban planning at Cooper Carry. “Which is why it was imperative that we worked not only with the city, but with the citizens of Savannah to build consensus and create a shared vision.” The city of Savannah plans to continue the process. Another charette is planned to further refine the guiding principles and concepts and to set a course for commissioning a final design.

Savannah, Georgia, fared better than much of the nation. One significant reason for Savannah’s stability is the local government’s initiative a few years ago to develop a strong infrastructure in projected growth areas. The rewards of this initiative are obvious. Due to the extension of utilities and good interconnecting roadway systems, the west side of Savannah is experiencing phenomenal growth, both in the commercial and residential corridors. Another factor associated with growth in Savannah is the low interest rates that make housing affordable in the “entry level” residential housing market.

Overall Commercial & Industrial

Even though the local commercial and industrial sectors have experienced higher vacancy rates than in 2001, Savannah is well below the national average. Savannah’s office and industrial sectors have never experienced the overbuilding that has occurred in many first- and second-tier cities across the nation. Therefore, the city is not experiencing the vacancies that are occurring in other office and industrial markets.

Another important and positive factor for the Savannah real estate market is the rapid growth of the Port of Savannah. The increased activity within Savannah’s port is directly related to the relatively low vacancy factor found in the industrial sector.

Overall, many of the commercial brokers in Savannah feel that the market sustained growth through 2002. “We have had a pretty good balance between demand and inventory,” says Cliff Dales of Neely-Dales LLC Commercial Real Estate Company. “The majority of our growth in the commercial markets has been need-driven with few, if any, speculative commercial buildings coming into the marketplace.”

Peggy Jolley of the Savannah Economic Development Authority states, “Business has been definitely on the upswing since Labor Day. In reflecting over the past 2 years, our business peaked in January 2001; then came the volatile stock market, and by mid-2001 our business had also taken a dive. We have had a mixed bag of highs and lows since then, but September was a real turnaround and activity has been on the increase. We are very optimistic that it will continue.”

Jolley adds that some of the most serious business inquiries to Savannah are coming from entities that are seeking nontraditional cities and locations, not the typical locations that were popular in the 1980s and 1990s. Those larger cities and their traditional markets have become increasingly overbuilt and economic bases have been driven by industries that are presently in a downturn in both the industrial and office sectors. Business owners are intrigued by the opportunities that abound in a market like Savannah. The area offers a good quality of life, and high-tech capabilities make it possible to operate in all markets from Savannah. Jolley also credits the growth of the Savannah port. There is presently a severe backup of products on the West Coast. Retail distributors are looking seriously to duplicate or move their distribution centers to the East Coast, and Savannah is a logical place because of the large import of products from the Asian markets. The end of 2002 saw a definite increase in prospects with signs of more to come.

The Downtown & Historic District Real Estate Markets

Bridget Lidy of the Downtown Development and Renewal Authority reports that the second and third quarters of 2002 showed a substantial increase in business and property development inquiries as compared to post-September 11, 2001, figures. The Renewal Authority also reports that the sale of residential lofts on Broughton Street has increased to a total of 108 units. The Savannah College of Art and Design (SCAD) continues to be a major business catalyst within the downtown corridor. It is obvious that retail activity in the downtown area is closely related to the continued growth and expansion of the college. Of major significance is the SCAD renovation and adaptive reuse of the Neal Blun property on Montgomery Street to house its digital arts programs.
Additional development in downtown Savannah includes the newly completed Radisson Hotel at MLK and Bay Street. The hotel adds to the list of several well-known lodging establishments including the Hilton, Marriott, Marriott Courtyard, Holiday Inn and Days Inn.

Streetscape Improvements

On behalf of the Downtown Renewal and Development Authority, the city of Savannah has requested a grant from the General Assembly. This grant, if obtained, would provide funds for the installation of comprehensive streetscape improvements to MLK, such as new medians, crosswalks, lighting, sidewalks and amenities. These funds would also be used to purchase and initiate development for Battlefield Park, which is located at the west end of the Historic District. This would include stabilization of the buildings at the Railroad Museum and completion of the renovation of the former West Broad Street YMCA building into the Westside Community Resource Center.

With regard to residential sales in the Historic District, Johnnie Ganem of Johnnie Ganem Appraisal Company says that residential property values within the Historic District have remained very good, but Savannah still lags behind Charleston, South Carolina, with regard to the number of residential sales. The average sale price within the district is also lower than in Charleston.

Office Market

Savannah’s office market fared much better than the national office market. The only significant vacancy increase is occurring in the downtown market. Parking rates have increased significantly in recent months and two large office tenants have relocated from downtown. There are no pending office developments on the horizon for downtown Savannah. Overall, there is a definite need for newer, larger and more efficient product in Savannah, but only one significant project is being considered. This project would be a 50-acre flex project and, if constructed, will be located on the west side of the city near the Savannah International Airport.

Industrial Market

The Savannah industrial market continues to expand at a rapid rate. Since January 1, 2000, the total inventory has increased more than 20 percent. The total inventory as of December 2002 was 31.5 million square feet. Of this amount, 29.6 percent is manufacturing.

During 2002, 1.47 million square feet of new construction was added. Of this amount, only 124,000 square feet was speculative warehouse space; the remainder was build-to-suit product. Pier 1 Imports’ (784,000 square feet) and United Distributions’ (220,000 square feet) projects constitute the bulk of the new construction.

On the downside, vacancy increased to 5.9 percent. This compares to a rate of only 2.1 percent at the end of 2001. Net absorption is negative 397,894 square feet.

Prospects for a continued thriving market are good. The announcement of the proposed DaimlerChrysler facility is a boon to the area.

It is anticipated that with the announcement of the DaimlerChrysler assembly plant, to be located in West Chatham, that the demand for industrial warehouses will greatly increase. The newest business/industrial park to be announced is the Westside Business Park on Highway 80, near Interstate 95. The park is located on approximately 100 acres with industrial and commercial lots available for sale. The acreage ranges from small to large tracts and is designed to accommodate industrial and business uses on the west side. “Interest in the park is very strong for industrial and warehouse use because of the lack of available, developed industrial lots on the west side,” says David Sink of Neely-Dales LLC. In only a few weeks Sink sold 12 of the 36 land parcels with roads and infrastructure not to be completed until spring. He believes that the demand will greatly increase within the next few weeks because of the announcement of the new DaimlerChrysler assembly plant.

Savannah’s Rapidly Developing West Side

South Godley Station continues to experience phenomenal growth. The Preserve, a Class A apartment community located at South Godley Station, is fully occupied, and an additional 640 apartments are slated for construction along the Benton Drive corridor. Benton Drive will be a major connector between the South Godley and North Godley developments with additional commercial and retail components to be developed along the corridor.

Harry Kitchen, principal of The Foxfield Company, sees continued growth within the Godley Station corridor. “This Westside development corridor is the center of the region,” says Kitchen. A new Sam’s Club will be located near the Wal-Mart Supercenter and Home Depot. Expectations are for 1 million visitors in the first year. Kitchen also sees potential for major office development along Benton Drive. He believes that the North Godley Station development could very well attract a major mall developer within the next few months.

Harvey Gilbert, senior vice president of Branigar/IP, concurs with Kitchen. “Due to the recently enhanced infrastructure and excellent road system, West Chatham County in general and the Pooler area in particular are experiencing significant residential and commercial growth,” Gilbert states. “Mixed-use projects such as Godley Station are providing residents with the opportunity to live, work, and play within the same neighborhood. Over the last 5 years, the Savannah metropolitan area has evolved into a five- to six-county region with a population in excess of 500,000 and a diversified economy. The Georgia Tech Engineering Program will be a major anchor for future growth within the high tech sector.” The Georgia Tech engineering campus is presently under construction on a 160-acre tract adjacent to North Godley Station on I-95.

Berwick Plantation, another Branigar/IP master development, has attracted several of Savannah’s leading homebuilders. New home construction is already underway and Berwick Boulevard is under construction. Upon completion, the road will connect Berwick Plantation and Southbridge. Southbridge is a major golf course community with over 600 homes. The Berwick community is zoned for 3,300 residential and apartment units. Eighty-four acres of planned commercial development known as The Exchange at Berwick will be available for commercial and retail use along Highway 17 and Berwick Boulevard. RealtiCorp will be working with Branigar to market this 84-acre parcel.

According to David Grubbs of RealtiCorp, “Our internal market research and local contacts led us to the growing west side. Savannah is a good market and the Berwick project met all of our investment criteria. There is improved infrastructure, new quality residential development and close proximity to downtown Savannah.”

With Pooler Parkway nearing completion, commercial activity at the southwest quadrant of Savannah Quarters is attracting interest from several regional commercial developers. The Southwest Quadrant is a joint venture between Hall Development and Greg Norman’s development group, Medalist Development.
Residential activity is also very strong. “Sales activity at The Woodyard at Savannah Quarters has been extraordinary,” notes Jeff Jepson, general manager and principal broker for Hall Development and Southbridge. “Since last May, there have been 158 lot sales with an average price of $140,000 up to $197,000 and we expect sales to number beyond 200 at year end. Eighty golf villas are expected to be under construction in the near future at the village and a 296-unit apartment project is expected to break ground within the next few weeks.”

The impact of locating the DaimlerChrysler assembly plant in Pooler could be the most significant business event ever to take place in Chatham County. The location of this new facility Savannah could initiate the same chain of events that occurred in the Greenville/Spartanburg, South Carolina, area where supplier-related industries and associated services competed to locate within close proximity to the BMW plant.

According to Ganem, “Raw land values on the west side of Savannah will be greatly impacted by the DaimlerChrysler announcement, and in some cases should have a near doubling effect on the value of raw land.”

The Savannah facility will affect the local real estate market in terms of housing demands, retail services, office and commercial uses, but, most importantly, the location of the new facility to Savannah will give Savannah the “seal of approval” as a good business location, which could attract countless other industries to Savannah.

Rhett Mouchet, SIOR, is with Mouchet & Associates, a subsidiary of Melaver Inc. in Savannah, Georgia. Some information and data in this article were provided by Marian E. Smith, CPA, and W. Lynn Beam, associate broker.


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