Savannah Chamber

48 Real Estate: Residential and Commercial The real estate market for residential property remained healthy in 2018. A total of 7,578 residential units sold in the three-county region, a gain of 3.7% over 2017. In Chatham County, the median residential home price was approximately $215,000, a gain of 6% from 2017. The median residential sale price in Bryan County was $264,000 (+10%) and in Effingham County was $194,400 (+9.7%). West Chatham County continues to hold the greatest promise for single family housing construction in 2019 in Chatham County. Multifamily residential construction is expected to boom in the Savannah metro region in 2019. A stunning $110 million in building permit valuation for nearly 760 multifamily (apartment) units was issued in 2018, nearly all of it in August. This is equal to all of the apartment style valuation permitted in the preceding 7 years in Chatham County. Through much of 2018, about 1,300 new units were delivered into the market that now has about 20,000 units. West Chatham County had the most new inventory enter the market, followed by downtown Savannah and the Southside. Another 2,700 units are under construction. Vacancy rates in metro Savannah's office market decreased to 14% at the end of 2018 from 16% at the end of 2017. In the region, office rental rates increased 3.3% from 2017, with all submarkets reporting gains. Rental rates increased faster on the Westside, Downtown, and the Islands. Office space rental rates were $22.80 per square foot in the downtown central business district at year-end, up from $22.01 in 2017. Similar gains are anticipated for 2019. Commercial construction appears to have leveled off in 2018 as compared to 2017. The Park of Commerce and Eastern Wharf projects would add about 110,000 square feet – when they exit the pre-lease stage - to the region's 3.4 million square feet of commercial space. Additional projects are expected near the St. Joseph's/Candler micro hospital in Pooler. The artistic, creative community of the Starland District continues to attract interest and plans for a $40 million investment by the Foram Group would add apartments, an office building with roof-top restaurant, renovation of a former church into a 900 seat music venue, and a parking garage. The renamed Savannah River Landing project, now Upper Eastern Wharf, had a ground-breaking in October 2018. This is a $600 million investment on 54 acres, the first phase of which is a $225 million investment expected to be completed in 2020. The first residential property of the Upper East River development is expected to open in February 2019. The first phase also includes luxury apartments, a boutique hotel, a parking garage, 40,000 square feet of retail, and 80,000 square feet of Class A office space. Hotel development continues throughout Savannah. Construction on the $270 million Plant Riverside District continued through 2018 and is expected well into 2019. Completion of the 419-room JW Marriott hotel, retail, dining, and entertainment space is expected in 2019 or 2020. This is one of the largest private developments ever experienced in Savannah; at 670,000 square feet, it is expected to create 700 new jobs. Development of Rockbridge Capital's adjacent $72 million 173-room hotel started in 2018, and includes a $14 million investment in streetscape and river walk by the City of Savannah. Additional hotel projects planned or under construction could add another 1,500 hotel rooms in Savannah during the upcoming several years. Real Estate: Industrial Distribution Perhaps the single most important event for the industrial distribution sector was the recently passed Freeport Tax Exemption that eliminated the inventory tax in Chatham County and substantially enhanced the attractiveness of the county to e-commerce fulfillment operations. Almost immediately after the tax exemption was approved by county voters, the home goods retailer Wayfair announced the construction of a 1.2 million square foot facility which will bring 1,000 jobs to Savannah over the next five years. E-commerce facilities are much more labor intensive than big box distribution warehouses and pay higher wages to workers. Savannah's industrial and warehousing market extended its multi-year trend of substantial growth in 2018. Continued exceptional growth in port activity pushed the vacancy rate down to a stunning rate of 0.5%. This is well below the equilibrium vacancy rate and historical average of 5.6%. New inventory of 3.2 million square feet was completed and delivered in 2018. Approximately 9.3 million square feet of new inventory is under construction with delivery expected in 2019, with about half already committed to users. 2019 is expected to be another very good year, even as new inventory is delivered. The market has attracted the attention of large nationwide developers as the number one market in the country for industrial/distribution development. About 60 million square feet of space is expected to be in the market by the end of 2019, with about 20 million square feet added in the past four years.

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