Buoyed by a flood of warehouse capacity hitting markets across the U.S., industrial real estate tenants are looking to expand their presence this year into both familiar and emerging markets.
Commercial real estate firm CBRE expects an uptick in leasing activity as companies grow their warehouse footprints, said James Breeze, vice president and global head of industrial and logistics research.
“Despite all the economic uncertainty, consumers continue to consume,” Breeze said. “That means that some occupiers who are waiting are just going to have to get back into the game and restart their expansion plans.”
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But which markets are logistics and warehouse operators likely to expand into? Location, labor availability, local regulations and individual company needs all play a part in leasing decisions. However, in conversations with industrial real estate experts, three markets emerged as likely hot spots this year.
Savannah, Georgia
Warehouse tenants have Savannah, Georgia, on their minds.
The Port of Savannah’s status as a key East Coast port is driving increased demand for industrial real estate in the area. Savannah also offers a viable alternative to Atlanta-area distribution centers for some occupants, according to Stephanie Rodriguez, national director of industrial services at real estate giant Colliers.
Industrial tenants securing new space in the Savannah market include supply chain service providers like Win.IT America and Customized Distribution Services, according to a January report from Colliers. The automotive industry also serves as an important driver of growth, with Hyundai Motor Group building a mass-production plant for electric vehicles in nearby Bryan County.
As tenants flocked to Savannah, a CBRE report said that the market saw 15.4 million square feet of leasing activity in 2023, the most in its history. However, a rush of construction completions pushed Savannah’s overall industrial vacancy rate up to 8.4%, putting downward pressure on rental rates.
“We’ve seen higher vacancy rates in Savannah just because of the massive amount of development, but the activity has also been good there,” Breeze said.
