Despite the U.S. industrial market experiencing a decline in leasing activity last year, 2023 was a record year for Savannah, Georgia, which saw approximately 15.7 million square feet of industrial space leased. Big-box leases made up most of this activity with 12.9 million sq. ft absorbed. Big-box leases are classified as any industrial transaction 200,000 sq. ft. or greater. 

Savannah’s record year made it North America’s top industrial growth market in 2023, according to a new report from CBRE. Savannah’s growth rate (overall net absorption divided by existing inventory) of 12.9% was more than twice that of second place Phoenix. Savannah’s 12.9 million sq. ft. of big-box leases also qualified it as the seventh strongest market in North America. Comparatively, Georgia’s capital, Atlanta, ranked fifth on the list with 16.9 million sq. ft. of big-box leases signed.

General retailers and wholesalers leased the most big-box warehouse space in both Savannah and North America, accounting for 40% and 36% of all transactions, respectively. Similarly, retailers and wholesalers dethroned last year’s top occupier category, third-party logistics (3PL) providers, in both cases. 

Approximately 13 million sq. ft. of space remains under construction in Savannah, down from its all-time high of 26.2 million sq. ft. in the fourth quarter of 2022.

Approximately 12.4 million sq. ft. of net absorption was recorded in Savannah in 2023, and things have already started out strong this year. The market’s vacancy rate was 7.5% as of the first quarter of 2024, with approximately 2.8 million sq. ft. of net absorption recorded in the first three months of 2024, a first quarter record for Savannah.  

“Sharp demand growth in Savannah’s industrial market over the last seven years shows no signs of slowing down. Leasing activity in Q1 was significantly higher than ever before,” said William Lattimore, Executive Vice President with CBRE.

Big-Box Activity in North America

Industrial construction activity peaked in the U.S. last year, with a record 413 million sq. ft. delivered to the market, causing a doubling of the vacancy rate to 6.6%. However, construction in progress dropped to 208.4 million sq. ft. by year end, half of the previous year's total. CBRE forecasts a 5% increase in big-box leasing volume in 2024 as current market conditions are favorable to tenants. This indicates a potential rebound in demand, as the market strives to catch up with the robust deliveries of newly constructed industrial spaces.

“There was naturally going to be a period of cooling in big-box leasing, which had reached unsustainable levels in recent years, due to e-commerce demand and companies electing to warehouse to more inventory,” said John Morris, CBRE’s President of Americas Industrial & Logistics. “This cooling represents a move toward stabilization, and we expect a modest increase in lease transaction volume this year as the market settles.”

North America’s Top 25 Core Markets

CBRE’s report examined 25 big-box markets in North America. The top 10 markets in North America, ranked by growth, were:

To read the full report, click here.