Duke Realty Inks 1.4 MSF in Industrial Leases

60 Triple B Trail, Pooler, Ga. Image courtesy of Duke Realty Corp.

Duke Realty Corp. has had an active run in Savannah, Ga., of late, having recently closed four lease and renewal contracts for industrial space totaling more than 1.4 million square feet. The spate of transactions has left the REIT’s approximately 9 million-square-foot Savannah portfolio 100 percent leased.

The big news in Savannah comes on the heels of a successful year of leasing activity for Duke, which inked more than 33 million square feet of leases in 2021.

“We concluded the year with our in-service portfolio at 98.1 percent leased, a company record and particularly impressive as it includes the delivery of 7.7 million square feet of development projects in 2021,” James Connor, CEO of Duke Realty Corp., said during the company’s fourth quarter 2021 earnings call on January 27, 2022. “We renewed 75 percent of our leases, or 90 percent when you include immediate backfills.”

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With the Savannah transactions, Duke appears to be continuing the leasing frenzy into 2022. Of particular note, the company landed a tenant for its largest speculative development in the market, 60 Triple B Trail, an approximately 820,300-square-foot facility in Pooler, Ga. Located on a 53-acre site near the Port of Savannah, the distribution warehouse is currently under construction and caught the attention of a global e-commerce giant that committed to occupying the building in its entirety. Duke expects to complete construction of 60 Triple B Trail in July 2022.

In Savannah proper, Duke signed Tradepoint Logistics to two lease agreements for two full buildings. Tradepoint will set up shop in the 284,400-square-foot distribution warehouse at 250 Grange Road and the 99,000-square-foot distribution warehouse at 248 Grange Road, both of which first opened their doors in 2002 and became part of Duke’s portfolio in 2006. At the neighboring property at 246 Grange Road, an approximately 262,900-square-foot facility built in 2006, Supply Chain Management signed a full-building lease renewal. Brian Sutton, a vice president of leasing and development with Duke Realty Corp., represented the only pure-play logistics property REIT in the U.S. in the lease transactions.

Signs of an insatiable market

Thanks in no small part to the thriving Port of Savannah, the third-largest port in the U.S., Savannah’s industrial sector is flourishing. The overall vacancy rate remained remarkably low in the fourth quarter of 2021 at just 2.3 percent and net absorption totaled 2.5 million square feet amid 3 million square feet of new deliveries, according to a report by Colliers International. All signs indicate there is no end in sight to the robust conditions.

“Between existing market tenants discussing expanding and newcomers circling, 2022 should be another strong year for the Savannah industrial market,” according to the Colliers report. “How quickly the market can absorb the 11.1 million square feet of spec space under construction will determine the next wave of development, but if the Port continues to expand at the rate it has, the Savannah industrial market won’t be far behind it.”

Looking beyond 2022, Duke expects the vigorous activity in Savannah’s industrial market to persist over the long term. The REIT anticipates that several factors will contribute to the market’s ongoing success, including, the bolstering of local infrastructure. “The state and federal governments continue to heavily invest in the region’s infrastructure to accommodate immediate and long-term growth both on the port property and in the transportation routes serving its customers. These include new staging areas for containers, highways expansions and rail line additions,” Brian Sutton, vice president of leasing and development with Duke Realty Corp., told Commercial Property Executive.

Additionally, Sutton said, other U.S. Ports such as the Ports of Los Angeles and Long Beach, are experiencing delays, which is only accelerating Savannah’s rapid container volume expansion. And the recent widening of the Panama Canal is now bringing larger ships to the Port of Savannah. “Finally, the Southeastern Region of the U.S. is experiencing long-term population growth that has resulted in higher container volumes year over year,” he added.