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May16, 2016

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38 THE JOURNAL OF COMMERCE www.joc.com MAY 16.2016 TOP 25 NORTH AMERICAN PORTS SPECIAL REPORT The industrial market "responded in a big way for sure," said Foltz, who will retire on June 30 and will be succeeded by Chief Operating Officer Griff Lynch. "In the 12 years that I have been at the GPA, I don't think I've ever seen the level of activity of the past six months or so. It's pretty remarkable." The new activity at Savannah is mostly build-to-suit or expansion, rather than speculative construction. Speculative building in the late 2000s burned several developers who had bet on continuous growth in the Savannah market but ran head on into the financial crisis. The lack of new construction was seen partly as a hangover from the 2008-09 recession. The buzz of industrial activity at Savannah mirrors the situation nation- ally. The industrial real estate market in the U.S. has seen 24 consecutive quarters of growth, with the vacancy rate fall- ing to 6.1 percent in the first quarter of 2016, according to the New York office of Cushman & Wakefield. The strongest demand is in Central New Jersey, Dallas- Fort Worth, Chicago, the Inland Empire around Los Angeles, Atlanta and Detroit, the real estate company said. Part of the growth is driven by e-com- merce, a trend impacting Savannah, where regional distribution centers increasingly are focusing on cross-docking and other short-term transfer points for e-commerce goods to be moved onward to distribution centers located near urban markets, from which goods can be delivered in one day or less to consumers. Savannah, however, is outperforming its peer group of Southeast port markets, said Blaine Kelley, senior vice president for the global supply chain practice at CBRE. The market is smaller statisti- cally, but has "definitely outperformed its peer group in terms of vacancy rate, demand, rental rate growth," Kelley said. That's partly tied to industrial real estate being based on anticipation for future growth, with developers betting Savannah will be a viable gateway for years. Based on the fallout from the West Coast labor unrest in the fall of 2014 and winter of 2015, they could be right. If the freight diverted to Savannah because of that unrest was only tempo- rary, it would have been noticeable in the volumes for Savannah's current fiscal year, which began July 1, 2015. That was just as the last of the congestion from the months-long West Coast disruption was finally cleared. Volumes during this fiscal year are up, however, which Foltz says shows diverted freight is staying. For its fiscal year-to-date through February, Savannah handled 2.4 mil- lion TEUs, up 3.6 percent from the same period in fiscal 2015, and a 17.7 percent increase over the same period in fiscal 2014. February's volumes were up 8 per- cent to a record 307,035 TEUs. More to the point, from July 2015 through March 2016, Savannah's Asia import volumes were up more than 7.2 percent versus the prior-year period, according to PIERS, a sister product of The Journal of Commerce within IHS. With Los Angeles-Long Beach Asia imports up only 2.5 percent, and the West Coast up 2.9 percent in Asia imports during the same period, the inescapable conclusion is that Savannah has kept all of the diverted freight, and more. Imports through the East Coast were up 7 percent. "We are this far into our fiscal year, and our import volumes are still up year-over-year," Foltz said. "This tells the market that we have retained a fairly high percentage of the imports that were diverted to Savannah, as well as custom- ers that had heretofore decided to put their business or more of it through here." The 2,700-acre site being developed by OmniTRAX in partnership with the Eff- ingham County Industrial Development Authority, to be called the Savannah Gate- way Industrial Hub, is an example of the long-term future bets on Savannah. "It is anticipated the completion of the Panama Canal widening will drive more business to East Coast ports and the Port of Savan- nah, in particular," Tony Manos, senior vice president of industrial development at OmniTRAX, recently told Commercial Property Executive magazine. Based on an initial master plan not yet finalized, OmniTRAX in March said the site will be able to accommodate 20 mil- lion square feet of warehouses, distribution facilities and a single-user mega-site. One option, given the rail access, will be to serve as a point for shipments of resins originating from the U.S. Gulf region to be transloaded into containers for export. The development authority will provide the land and "OmniTRAX will contribute capital for infrastructure devel- opment, including a rail system linking the park's tenants to the Class I operators, as well as marketing services," according to an article published on the company's website. The company has developed other industrial business parks, including the 3,000-acre Great Western Industrial Park in Denver, and the 1,400-acre GEOTRAC Industrial Hub in Brownsville, Texas. JOC Contact Peter Tirschwell at peter.tirschwell@ihs.com and follow him on Twitter: @petertirschwell. Source: PIERS data, JOC Forecast PORT OF SAVANNAH CONTAINER TRADE n Actual and forecast volumes of containers handled at the Port of Savannah, Georgia, in millions of 20-foot-equivalent units. 1.00 1.25 1.50 1.75 2.00 Exports Imports 2017 2016 2015 2014 2013 ■ Imports ■ Exports "WE ARE THIS FAR INTO OUR FISCAL YEAR, AND OUR IMPORT VOLUMES ARE STILL UP YEAR-OVER-YEAR."

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