Commercial Real Estate News / General CRE / 2022 Office Space Report: Savannah

2022 Office Space Report: Savannah

Published: 07-12-22 Category: General CRE

Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.

Savannah is a perfect destination for businesses looking to expand. With an extensive range of office space options and numerous support services and amenities, it’s easy to see why.

While its growth is not like nearby Atlanta, Savannah has its own mix of tourism, office space availability, and affordability that’s beneficial.

It’s also seeing increased demand for office space as entrepreneurs and corporations continue to see the value in the area.

In this Savannah office space report, learn more about the viability of Savannah for commercial office space investments.

Savannah Office Space Highlights

In this Savannah office space report, some highlights include:

The office property market in Savannah is stronger than the national average.
The office market will recover slower than the multifamily, industrial, and retail markets.
Vacancy rates in office buildings remain higher than pre-pandemic levels.

While vacancy rates are still up, they are showing some improvement at a slower rate than expected.

Companies are making the move back to the office, which means that demand for space is returning over time.

The Pacing of Office Space Rents in Savannah

The vacancy rate for office rentals in the U.S. is 15.4%. The average listing cost $33.08 per square foot.

In Georgia, the average cost of commercial office rent in 2020 was:

$30.31 for Class A Office Space.
$21.23 for Class B Office Space.
$16.05 for Class C Office Space.

Office space rental prices are increasing as demand grows. Investing now may be beneficial before rent prices hit a peak.

However, Savannah’s office space growth is stagnant since the return to the office is struggling to materialize in the area.

Long-Term Changes in Rent

Savannah is in a difficult position when it comes to the office space market. Its long-term outcomes are neutral, based on current conditions.

While the market is staying relatively consistent, it is not seeing investment and development that will lead to significant changes over the long term.

A part of the issue may be development in other nearby areas. Atlanta is seeing major growth in office space and other areas, which may be drawing demand away from Savannah.

Short-Term Changes in Rent

Savannah is one of many places seeing a short-term surge in office demand as companies relocate.

Warmer weather combined with changes in COVID-19 regulations are driving businesses to relocate and take advantage of markets.

However, this increased demand is not enough to drive up the market. The market remains relatively stable and flat, with minimal large-scale investment.

Demand for office space is increasing, but fewer companies are looking to take the available space as getting staff back into offices is proving difficult.

Office Space Sales in Savannah

In Savannah, the office space market is stabilizing due to major moves by investors and property owners.

Here are several notable sales and acquisitions in the Savannah market that demonstrate the current market conditions.

Notable Acquisitions So Far

St. Joseph’s/Candler acquired 6 acres of land near I-16 and Highway 280.

The company plans to put a large medical office building on the property, located in Interstate Centre Industrial Park.

Development in the area is expected to support the company’s large-scale medical facilities being established nearby.

A new building, alongside many other developments, is expected to add $40 million worth of investments in the area.

Notable Sales So Far

Hawkeye Hotels and HOS Management sold three large key assets worth a total of $100 million.

The companies plan to develop more new construction properties over the next 18 to 24 months. Three buyers were involved in the sale.

Market Forecast for the Rest of 2022

Savannah is still in a neutral market. Hot markets in Atlanta, GA, Miami, and Tampa are driving demand from companies searching for long-term office space.

Over the next two years, Savannah’s office space market will be stable while it anticipates a surge in demand due to overall economic growth.

This Savannah office space report also shows that developers are anticipating a moderate increase in new developments compared to other markets in Georgia.

General Investor Activity: Where is the most money flowing?

Savannah’s commercial real estate market is seeing investment in new commercial and retail development in the area.

Local investors are moving on new projects to revitalize downtown and keep it a desirable destination for living and working.

This Savannah office space report shows that money is flowing into downtown, with outlying areas seeing the least amount of investment.

Takeaways for Office Space Investors

Savannah is the crown jewel of Georgia. It’s teeming with a small-town charm that has a lot to offer: From pristine parks and ample activities to a bevy of restaurants and museums that make it a destination for tourists and locals alike.

The office property market in Savannah is stronger than the national average. The office market will recover slower than the multifamily, industrial, and retail markets.

Vacancy rates in office buildings remain higher than pre-pandemic levels.

Savannah is not seeing a large influx of investment from developers and investors in the same way that Atlanta is.

Savannah has seen no significant changes in rent since the pandemic. However, there has been an increase in property activity and new developments in the city.

This Savannah office space report shows that developers anticipate a moderate increase in new developments compared to other markets in Georgia.

There is some new investment and development in downtown Savannah, which tends to attract investors.

Savannah’s office space market is expected to be stable, with an increase in demand for space over the long term.