The Southern U.S. dominated activity in Q1 2018 evidenced by nearly 23 million square feet of net absorption, 46.5% of the total net absorption in the U.S. Occupiers continue to move into the market in droves because of the region’s growing population and significant logistics advantages. At the time of this report, over 111 million people lived in the southern region, the most of any region in the country, and this is expected to grow by a nation-leading 6.4% over the next five years.
The region also boasts a plethora of logistics options from the ground, sea, and air. The ports of Houston, Charleston, Virginia and Savannah are four of the five fastest-growing seaports in the country, with loaded twenty-foot equivalent units (TEU) growing by an average of 9.1% in 2017. The region offers a multitude of inland ports in strategic markets including Greenville, SC; Memphis, TN; the I-4 Corridor in Florida; and the Shenandoah Valley in Virginia. The region is also home to major UPS and FedEx hubs in Atlanta and Memphis, respectively.
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The region finished Q1 2018 with three of the top five markets in the country for overall net absorption including Atlanta (#2), Savannah (#4) and Greenville-Spartanburg-Anderson (#5). It is particularly impressive that Savannah and Spartanburg are in the top five nationally because both markets have less than 200 million square feet of existing inventory, yet they absorbed more space than much larger markets in other regions of the country.
As we look ahead, growth will continue to be robust for the foreseeable future. As the rise in e-commerce demand continues, occupiers will continue to desire to be close to growing populations and logistics hubs. The region also boasts a significant industrial labor pool and the most manufacturing growth in the country, both harbingers to future industrial demand.