Booming Ports, A Thriving Downtown And High Tech Business

GEORGIA TREND - April 2007

Randy Southerland

Folks in Savannah and Chatham County know they’re lucky. Good fortune comes in the form of location – the Georgia coast beckons both new residents and business and the local port has become a major gateway for shippers from places as far away as China. Add to that the easy living, the preserved history and many cultural amenities for which the city has become famous.

With so much going for it, there’s little wonder that this region has become one of the state’s leading job producers. In 2005 the Savannah metropolitan area added 5,700 jobs, a growth rate of 3.9 percent. Last year the area did almost as well, generating 5,500 jobs for a 3.6 percent growth rate, says Dr. Michael Toma, director of the Center for Regional Analysis at Armstrong Atlantic State University.

“That is practically double the state’s [rate of growth],” he declares. “The projections for ’07 are almost the same sort of pattern in the Savannah MSA versus the state. We are looking at growth on the order around 2.7 to 2.8 percent. That would be around 4,200 jobs.”

In contrast, state employment will grow by only 1.5 percent this year, according to figures released by the University of Georgia’s Terry College of Business in its annual Georgia Economic Outlook report. The reasons for Chatham’s prosperity can be found in a diverse and vibrant local economy.

“We’ve got a number of sectors in the economy that are really firing right now,” Toma says. “In particular, we’ve got substantial growth at the Georgia Ports Authority and the related activity that goes along with the distribution centers that are being built in the area and all the service activity that takes place related to the logistics of port operations. We are seeing job growth in Savannah because we are seeing port activity increase.”

At the same time, the area’s manufacturing sector is picking up steam. Aircraft builder Gulfstream is expanding, expecting to add more than 1,100 workers over the next seven years to an operation that already employs about 4,505 people. The company announced that it will spend $300 million expanding its manufacturing and services facilities in Savannah.

The Port of Savannah has opened up the city to the rest of the world and increasingly a big part of what the rest of the country buys and sells is passing through its gates and onto the ships that line its docks. The port handled more than 2.16 million Twenty Foot Equivalent Unit containers (TEUs) during 2006 – a 14 percent increase over the same period a year earlier. According to figures released by the Port Authority, that makes Savannah the second largest container port on the East Coast.

“The port related growth is just booming in terms of new projects coming out of the ground,” says John Neely, a partner with Neely/Dales, LLC, a commercial and industrial real estate firm. “Major national developers have discovered Savannah and have either acquired or tied up key sites near the port; and several million new square feet of port related warehousing is either under construction or soon will be.”

Home improvement retailer Lowe’s recently joined a growing list of other corporations such as Wal-Mart, Home Depot, Dollar Tree and Pier 1 in opening a distribution warehouse in Chatham County. Improvements at the port – including a deeper harbor and more onshore facilities to load and unload goods – have enhanced its attraction to shippers weary of delays at West Coast berths.

Downtown renewal
As Savannah has attracted more attention for its economy, the city has continued to enjoy a boom in new construction throughout its sprawling historic downtown.

“Just about any vacant lot anywhere near the historic district has been acquired and either single family or condos or apartments are going up on it,” Neely says.

One of the biggest downtown developments and a project that promises to both revitalize and restore the city’s historic center is taking place not far from the popular Riverfront area.

The gaping hole that was once the old and much maligned City Market Parking Garage – and before that one of the original squares – resembles nothing so much as a bomb crater. Yet this seeming destruction promises to give rise to a rebirth of not just Ellis Square, but this entire section of downtown.

While work has moved in fits and starts lately, an array of new structures will soon rise from the site. The parking facility was built in the 1950s following destruction of the City Market, but parking will move underground as one component of an ambitious effort to bring new life to the area.

The work is part of a redevelopment of the old Savannah Morning News Press building now renamed News Place on Ellis Square. It will consist of a mixed-use development that will bring retail shops, outdoor dining, residential condominiums and offices to the area.

“That’s just really going to transform the northwest quadrant of downtown Savannah once it’s finished,” Neely says. “It will stimulate redevelopment once it’s finished and the square is re-established.”

Along with a new suites hotel to be built on the old parking lot, the remainder of the Savannah Morning News property and buildings will give way to a new six-story, Class A office building. The ground floor of the existing historic newspaper buildings along East Bay Street becomes 40,000 square feet of retail space. A residential component will include 44 condos on the upper floors above a ground floor “Merchant’s Row.” An open courtyard will conjure up the feel of the original square.

Builders worked to keep the development consistent with the look and feel that has attracted so many people to the city’s historic district. “Everything we’ve done fits into the historical pattern of the Oglethorpe Plan,” says Ray Michaels, senior vice president with Batson Development Co. He believes the project will spur still more growth both within and on the edges of the historic district.

The effort continues a trend started by the Savannah College of Art and Design, which has invested more than $70 million in buying and rehabbing some 60 downtown buildings.

There is also promise of new development south of the I-16 fly-over. Local developer Walter Evans is planning to build a mixed-use project with retail, offices and condos along MKL Jr. Boulevard. The entire development is expected to encompass nearly three city blocks.

Developers also are getting ready to renovate two vacant buildings on West Broughton Street for commercial and retail. The buildings’ upper floors will be occupied by luxury condos. Savannah Capital paid nearly $6.25 million for the structures, a figure locals say is a record for the area.

Getting Creative
Clearly Savannah certainly hasn’t given up on manufacturing, retail and other traditional types of businesses. However, local boosters have realized that the area’s assets are prime sales points when it comes to attracting another type of industry – technology or knowledge-based businesses.

“I guess some might say that this is a branding exercise, but the way we see it we’re calling attention to a set of attributes that are already in place,” says Rick Winger, executive director of the Savannah Economic Development Authority. “People who have companies or jobs that are in what we used to call high tech and now we prefer to call knowledge-based businesses are probably more portable in their operations than manufacturers or people for whom a site is almost predestined based on their business.”

The knowledge-based business has more choices about where it can locate because the company’s assets and inventory are ideas and talent rather than machinery and goods. It can locate anywhere that can provide telecommunications and broad-band access. It doesn’t need a business or industrial park – workers can even operate from home if need be. That allows for greater emphasis on quality of life.

“If your business was more virtual and more knowledge based you could come to Savannah and be near all the things that a lot of people literally go on vacation for,” Winger says.

Making sure creative folks know about Savannah is where SEDA’s new division, the Creative Coast Initiative, comes in. Headed by Mindspring Enterprises co-founder Chris Miller, the agency’s job is to “create the conversations that make positive things happen.”

“And by that I mean we’ve learned that nothing great in the world ever happens in the absence of a conversation and oftentimes it takes place between people that have never met,” he adds.

Miller and his staff provide information and make connections between companies that want to relocate and resources in the area. Successes include the opening of Benedetto Guitars’ manufacturing plant, along with companies such as The Stat Doctor Inc., a web-based application service provider for medical professionals. In the last 24 months the Creative Coast has successfully relocated 16 of these knowledge-based businesses to Savannah, Miller says.

“We looked at several cities to expand to such as Asheville and Austin, but we figured Savannah was close enough that we could get to Atlanta if we had to,” says Hannah Meurer, who moved her design firm, Smack Dab Studios, to the city in 2005.

The nature of her work – graphic design and web development – didn’t require a lot of face-to-face contact with clients, and she had tired of the daily commute through Atlanta traffic.

“We couldn’t help but think that if we could work in a town that was this incredibly beautiful that we would be very lucky,” she recalls.

She moved here first and opened a second office on Broughton Street in an historic circa 1905 building featuring all the cool details that creatives like – 14-foot-high ceilings and exposed brick.

As time passed, she found that her clients didn’t notice that she was no longer in Atlanta – they seldom wanted to attend meetings anyway, preferring to conduct business by phone or email. A few months later, she closed the Atlanta office and moved her four staffers to Savannah. Business has burgeoned as Smack Dab has picked up a bevy of local accounts. Within a few months Meurer expects to double her staff to keep up with the extra work.

The attraction of recruiting knowledge-based businesses is obvious – at least to people like Miller. For one thing they’re clean. Graphics companies, software makers and the like don’t pollute the environment like the older smokestack industries. The jobs also tend to be higher paying than retail or tourism related employment. In fact, creative jobs tend to pay about as much as the high level manufacturing positions that are becoming increasingly scarce in this era of globalization and outsourcing.

What factors draw these businesses to a particular city? Miller is blunt: “People aren’t going to go to places that suck anymore if they don’t have to,” he says.

“These smart people who are doing this, they can work anywhere they want and you know if you can work anywhere you want, you don’t go work in places that you don’t love,” he adds. “You go to places that offer a high quality of life.”

Translated, quality of life means parks, a walkable, livable downtown, arts and culture, universities, a nice climate, healthcare, and, oh, yes, minimal traffic and congestion. These are all qualities that Savannah offers in spades.

Savannah has taken to heart the ideas of bestselling author and social theorist Richard Florida who contends that cities that want to thrive must have both open doors and open communications.

“He proposed the notion that tolerance was important to these people,” Miller says. “They are not going to be going to places that are narrow minded or look down their nose at them or they are just not going to be there. They are going to go to places that are tolerant. So quality of life for these people is basically, it is tolerance, it’s culture, it’s a nice environment, it’s friendly people.”

Homing Instincts
Homebuilding – another prime indicator of growth – has flourished since regional and national homebuilders have starting taking notice of Chatham in general and its coastal area in particular. These companies have changed not only the volume of building, but also how land is developed and homes constructed. Vertically integrated, they are able to handle development, construction and even financing – unlike their smaller local competitors.

“Over the last 12 to 18 months many of them have pulled back because of the national housing market slowdown,” says Bill Lattimore, president of the Lattimore Company, whose Coastal MarketGraphics division tracks residential growth along the coast. “We believe that when they get remobilized – and many of them will soon – many will start targeting the Georgia coast, because the future is pretty much here.”

This market cooling represents a growth rate that, while slowing somewhat, still shows significant increases over past years. In 2003, Lattimore explains, the county issued 1,440 building permits for new homes. That jumped to 2,150 the following year and edged up to 2,394 in 2005. Last year the number increased again to 2,539 and while the market has slowed somewhat recently, the boom is far from over.

In addition to the hot housing market in downtown Savannah, outlying areas are also beginning to get their share of growth. Over the last five years the northwest portion of the county around Pooler has exploded, with new development moving farther west along the I-16 corridor.

To the north, Port Wentworth is seeing what locals say is a complete turnaround for an area that once worried about becoming a dying town. The city was declining in population during the ’90s, but now has swelled to more than 4,000 residents. With more than 8,000 homes either already platted or in the planning process, those numbers will only increase, says City Administrator Philip Claxton.

“We are the last area really in the county to see this growth,” he explains.

Along with more people have come grocery chains and other retail development as well. Most of this development is concentrated north of I-95 as growth has followed the major transportation arteries.

“It’s the availability of land, but also the fact that I-16 and I-95 are now regarded as huge convenience factors; and they are operating as much as regional roads as they are interstate highways,” Lattimore says. “All of a sudden the awareness is growing that we are truly dealing in a regional market here and that the folks living in Liberty or Bryan Counties regard themselves as part of the Savannah MSA.”