AMB - Morgan Distribution Center

[ By Gene Reilly ]

The recently completed 346,784-square-foot Building 100 at the 249-acre Morgan Business Center is the first LEED-Silver certified speculative development in the southeastern U.S.

Global container traffic is projected to grow eight to 10 percent over the next 10 years, due to the expansion of global trade as a result of emerging markets; the diversification of outsourcing; and the lengthening of the supply chain between the sources of production and consumption. AMB Property Corporation's portfolio of properties is located near major seaports and airports, close to large consumer bases in some of the world's best markets tied to global trade. Business is better than ever at the Port of Savannah, one of the oldest ports on the East Coast, and a new market entry for AMB.

The Growth of the Port
The Port of Savannah has been a major beneficiary of the trend toward globalization. More than 2.6 million TEUs (20-foot equivalent unit containers) passed through the port in 2007 alone, according to the Georgia Ports Authority--a 20.6 percent increase over 2006. This extraordinary rate of growth is partly due to port initiatives. The port has committed hundreds of millions of dollars to increase its efficiency and to expand its dock and rail yards, an investment that is paying off in increased traffic.

Another factor that has contributed to the port's growth is the drive by retailers to diversify their points of entry. Many retailers suffered in 2002, when disruption of port operations resulted in 10 days of no freight moving. Fearful of labor strife, major retailers vowed not to "put all their eggs in one basket" again. In the last 10 years, they have expanded the average number of ports they use from one or two to four or five.

Building 100, divisible to 60,000 square feet, is a rear-loaded warehouse featuring 83 trailer parking spaces, 95 dock positions, and a 185-foot truck court made of heavy-duty pavement.

Retailers are also seeking to increase the efficiency of their supply chains. A prospective tenant for AMB's seaport developments, for instance, has decided to focus on two major coastal markets--one east and one west--instead of shipping goods by air to a single distribution center in the Midwest, and then trucking goods throughout the country from there.

Still another factor contributing to the port's growth is capacity. While the two largest ports have more business than they can handle, causing logjams that can delay cargo for weeks, Savannah still has room for expansion. Although land isn't as available as a bird's-eye view would have one believe--much is marshland that cannot be developed due to environmental constraints--there is still additional availability for growth than in more highly developed urban areas. Morgan Business Center is only 10.7 miles from the port, while the only available land in the Los Angeles basin might be 60 miles away from that port.

The Savannah Decision
Before making a major investment in Savannah, AMB conducted a detailed analysis of other major ports. Among the factors influencing our decision to enter the Savannah market were its business-friendly atmosphere; access to Interstates 95 and 16; proximity to the large Atlanta and south Florida markets; and the growing population east of the Mississippi--a 26-state region that encompasses 75 percent of the U.S. population.

AMB recognized the port as a critical node in the global supply chain, entering the Savannah market in 2008 with the 249-acre AMB Morgan Business Park. At full build-out, expected in two to three years, this major new facility will total 3.1 million square feet of port-related eco-friendly warehouse space. Savannah furthers AMB's strategy of investing in high-growth, high-barriers-to-entry markets servicing customers' borderless trade activities.

The inaugural development is the 347,000-square-foot AMB Morgan Distribution Center - Building 100, a distribution center in the Southeast developed to U.S. Green Building Council's Silver LEED(TM) (Leadership in Energy and Environmental Design) specifications. The facility is the first of four buildings that will be built at the site. The tenants are expected to be retailers or third-party logistics providers with ties to the port, as well as to the regional transportation system.

Going Green
In Savannah, AMB's initiatives are aligned with those of the port and the Savannah Economic Development Authority. These organizations recognize that green development makes the port even more attractive to customers, and that it's possible to pursue growth and job creation in a way that puts the region in a leadership position for sustainability. The port has launched a sustainability initiative focused on the use of recycled materials; the conservation of diesel fuel through a number of means--including the expansion of rail facilities--a more efficient system for stacking containers; a crane electrification program; and the replacement of obsolete equipment.

Long before LEED became the standard benchmark, AMB was implementing "green" design and construction features to ensure optimized energy-efficient and environmentally friendly systems in buildings and industrial parks. In addition to making environmental sense and serving as an example of global citizenship, AMB believes that sustainable practices also make for a stronger and more profitable company in the long run.

The environmental highlights of AMB Morgan Distribution Center - Building 100 include:

• clerestory windows to admit natural light;
• highly reflective white roofing;
• concrete paving throughout;
• a T-5 lighting system with motion sensors that turn lights off when no motion is detected;
• water-reducing plumbing fixtures; and
• use of drought-tolerant native plants instead of water-intensive landscaping.

These features offer prospective tenants considerable savings on operating expenses, not to mention the benefits of a healthier work environment. The amount of water saved by AMB Morgan Distribution Center - Building 100, for instance, could provide drinking water for the city of Bloomingdale, the facility's location, for 14 months. Similarly, the amount of power saved could power 120 homes a year, which translates to a savings of approximately $100,000. The building is nearly 28 percent more energy efficient than a conventional building.

Sustainable Development Challenges
AMB's decision to enter the Savannah market with a sustainable development hasn't been without its challenges. Among these were the specifications for LEED certification, one of which requires using construction materials that are largely from sources extracted, processed or manufactured within 500 miles of the site, in order to reduce the amount of fuel consumed in transport. AMB succeeded in exceeding those specifications, using building materials almost exclusively from within a 200-mile radius.

Building 100 features 52-foot column spacing with 60-foot staging bays and a clear height of 32 feet. A high-efficiency fluorescent lighting system with motion sensors, which allow areas inside the building to shut down after five minutes of inactivity, results in a 52 percent reduction of total lighting energy.

Another challenge was that of educating prospective tenants on the value of "green" building and encouraging them to adopt green practices for the building's interior. AMB prepared manuals on such issues as the importance of green design to water conservation and energy savings. The energy savings offered by green buildings, in particular, are becoming increasingly important to prospective tenants as a result of the recent surge in fuel prices. In addition, green features help customers achieve their corporate sustainability initiatives.

Outlook for the Future: The Canal Factor
One of the major factors influencing AMB's decision to locate in Savannah was the comparison between the East and West Coasts in terms of the time and cost of shipping goods from Asia.

A straight line may be the shortest distance between two points, but not the most economical--at least as far as shipping is concerned. Most goods imported into the United States come from the Far East and Southeast Asia, with the ports of Los Angeles/Long Beach handling about 40 percent of the nation's container cargo traffic. While much of that cargo is destined for the huge Southern California market, the rest is shipped overland via truck or train to the central and eastern parts of the country.

The alternative is to ship goods to the East Coast via the Panama Canal, which costs slightly less and takes only slightly longer, due to a new generation of faster ships. The economies of this all-water route are increasing, due to the rising costs of truck hauling from the surge in oil prices. The result has been a growth in importance of the East Coast ports, with the Port of Savannah leading the way as the largest single terminal container facility of its kind on the East and Gulf Coasts.

The constraint on the growth of the East Coast ports, however, has been that the mammoth new container vessels--the number of which is expected to increase by more than 80 percent by 2011--can't fit through the canal. That is about to change. Last fall, the Panama Canal broke ground on the biggest expansion of the 48-mile channel since it was completed in 1914. The $5 billion widening, expected to be completed for the canal's centennial in 2014, will add a third lane of traffic to accommodate today's longer, wider ships, which have the advantage of offering greater economies of scale than their smaller counterparts. The canal expansion is expected to double the volume of cargo capacity traversing the Isthmus of Panama.

In anticipation of the increased traffic, the East Coast ports, including Savannah, are spending billions of dollars to upgrade their facilities. The Savannah Harbor Expansion Project -- which will increase the depth of the Savannah River channel from 42 to 48 feet to accommodate the increased drafts of the larger vessels, as well as make other navigational improvement -- is expected to be completed in 2012.

The Role of Exports
Yet another factor is transforming this once-sleepy port into an international shipping hub: exports. Savannah is one of the only major ports in the nation with a nearly even balance between imports and exports--52 to 48 percent. With a weakened dollar making American products even more affordable to overseas buyers, that ratio can only move in the direction of parity.

Much has changed in the more than 260 years since the Port of Savannah was founded, but much remains the same. The ships may be larger, the trade routes shorter and the warehousing facilities more energy efficient, but the demand for goods and products that are not locally available remains the driving force of global trade.

AMB launched its global expansion seven years ago as a facilitator of global trade focused on major international seaports and airports. With AMB Morgan Distribution Center, AMB is proud to introduce increased efficiencies coupled with sustainable development practices to the rapidly growing Savannah market.