U.S. Industrial Vacancy Rate Hits Decade High in Q3 2009, According to Colliers International

U.S. Industrial Vacancy Rate Hits Decade High in Q3 2009, According to
Colliers International

BOSTON, Oct. 29 /PRNewswire/ -- The national industrial vacancy rate edged up
yet again during the third quarter of 2009, hitting 10.5 percent. This
represents a new high for the decade and marks the eighth consecutive quarter
of increasing vacancy, according to the third quarter industrial report from
Colliers International, the global real estate services firm. The cyclical
low for industrial vacancies had previously stood at 7.9 percent; and from one
year ago, the U.S. industrial vacancy rate has increased by 1.9 percentage
points.

Industrial net absorption for the quarter measured negative 47.3 million
square feet (msf). Although this is clearly not an encouraging sign, Q3
occupied space contracted by less than it did in Q1 and Q2, respectively.
Year-to-date industrial absorption in the U.S. stands at negative 132.4 msf.
Three markets in particular contributed to the YTD negative absorption,
including Chicago (negative 18.4 msf), Los Angeles Basin (negative 20.4 msf)
and San Jose/Silicon Valley (negative 9.6 msf).

The amount of warehouse construction completions declined again in Q3, in
tandem with ongoing weak industrial market conditions, with just 11.9 msf
delivered in the July through September period. This is the lowest number for
new construction delivery Colliers has on record. Indeed, quarterly new
construction has fallen steadily as 2009 has progressed.

In terms of U.S. warehouses under construction, during the third quarter, this
metric was down as well. Approximately 22.4 msf of new development was
underway at the end of Q3, scheduled to be delivered to the market during
Q4'09 and into 2010. Like new completions, this construction underway number
is the lowest Colliers has on record, and well beneath the 154 msf of
construction underway just two years ago.

Warehouse rent patterns mirrored those of absorption mentioned above.
Although the average rental rate for industrial space did fall from $5.09 per
square foot (psf) during Q2'09 to $5.04 psf in the third quarter, this
fractional decrease of 0.9 percent was the least rents had dropped (psf) in
the past year. Bulk warehouse space and tech/R&D space showed larger
decreases in rental rates, while flex/service space fared better than
traditional warehouse rents.

"The U.S. warehouse market showed ongoing weakness in Q3, with vacancies up,
absorptions negative and construction completions/construction underway at the
lowest levels our researchers have ever witnessed - which is no surprise given
the ongoing recession and stagnating economic landscape," reported Ross Moore,
executive vice president and director of market & economic research for
Colliers International. "Although a few bright spots are evident, including a
pickup in leasing activity and an easing of absorption losses
quarter-over-quarter, we predict 'more of the same' for the industrial space
market until well into 2010. From our vantage point, warehouse tenants will
sit tight and make do with their current space - avoiding expansion and new
lease signings - until more signs of a sustainable recovery are evident."

U.S. Industrial Vacancies - Year over Year

MARKET VACANCY RATE VACANCY RATE
SEP 30, 2008 SEP 30, 2009
(%) (%)
Atlanta, GA 11.8 12.9
Bakersfield, CA 6.1 8.5
Baltimore, MD 18.3 16.6
Boise, ID 7.5 11.4
Charleston, SC 9.2 10.8
Charlotte, NC 7.2 8.7
Chicago, IL 9.9 11.9
Cincinnati, OH 7.5 10.2
Cleveland, OH 7.6 8.0
Columbia, SC 4.5 8.2
Columbus, OH 11.7 11.7
Dallas-Ft. Worth, TX 9.6 11.9
Denver, CO 8.1 8.9
Detroit, MI 12.6 14.0
Fairfield, CA 8.5 11.6
Fresno, CA 6.0 8.0
Ft. Lauderdale-Broward, FL 6.6 10.1
Greenville, SC 9.7 11.3
Hartford, CT 9.8 9.8
Honolulu, HI 4.0 4.6
Houston, TX 5.7 6.7
Indianapolis, IN 7.5 7.4
Jacksonville, FL 8.4 10.3
Kansas City, MO 5.7 8.1
Las Vegas, NV 9.8 14.3
Little Rock, AR 17.1 14.6
Los Angeles - Inland Empire, CA 11.9 15.4
Los Angeles, CA 3.5 5.4
Louisville, KY 8.0 8.3
Memphis, TN 11.7 14.7
Miami, FL 7.1 10.0
Milwaukee, WI 7.8 7.8
Minneapolis, MN 10.8 12.6
Nashville, TN 6.4 8.6
New Jersey - Central 8.4 9.9
New Jersey - Northern 6.4 7.5
Oakland, CA 7.9 9.3
Orange County, CA 4.5 5.8
Orlando, FL 8.6 13.2
Philadelphia, PA 8.5 9.9
Phoenix, AZ 13.7 17.4
Pleasanton/Walnut Creek, CA 11.7 14.8
Portland, OR 6.5 8.1
Raleigh, NC 18.6 23.0
Reno, NV 11.3 15.1
Sacramento, CA 10.6 12.1
San Diego, CA 8.4 11.3
San Fran Peninsula - San Mateo, CA 6.1 9.5
San Jose/Silicon Valley, CA 10.1 13.7
Seattle/Puget Sound, WA 6.3 7.0
St. Louis, MO 6.0 8.7
Stockton/San Joaquin County, CA 10.3 16.8
Tampa Bay, FL 7.6 10.0
Washington, DC 11.0 12.8
West Palm Beach, FL 8.6 12.1
U.S. AVERAGE 8.67 10.53

About Colliers
Colliers International is a global affiliation of independently owned
commercial real estate firms. The organization's 12,700 employees span the
world in 294 offices in 61 countries. On a worldwide basis, Colliers manages
more than 1.1 billion square feet and has revenue of $US 1.6 billion. For more
information, visit http://www.colliers.com/http://www.colliers.com.

SOURCE Colliers International

Kristin Sadlon, Porter Novelli, +1-212-601-8192,
Kristin.sadlon@Porternovelli.com