The metro's rate is now riding at 7.2%, up from 6.3% at thestart of the second quarter. During the quarter, the Valleyexperienced negative net absorption of 1.86 million sf. "I'mdefinitely seeing a slowdown in activity and absorption," PeteKlees, an industrial broker with Grubb & Ellis, "It's been slow all year, but was more accentuated inthe second quarter."

Companies are reticent to expand or open new industrial sitesduring a time when the national economy is in a fragile state. Mosttenants plan to wait until there are signs that the economy hasturned around before they consider leasing more space, Kleessays."That's what I'm hearing time and time again," he says.

The slowdown in lease activity has occurred fairly evenly acrossall submarkets in the Valley, Klees says, although some have beenhit harder than others have. "There is negative absorption in someand positive in some and it's washing out to not a whole lot ofpluses," he says.

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