At the second quarter end, the overall vacancy of industrial buildings increased to 8.1%, up 0.5% from Q1's 7.6%. Although the vacancy rate went up, it's a positive indication of the resiliency of the Valley's industrial market, Rob Stephens, director in the Industrial Properties Division of Cushman & Wakefield of Arizona Inc., tells GlobeSt.com. "This is a healthy vacancy figure when you consider we've lost 1.9 million sf of absorption year-to-date," he says. "Our market remains strong when compared to other US cities, but continued negative absorption combined with on-going construction could lead us to significantly higher vacancies in the near future."

The 1.9 million sf of negative net absorption figure is somewhat misleading. "Revlon's move from the Southwest Phoenix submarket comprised 880,000 sf of our overall negative net absorption," he says. "When you combine that figure with Motorola's downsizing in North Tempe, the negative impact is significant. That type of large tenant movement is not anticipated to continue during the remainder of 2001."

Vacancy levels vary greatly throughout the Valley, geographically and by product type, according to the Cushman & Wakefield survey. The lowest overall vacancies are found in the Sky Harbor Airport and Mesa areas, which posted 3.4% and 3.7%, respectively. South Mountain and Southwest Phoenix lead the region's submarkets, with 12.5% and 12.3%, respectively.