"It's ugly," says Mike Haenel, a Grubb & Ellis industrialbroker in Phoenix. "It's brutal. It's slow. There is very littletenant activity, no velocity at all. We are in for more of the samethrough the rest of the year."

Four submarkets–Chandler, Mesa/Gilbert, Tempe and West CentralPhoenix–all posted negative net absorption during the quarter. WestCentral Phoenix had 595,000 sf and Tempe, 568,000 sf.

The submarket struggling the most is the southwest Phoenix area.Even though the area had 487,000 sf of positive net absorptionduring the quarter, it's still the red year-to-date, with 127,000sf.

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