"Last year was very volatile," says Jim Wilson of Cushman & Wakefield. "Overall, the market experienced a considerable slowdown, but fourth quarter activity provided signs of recovery."

Some 6.5 million sf delivered last year, including 4.4 million sf just in November and December. Wilson says pre-leasing and post-construction leasing helped the industrial market post a positive net absorption of 1.3 million sf at yearend. "This is remarkable, considering the industrial market's 2001 standing at the end of the third quarter was negative 2.3 million sf," he says. The surge in absorption is the direct result of the Intel Fab 22 project in Chandler and several large leases in the Southwest Valley. Wilson says many 2001 projects reaching completion would have never started if the decisions were being made today.

Despite signs of improvement, the year-end totals show some negatives coupled with rising vacancy in the industrial sector that hit 9.1% at the year's close. There also has been a lot of space has been put back on the market. "In many cases, tenants engaged in speculative leasing," says Wilson. "Companies prematurely made commitments to space and some never even completed tenant improvements before putting the square footage back on the market.