Q3 vacancies are at 15.04%, down 0.45% from second quarter butstill above the 8.98% national average. However, net absorption hasimproved to a positive 364,743 sf from a negative 532,613 sf in theprevious period. But counting sublease space, the vacancy markshoots up to 16.17%, fractionally lower than 16.74% in the secondquarter.

"The industrial market has hopefully hit the bottom of thiscycle," at says Colliers Arnold senior research analyst JeremyKral. In the report, he projects the market will pick up stronglyby the second or third quarter of 2003.

But he fears the fourth quarter may bring negative absorptionagain. "The instability of the stock market has paralyzed largercompanies that remain reluctant to expand space," Kral says."Landlords have been cutting rates for three consecutive quarterswhile trying to attract new tenants, decreasing the average quotedrental rates 20 cents since the first quarter."

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