This activity can certainly be interpreted as a positive sign, but to influence the vacancy rate by just 1 percentage point, the market would need to see positive net absorption of more than 1 million sf. The Twin Cities industrial market has the most excess space of all property types in the marketplace—nearly 15 million sf including sublease availability.

Despite signs of improvement in the industrial market as a whole, the bulk distribution category continues to show signs of weakness, according to Welsh. This category, which encompasses more than 24 million sf, recorded negative absorption of about 150,000 sf in the first quarter of 2004 resulting in an overall vacancy of 15.4%, or 16.6% with the addition of 306,000 sf of sublease space.

In contrast, the office/showroom category reflects vacancy of 9.5% following 191,000 sf of net absorption year-to-date. That vacancy factor jumps to 11.4% with sublease space.

But subleases are vanishing across the Twin Cities industrial market, with the amount of sublease space on the market dropping to 1.6 million sf from 3.5 million sf a year ago. Most of the sublease opportunities that still exist are in the western half of the metro area, where more than half of all of the industrial sublease space is in the Southwest and Northwest submarkets alone.