"The pace of the current recovery in the nation's warehouse and distribution leasing markets accelerated in the second half of 2004 and especially in the fourth quarter," Sahling adds. "We believe that this momentum will carry over into the current year."

Key findings of the report include:

• For the top 30 markets, the overall vacancy rate declined to 9.6% at year-end 2004 from 10% at mid-year and 10.3% at year-end 2003.
• Demand surged during the closing months of 2004, leading to a total net absorption of 111 million sf during the year, a 2.7% increase in total occupied space.
• After a sluggish start during the first half of 2004, construction activity gained momentum and ended the year on a strong note.

The report says that seven of the 30 markets appear to have recovered fully from the 2000 to 2002 downturn. They are the Los Angeles Basin including the Inland Empire, Seattle, Las Vegas, Reno, Phoenix, South Florida and Northern/Central New Jersey.

"The good news is that the number of markets lagging behind the recovery is down from nine to four, but these "laggards," including Dallas, Denver, Eastern Pennsylvania and Baltimore, are slightly worse off than last year at this time," the report notes.