"We're going through a pause," she tells GlobeSt.com. "It's atime to catch our breath and prepare for the next wave. Mostindustrial developers are welcoming the slowing. The pace has beenalmost too fast. All this money has been pouring in, and sales andlease activity has been unbelievable. I think most people agree weneed a break to catch our breath and assess what the next stepsshould be."

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The Lusk Center released the 2008 Casden forecast in midDecember based on statistics from the first three quarters of '07.But Conway assures that nothing has happened since October to alterthe report's findings. "Demand remains solid on both the sales andleasing ends. Cap rates are holding. Rents are holding. It's more aquestion of slowing acceleration than deceleration," she says.

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The Grubb & Ellis 2008 forecast, released in early January,paints the industrial sector as the region's current investmentfavorite, overtaking multifamily. The report says busyports,extremely low vacancy rates and steady demand make industrialproduct the current "Energizer bunny." In Los Angeles County, landscarcity dropped construction activity to roughly three million sf,which represents less than one third of 1% of existing inventory.As a result, vacancies fell to 1.6%, the lowest rate in the US.However, Conway says some of the shortage was created byacquisition of industrial sites for residential and retaildevelopment. With those sectors losing favor, more land shouldbecome available for industrial construction, though probably notenough to satisfy demand.

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Land scarcity is less of a problem in the Inland Empire, wherethe Grubb report shows '07 vacancies climbed to about 5.2% from4.4% in '06 thanks largely to more than 20 million sf of newconstruction. But most of the development occurred in the Empire'seastern half as the area west of Interstate 15 approachesbuild-out. Master Development Corp., which has developed 28buildings in Corona since '03, recently made its first value-addacquisition in the city immediately west of I-15 as redevelopmentbecame a more viable alternative to new development there. TheNewport Beach, CA-based company paid $9.2 million for two buildingstotaling 100,020 sf.

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If there is any serious concern about the region's future, itlies in the possibility of a downturn at the ports of Los Angelesand Long Beach. According to Grubb, the combined ports account for40% of US imports, and Conway says reduced imports due to a steepdrop in consumer purchasing would have a negative impact on themarket. Increased diversion of goods to ports in Mexico and on theGulf and East coasts could also weaken the market, she adds. Thetotal number of 20-foot equivalent units handled through Novemberwas down about 1% compared to the preceding year, but theunofficial figure for Long Beach indicated a slight increase forthe same period.

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