The company's US Property Market Review found average vacancyrate for bulk distribution space across the country's top 30markets increased to 7.8% at year-end 2007 from 7.6% at mid-year2007. ProLogis' US Construction Pipeline Report found that thanksto a busy second half of 2007—new starts totaled 79 million sf inthe second half of 2007 compared to 66 million sf the sameyear-earlier period—construction activity increased to 145 millionsf for the year from 123 million sf in 2006. The total activityrepresents 2.7% of total existing inventory.

Leonard Sahling, with ProLogis' research division, says the bulkdistribution property leasing markets held up well last yeardespite the global credit crunch, and that overall fundamentalsthrough the first three months of 2008 are in better shape thanduring past downturns. That said, he adds, the future is alwaysuncertain.

"Insofar as the economy slows, so will the demand for space, butsharp cutbacks in new supply are also in the offing, given the lackof financing," he says. "The interplay between these two marketcrosswinds will determine the relative strength of the bulkdistribution property leasing markets during 2008."