Peter Klees, senior vice president with locally based Grubb& Ellis/BRE Commercial LLC, says area watchers had bracedthemselves for a little more negative absorption, but the overallvacancy stayed below 10%. "The first quarter here could be theworst we'll see out of the four," Klees tells GlobeSt.com. "I thinkeveryone started believing the press they saw on the economy afterthe New Year and it gave them pause. We went from going 120 milesper hour to 60 miles per hour, but then again, going 60 miles perhour isn't too bad."

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Grubb & Ellis' first-quarter report showed a 9.5% vacancy inthe 259-million-sf inventory. Absorption was down 59,140 sf. At thelast count, there are 7.5 million sf under construction.

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Cushman & Wakefield Inc.'s research team clocked a234,576-sf backslide in absorption in Q1. It reported vacancy of7.5% in a 259.7-million-sf inventory, with 5.8 million sf underconstruction and 17.6 million sf on drawing boards.

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The Southwest Valley was the most active during Q1. Grubb &Ellis' team found 596,462 sf had been absorbed. It placed occupancyat 13.8% in the 52.2- million-sf inventory. The submarket has 4.6million sf under construction. Meanwhile, C&W says 378,887 sfwas absorbed in the 108.8-million-sf inventory, which is sporting8.4% occupancy. The difference is C&W includes south centralPhoenix. According to C&W, there are 3.7 million sf underconstruction and 13.8 million sf in various planning stages.

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Klees believes the southwest submarket saw positive absorptionpartly because of build-to-suit activity. Additionally, it hasenjoyed good momentum since 2005-2006 due to proximity to the portsof Los Angeles and Long Beach. "There's a little danger ofoverbuilding in the Southwest Valley, with product in thepipeline," he asserts. "That's really the only submarket where wesee a potential delivery disconnect, but nothing like what we sawin the last recession go-round."

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