Spencer gave a number of reasons for this phenomenon. For onething, Mexico is on the rise as a manufacturing center, and moregoods are coming through the Suez Canal and heading to ports in thenortheast. The high price of gas is also making companies look moreclosely at the locations of their distribution centers. Rail, whichis plentiful in the northeast, is becoming more popular as adistribution method, and companies are spreading out distributioncenters and locating them near major population centers in order tocut down on the number of miles trucks need to travel in order toreach customers.

One of the northeast's greatest assets is its dense population.The Eastern United States has 66% of the country's population, andaccording to Spencer, the East Coast ports will soon begin toseriously compete with the West Coast ports for inland marketshare. The current state of the economy, however, is making somecompanies slightly reluctant to expand their industrial base inanticipation of a port boom. "This is a have-to year," said TomTucci, senior managing director of CB Richard Ellis, in his openingremarks for the town hall meeting on the state of industrial realestate. "People are not pulling the trigger on deals unless theyhave to."

The panel agreed there is hesitancy dealing for retail space,due to the reduction in consumer spending that accompanied theeconomic downturn. "Retail has dropped away," noted Craig Guers,senior vice president and general manager of Opus East. The onebright spot in the retail market is food retailers, who are stilldemanding space. "People still need to eat," Guers pointed out.