"The Metro Chicago industrial market will remain weak throughmuch of 2010 as limited demand persists," the report states."Stronger economic conditions and improving consumer sentiment inthe latter stages of 2010 likely will boost demand for goods andresult in stronger market conditions in 2011."

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Vacancy jumped to 11.8% by the end of the year, slightlyincreasing from 11.2% in the third quarter and 9.7% at the end of2008. Leasing wasn't the only significant decline in 2009.Industrial investment sales totaled $312 million for the year, adecline from $1.2 billion in 2008. Sale prices averaged $49 persquare foot.

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The Chicago industrial market saw a negative 5.6 million squarefeet of net absorption during the fourth quarter, while negativenet absorption for the entire year was 15.9 million square feet.This total is a significant difference from the positive sixmillion square feet of absorption during 2008.

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This was due in part to companies disposing of warehouse andmanufacturing space as the economy weakened. Beyond net absorption,the market saw 6.5 million square feet of sublease space enter themarket during 2009; this is an increase from 6.1 million squarefeet in 2008. Sublease space totals 0.6% of the market's currentinventory.

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Additionally 346,000 square feet of industrial space currentlyunder construction, although this total is far less than the 1.7million square feet under construction in Q3 and five millionsquare feet at the end of 2008.

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In total industrial deliveries dropped significantly during2009; with 8.3 million square feet delivered in 2009. In comparisonto 18.7 million square feet delivered in 2008.

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Rental rates decreased 3.2% in 2008 and another 6% in 2009. Theaverage rental rate now sits at $4.76 per square foot, triple net.Rates are expected to further decline through mid 2010, when marketconditions are expected to stabilize.

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