TORONTO-While the industrial market is still slow across NorthAmerican, an almost complete lack of new development across thecontinent has some experts at Jones Lang LaSalle believing thatdemand will start to return by the end of this year. The companyrecently released its first quarter industrial outlook report forNorth America.

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Canada suffered throughout 2009 and today, in part because ofweaker trade as exports of goods and resources remain dampened bythe strength of the Canadian dollar, according to JLL. However, alimited supply of quality industrial product, particularly in thegreater Toronto area, may spur earlier than expected speculativedevelopment as early as the Q2 2011, the company said.

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“Tenants should continue to find good value, however, this isexpected to change toward the end of the year,” said Fraser Plant,VP of industrial services in Canada, in a statement. “With a slowrecovery underway, 2010 should be a better year for overall leasingactivity.”

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Mexico’s problems have worsened, as drug crime activity hassignificantly increased near the US border, according to AlfredoAsali, SVP of industrial services in Mexico. “As a result, thesemarkets are still looking depressed,” he said in a statement.

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Asali said there’s a good number of modern, empty spec buildingsin most Mexico markets. Monterrey, northern Mexico’s principalindustrial market, is starting to see a pick-up in demand, hesaid.

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The Mexico industrial region is an emerging supply chain marketand a manufacturing hub for the US. “Since there’s no newconstruction in process, prices could rebound in 12 to 18 months asdevelopers scramble to build new space,” Asali said.

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The United States isn’t doing that much better than itsneighbors, according to JLL. The national vacancy rate climbed 30basis points to 10.6%, though brokers throughout the country saythat they’ve seen an increase in activity.

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Craig Meyer, managing director and head of JLL’s Americasindustrial services team, said that this year began with positivesigns. “The thinnest construction pipeline on record, combined witha supply of large blocks of prime warehouse space that is slowlybeing eliminated over the past two years, could translate into arapid and significant uplift in property fundaments once demandpicks up in late 2011 or early 2012,” he said.

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Demand activity has been generally uneven, Meyer said in astatement. Activity has improved notably in markets such as InlandEmpire, Dallas and Harrisburg, PA, while interest has stalled inAtlanta, northern California and Seattle, he said. Areas with thelowest vacancy rates include Los Angeles (5.1%), Houston (6.4%) andSeattle (7.7%), and those recording the highest rates includeCalifornia (20.9%), Phoenix (16.7%) and Charlotte (14.7%).

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“Being cost-conscious remains the priority for industrialoccupiers,” said Meyer. “Rightsizing and consolidations withinsupply chain networks has been a predominant trend across allgeographies over the last two years and has continued into 2010,”he said.

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