CHICAGO-While vacancy andabsorption was solid in the first half of 2010, and leasingincreased, researchers at Jones Lang LaSalle say that nationalindustrial activity will slow to a crawl during the next 12 months.Low job growth, rent and consumer confidence will keep theindustrial markets flat, the company said in its recent IndustrialOutlook report.

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Craig Meyer, managing director and head of the company’slogistics and industrial services group, tells GlobeSt.com thatthough there has been positive news, the economy will not reboundin a quick fashion. National average vacancy rates dropped for thefirst time in two years to 10.4%, Meyer says, but absorptionremains at a negative 7.4 million square feet for the first sixmonths.

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“We looked at the numbers after the second quarter and saw thisgreat uptick. The flipside, however, is that as we head into thethird quarter, we’re not feeling good. Employment is stillproblematic, we’re getting mixed signals about consumer confidence.I’m not saying that we are skidding, or even suggesting adouble-dip recession…I would call it a ‘backing off theaccelerator’,” Meyer says.

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There are some positives, he says. There’s very littleconstruction, only about 11.3 million square feet, and 83% of thatis pre-leased, suggesting that build-to-suit activity could make acomeback, Meyer says. Many corporations have had to restock, andpent-up demand leasing activity has revolved around this need,along with renewals and expansions keeping the industrial marketstrong. New Jersey, the Inland Empire and Dallas have beenexceptional markets, while Chicago and Los Angeles account for acombined 8.3 million square feet of negative net absorption so farthis year.

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However, rents are still declining across the country, he says.This rate of decline slowed in the second quarter, but will likelystay flat until mid-2011, Meyer says. Many in the market will bewatching the seasonal sales figures intently, he says. “Therehasn’t been the increase of holiday stocking that we are used toseeing. There is an uptick in manufacturing jobs, but it’s not thatsignificant. We’ll probably be flat with leasing activity until atleast Q2 2011, backing off this growth spurt we had in the firsthalf of the year.”

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