"Austin's industrial market has a tough time keeping up withdemand," explains Jerry Heare, an industrial specialist atNAI/Commercial Industrial Properties Co. here. "Vacancy ranges at5% to 6% even though the increase in product construction continuesat a brisk rate."

The continued expansion of Dell Computers and Applied Materials,combined with the growing number of software companies and servicesto the expanding population is driving the market, he adds.According to Heare, most buildings being constructed are bulkwarehouses, which are dock high and have 24-foot clear height.About one-third to one-half are being used for flex office spacewith dropped ceilings, air conditioning and windows in place ofoverhead doors. "Flex space is in demand in response to the highcost of office space," he says.

According to statistics provided by NAI/CIP, Austin has absorbednearly 1 million sf in the first six months of this year, bringingthe market total to more than 26 million sf of industrial space.Nearly half of the absorbed sf is located in the city's northerncorridor, where a 1% vacancy rate prevails.