Industrial Market Weathers Economy--So Far

PORTLAND-Just less than 830,000 sf of new industrial construction came online during the second quarter, but more than half was owner-occupied or build to suit product, keeping conditions stable, according to the latest report from the Portland office of Grubb & Ellis. The brokerage puts absorption at a solid 600,000 sf by the end of the second quarter and overall vacancy at 7.9%, just one tenth of a point higher than the first quarter.

The warehouse market, which saw its vacancy rate drop by a half point to 7.9%, offset somewhat the troubled semiconductor and telecom industries negatively affecting the flex market. Flex absorption was a negative 132,000 sf–mostly in the Sunset Corridor–and vacancy rose more than one full point to 7.8%.

The potential problem is that the real estate market tends to lag behind the macro-economic cycle, making it hard to say when the market will start to show tangible signs of recovery. The leading economic indicators are suggesting a return to normal sometime in 2002, once the Fed rate cuts have a chance to take effect.