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PHILADELPHIA-The overall vacancy rate along Pennsylvania’s I-81 industrialcorridor dropped to 16.9% in second quarter, according to research from theConshohocken, PA office of Trammell Crow Co., compared with 17.5% in theprevious quarter. The direct vacancy rate, however, remained the same at 16.2% duringthat timeframe.

“Although the leasing trend is positive for the first half of the year,”says Matt Marshall, SVP of the Trammell Crow office, “only two million sf ofgross absorption can be counted year-to-date by the end of June 2003. As a result,building owners are structuring short-term -one- to two-year -leases ataggressive rental rates hoping that the market for space recovers.”

The average triple-net rental rate slipped from $4.25 per sf during theyear’s opening quarter to $3.82 per sf by mid-year, according to theresearch.

The submarket cuts a diagonal swath from Chambersburg, PA in the southcentral portion of the state to Scranton, PA near the state’s northeasterncorner. It consists of primarily warehouse/distribution facilities that total morethan 54 million sf. According to Marshall, 40% of the nation’s population iswithin a 10-hour drive off I-81, prompting truckers and logistics suppliersto refer to it as “the back door to the Eastern U.S.”

“Vacancy rates are likely to decrease slightly over the next six months,”Marshall predicts, “while new construction and absorption will trendupwards. Rental rates are likely to remain flat or increase slightly going into thesecond half of 2003,” he adds.

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