"The market has behaved in line with our forecast for the year,"Robert Kramp, client services' director for Grubb & Ellis,stresses to GlobeSt.com. Vacancy is 9.6% in the 643.6-million-sfinventory. And though there are two million sf under construction,he predicts the region is on solid ground to stay below 10%vacancy, the historical threshold to set up some traction forbuilding owners.

Kramp says the region is on track to end the year at 9% vacancy,possibly even 8.75%. "We've seen vacancy drop a full percentagepoint in two years and a half a point in the past year," he says.The under-construction space is evenly divided betweenbuild-to-suits and spec. "One million sf of speculative space in a650-million-sf-market is a drop in the bucket," he adds.

The positive traction has manifested into a rent increase inwarehouse/distribution space, which accounted for 512,797 sf of theQ2 absorption, according to Kramp's analysis. The category, onaverage, is pulling down $3.78 per sf while research anddevelopment and flex space averages $7.27 per sf. Overall rents inthe region rose four cents to $4.73 per sf triple net on an annualcalculation.