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DENVER-The market for bulk distribution facilities in the US is holding steady, according to two semi-annual research reports released this week by ProLogis, a major distribution REIT based in Denver. The reports found that vacancy is up only slightly while construction starts and deliveries are up significantly in the nation’s top 30 bulk distribution markets.

The company’s US Property Market Review found average vacancy rate for bulk distribution space across the country’s top 30 markets increased to 7.8% at year-end 2007 from 7.6% at mid-year 2007. ProLogis’ US Construction Pipeline Report found that thanks to a busy second half of 2007—new starts totaled 79 million sf in the second half of 2007 compared to 66 million sf the same year-earlier period—construction activity increased to 145 million sf for the year from 123 million sf in 2006. The total activity represents 2.7% of total existing inventory.

Leonard Sahling, with ProLogis’ research division, says the bulk distribution property leasing markets held up well last year despite the global credit crunch, and that overall fundamentals through the first three months of 2008 are in better shape than during past downturns. That said, he adds, the future is always uncertain.

“Insofar as the economy slows, so will the demand for space, but sharp cutbacks in new supply are also in the offing, given the lack of financing,” he says. “The interplay between these two market crosswinds will determine the relative strength of the bulk distribution property leasing markets during 2008.”

Other facts from the reports:

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