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The industrial availability rate nationwide increased by 30 basis points from 10.2% at year-end 2007 to 10.5% in Q1, according to CB Richard Ellis. Most of the increase was in the Midwest with a 40 basis points change and the West, where the rate rose by 50 basis points. The highest jumps occurred in Austin, which soared nearly 30 basis points to an uncomfortable 19.4%, and Indianapolis, which rose to 11% from 8.4%. Seattle had the largest drop in availability—a 340 basis points decrease to 8.8%, primarily due to expansion in the tech sector. Wilmington, DE followed with a 330 basis points decrease to 11.6%.

Tucson, Tampa, Long Island, Cincinnati and Portland had the lowest rates, ranging from 5.6% to 7.1%, while Austin, Atlanta, Boston, Phoenix and Baltimore had the highest, ranging from 19.4% to 15.3%. Of the 10 largest markets, Atlanta, Northern and Central New Jersey and Philadelphia saw contractions in availability, but Los Angeles, San Francisco, Dallas, Detroit and Chicago all saw upsurges. Houston remained basically unchanged.

The higher industrial availability reflects the slowdown of the US economy, particularly consumer spending. This trend is very apparent in Southern California, which has experienced corresponding increases in availability rates. The market will continue to see subtle increases in availability rates over the next couple of quarters due to the continued sluggishness of the economy. In addition, new construction was down sharply, from 37.5 million sf in the previous quarter to 25.6 million sf in Q1. The diminishing supply of new product will help keep vacancies from rising significantly higher.

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