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PHOENIX-Although negative absorption plagued the industrial market in the first quarter, overall vacancy has held a single-digit showing. The strongest market during the period was the Southwest Valley.

Peter Klees, senior vice president with locally based Grubb & Ellis/BRE Commercial LLC, says area watchers had braced themselves for a little more negative absorption, but the overall vacancy stayed below 10%. “The first quarter here could be the worst we’ll see out of the four,” Klees tells GlobeSt.com. “I think everyone started believing the press they saw on the economy after the New Year and it gave them pause. We went from going 120 miles per hour to 60 miles per hour, but then again, going 60 miles per hour isn’t too bad.”

Grubb & Ellis’ first-quarter report showed a 9.5% vacancy in the 259-million-sf inventory. Absorption was down 59,140 sf. At the last count, there are 7.5 million sf under construction.

Cushman & Wakefield Inc.’s research team clocked a 234,576-sf backslide in absorption in Q1. It reported vacancy of 7.5% in a 259.7-million-sf inventory, with 5.8 million sf under construction and 17.6 million sf on drawing boards.

The Southwest Valley was the most active during Q1. Grubb & Ellis’ team found 596,462 sf had been absorbed. It placed occupancy at 13.8% in the 52.2- million-sf inventory. The submarket has 4.6 million sf under construction. Meanwhile, C&W says 378,887 sf was absorbed in the 108.8-million-sf inventory, which is sporting 8.4% occupancy. The difference is C&W includes south central Phoenix. According to C&W, there are 3.7 million sf under construction and 13.8 million sf in various planning stages.

Klees believes the southwest submarket saw positive absorption partly because of build-to-suit activity. Additionally, it has enjoyed good momentum since 2005-2006 due to proximity to the ports of Los Angeles and Long Beach. “There’s a little danger of overbuilding in the Southwest Valley, with product in the pipeline,” he asserts. “That’s really the only submarket where we see a potential delivery disconnect, but nothing like what we saw in the last recession go-round.”

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