At the start of the fourth quarter, the vacancy rate for industrial buildings in the Valley was 7.7%, a slight increase from the start of the third quarter, which posted a vacancy rate of 6.9%, according to a recent survey by CB Richard Ellis.

The rate should easily remain below 10% by year-end, making it the seventh straight year that it has been below the double digit mark.

"The net absorption has been more aggressive than we thought," says Mark Krison, an industrial and office broker with CB Richard Ellis. "The vacancy rate has not changed much in four years. That's a very health vacancy rate."

CB Richard Ellis had predicted that Phoenix would have a net absorption of industrial space in 2000 of approximately nine million sf, but that mark was hit at the start of the fourth quarter. The fourth quarter should easily have more than one million sf of absorption during the quarter and as much as two million sf, Krison says.

"All of the indicators show that the fourth quarter will be strong," he says.

Absorption was strong even though more than 2.5 million sf of space came onto the market during the third quarter.

The strongest submarkets are around Sky Harbor International Airport, around the Scottsdale Airpark and in the Northwest Phoenix area.