Also supporting the industrial market are warehouses, which, instead of being used just for storage, are now central to moving goods for just-in-time delivery. At the same time, big-box warehouses are still in demand, although they will have to satisfy client demands for upgraded communications capabilities, trailer storage and automated materials handling, the study finds.

Offices--The Downtown vacancy rate for office space of 7.3% in the top markets. About 79.8 million sf are now in the process of being added to the existing 1.23 billion sf of space. IRR projects it will take a little over three years to balance the supply. San Francisco, Boston, New York, Austin, Seattle and Washington, DC, which account of 46% of the survey's inventory, post a weighted vacancy rate of 3.7%. Yellow caution flags have been issued for eight cities: Los Angeles, Memphis, TN, New Orleans, Kansas City, MO, and Baltimore, MD. Reporting a weighted average vacancy of 17.6%, it is projected they will take more than seven years to come into balance.

Hotels--As the economy slows, the lodging industry is expected to feel the impact. Few projects are expected for be financed in 2001 and RevPAR and occupancy rates are anticipated to fall when new product now in the pipelines comes to market. A positive environment, including the availability of financing and low interest rates over the last four years, encouraged a major construction boom, much of which has yet to deliver. As a result, over the next few years, growth in occupancy rates are likely to be minimal or decline, and make it difficult to maintain rates. The IRR report recommends that developers and lenders move cautiously in this market.