Three build to suit projects are under construction at Southshore Corporate Park -- One for Alexander Moving & Storage at 110,000, another for Frito Lay at 80,000 sf and Harry's Fresh Foods will soon break ground on their 80,000 square foot plant, according to the report.

The only speculative industrial construction to speak of, states the report, is at Southshore Corporate Park, where Catellus Development has broken ground for two buildings totaling about 180,000 sf. Grubb & Ellis' Tom Talbot is marketing the space, and the report says the buildings have already begun to see interest. Of the existing Catellus-owned buildings, Fuji Photo Film recently backfilled 27,000 sf of 80,000-sf vacated by Centric Corp.

In the I-5 South region, Specht Properties is expected to deliver a 260,000-sf build-to-suit (23% office) for Precision Interconnect by the end of the year, and in the second quarter of 2002 Novellus Systems is expected to deliver the 495,000-sf first phase of its development on SW Leveton Drive.

"The slowdown in the manufacturing sector of the economy has taken its toll on the tech- heavy Sunset Corridor this year," states the report, but it was not the key driver of the corridor's rising vacancy rate in the third quarter, states the report. The driver was 182,635 sf of new flex product delivered to the Sunset Corridor only 19% occupied.

Sunset flex vacancy rose over one full point from the first to the second quarter, but rose by only half that in the third quarter. Following 20,000-sf of negative absorption in the quarter, the industrial vacancy rate now stands at 9%. But no new construction will arrive until the first quarter of 2002; and that will be pre-committed product. Flex activity in the Sunset Corridor in the third quarter included Poorman Douglas taking 28,013 sf at Millikan Business Center and Network Elements taking 40,000 sf at Woodside Corporate Park, according to the report.