"Firms have apparently anticipated a slowing in the economy and have decided to temporarily postpone any space expansion until they feel more secure about their economic future," the Colliers Seeley report says. Sales and leasing activity in third quarter 2001 decreased to 2.7 million sf from 3 million sf last quarter.

The region also saw its third consecutive quarter of negative net absorption, as it stood at negative 736,000 sf. The airport submarket had an especially slow third quarter, as net absorption there stood at negative 555,000 sf.

The Colliers Seeley researchers don't expect activity to pick up for at least another quarter, as the Sept. 11 attacks have economists predicting a recession. "This would limit growth in demand for industrial space for at least another three to six months," the researchers point out. However, increased demand from defense and communication-oriented firms may help to offset the anticipated slowdown, the report adds.