The tiny South submarket, with only 758,000 sf of space, had a zero vacancy rate. The Henderson market, with 11.44 million sf of space, posts the highest vacancy rate at 14.9%. Henderson and Northeast, which has 5.6 million sf of space and a vacancy rate of 11.2%, were especially it hard by a slowing national economy, weakened demand for warehouse space and the loss of absorption from telecom companies, Grubb & Ellis notes.
"The events of Sept. 11 have had the effect of delaying expansion plans and new projects for marginal-credit clients," the report warns. "Lenders have adopted a very conservative stance and are focusing on properties with proven track records."
Plans by established developers such as Dermody Properties, MajesticRealty Co. and the Airport Authority, will continue, the report notes. Also unaffected is EJM Development's 150-acre proposed project offInterstate 215 in the Rainbow area, Grubb & Ellis adds.
Patrick Foley, senior industrial advisor at Grubb & Ellis, says it isdifficult to forecast when lenders will loosen their purse strings forindustrial properties. But he is confident a correction will occur.
"It will correct," Foley says. "It may take a year to overcome it, butit will. The market's too strong here."
Meanwhile, bad news for developers is good news for prospective tenants.
"Larger concessions are being offered to lure hesitant clients in thisweakening market," Grubb & Ellis notes. "On a five-year lease, it is now typical to receive a minimum of three months free rent, with some tenants receiving up to five. In a stronger economy, one to two months is more common."
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