Industrial absorption in 2001 was a respectable 1,593,313 sf, but compares to 4,619,617 sf the prior year. "The high absorption in 2000 is evidence of the strong tenant demand that was driving construction," said Morera. "Absorption slowed most notably during the early part of 2001, then surprised us in the fourth quarter with 572,000 sf of activity. This was the strongest quarterly performance all year and something we did not expect following the 9/11 tragedy."

Where the San Diego County office market is concerned, a four-point increase in vacancy during 2001 is still quite low by historical standards and does not signal an overbuilt situation, according to Mark Wayne, also a senior vice president with Burnham.

"Today¹s vacancy rate of 12.4% is well below the 25.8% vacancy rate we had in 1991 following years of unprecedented construction that was not supported by demand," says Wayne. "What sets our current situation apart from the early 1990s is that the record building activity we witnessed over the past six years has been driven solely by demand."

The Burnham report shows that from 1996-2001, the San Diego County office market added 14.4 million sf of office space a 35% increase. Demand kept pace with new records being set for absorption, and vacancy falling to an all time low of 6.5% in 2000.

In 2001, net absorption totaled 1,039,874 sf, down from 4,641,989 sf the prior year. Construction declined from 3,750,314 sf to 2,368,377 sf, with even less space on the drawing board for 2002. "Of the new space that is under way, 46% is preleased and this willhelp keep vacancy in check as the year progresses," Wayne says.