The report notes that the slowdown if the economy during the second half of 2001 has resulted in reduced enquiry levels, but it finds no evidence that agreed deals are falling through or that occupiers are withdrawing from the market en masse. Nigel Rowe, ATIS Weatheralls' head of industrial property said: 'The limited supply of new and second-hand property remains the principal industrial market driver. As a result, we expect rental levels to be maintained within a stable and balanced market. However, where availability of existing buildings is more extensive, then the weakening demand profile will result in greater restrictions on growth.'

The report found that the distribution sector remains the most active part of the industrial market with demand strongest for large, modern and well-specified buildings. 'This is driven by the increasing quality and range of services provided by outsourcing distribution companies, resulting in them receiving greater numbers of distribution contracts,' said Rowe.