Q3 vacancies are at 15.04%, down 0.45% from second quarter but still above the 8.98% national average. However, net absorption has improved to a positive 364,743 sf from a negative 532,613 sf in the previous period. But counting sublease space, the vacancy mark shoots up to 16.17%, fractionally lower than 16.74% in the second quarter.

"The industrial market has hopefully hit the bottom of this cycle," at says Colliers Arnold senior research analyst Jeremy Kral. In the report, he projects the market will pick up strongly by the second or third quarter of 2003.

But he fears the fourth quarter may bring negative absorption again. "The instability of the stock market has paralyzed larger companies that remain reluctant to expand space," Kral says. "Landlords have been cutting rates for three consecutive quarters while trying to attract new tenants, decreasing the average quoted rental rates 20 cents since the first quarter."