According to a year end report by Cushman & Wakefield of Arizona Inc., 2.97 million sf of industrial space were absorbed in 2002 in comparison to slightly more than 1.3 million sf in 2001, with 1.5 million sf of that space taken by a single user, Target, for its West Valley distribution center.

"Net absorption has improved this past year, but it is primarily due to the warehouse/distribution factor," said Jim Wilson, senior director for Cushman & Wakefield, noting that a continuing demand for durable goods has secured the Valley as a shipping hub for the southwest.

But while the warehouse and distribution sectors remained strong, the economic downturn wreaked havoc in the manufacturing and high-tech sectors where vacancy rates remained high. Only 43,419 sf of manufacturing space was absorbed in 2002, compared to more than 500,000 sf in 2001. In the high-tech sector, net absorption fell to a negative 168,785 sf, down significantly from a year earlier when 254,576 sf was absorbed. The drop in activity led building owners to reduce rents and increase concessions.