The lease is valued at around $2.1 million. Based on that figure, the average lease rate on the transaction is less than $0.30 per sf per year. Global also leased an adjacent 31,000-sf space for two years in order to accommodate expansion needs.

"With the current market conditions, companies are searching for cost-effective, functional and well-located buildings," says Chet Barney, the Colliers International Partnership broker who handled the transaction for the tenant. "Developers would do well to search for infill and renovation opportunities, especially in the Interstate 880 corridor, to take advantage of opportunities presented by commodity driven companies such as Global Supply Packaging."

The city's vacancy rates continue to drop for the overall industrial market, which includes industrial, warehouse and R&D space. The vacancy rate dropped from 8.7% at the end of 2002 to 8% at the end of the second quarter of 2003. The market has seen 208,000 sf of positive absorption year-to-date, with most of that having come from the industrial product, which saw a drop in vacancy rates from 8% at the end of 2002 to 6.6% at the halfway point in 2003.