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ATLANTA-Bulk warehouse leasing deals, in the 500,000-sf-plus range for the past two years, slowed in the second quarter as shallow bay distribution space absorption was up 85% from mid-year 2005 levels, according to new research by Atlanta-based Colliers Spectrum Cauble.

Net warehouse absorption totaled only 389,107 sf compared to 970,682 sf leased in the shallow bay category and 233,441sf in flex space. Year-to-date, shallow bay leasing totaled 1.89 million sf; warehouse, 1.7 million sf; and flex space, 51,966. Flex had a negative first-quarter absorption of 181,475 sf. Total market vacancy is at 11.8% versus 11.4% in the first quarter.

"Looking at the size comparison between bulk warehouse and shallow-bay deals, mid-year absorption levels, relative to the types of deals taking place, continue to show a healthy industrial market," says Scott Amoson, research director, Colliers Spectrum Cauble. "The trending vacancy rate, however, paints a different picture to the story." Vacant industrial space has been increasing over the past six months and "appears to be headed that way for the remainder of the year," Amoson predicts.