Apart from the greater difficulty in obtaining credit, the primary cause of the slowdown, he continues, is a disconnect between sellers' expectations and buyers' realities. With leasing market fundamentals still relatively strong as evidenced by stable or rising rents and declining vacancies, Fasulo says existing owners are opting to hang on properties. "They're telling buyers, if you can't get me the price I need, I'm just going to pull my property from the market and try to sell at a later day," he remarks.

According to Fasulo, the composition of the buyer pool differs significantly from last year, with the equity funds, private investors and other highly leveraged investors that dominated the scene in early '07 gone and pension funds and REITs now in the forefront. In coming months, he says, we can expect more investors to look outside the US for opportunity. "The longer there's uncertainty about the US economy, the more you're going to see US players look for alternatives elsewhere. Major pension funds had already been planning on reallocating more of their portfolios internationally. The uncertainty is only going to speed that up," he predicts.

Despite the current status, Fasulo remains very bullish on the US industrial sector, especially in supply-constrained markets on the coasts. "Too many investors talk about the US as if it's one place," he points out. "But industrial is much more local than people realize. There will be great opportunities over the coming year, but investors will have to do homework in the local market they want to invest in. Those who do their homework will be amply rewarded. Those who don't will pay the price."