"Although market conditions are expected to soften over the next few quarters, when the economy slows, the demand for logistic space still tends to hold up well," says Bob Bach, the firm's senior vice president and chief economist. "Manufacturers need to store excess inventories while their sales slow, in turn boosting demand for warehouse space."

According to the report, the industrial market as a whole is faring better than the logistics subsector. Though the vacancy rate for overall industrial also rose last year, it jumped only 110 basis points and topped out at 8.8%, three points lower than the logistics market. Furthermore, with logistics properties factored out, industrial market vacancies would have risen only 40 basis points and ended the year at 7.6%.

In addition, the report notes, Class A logistics vacancies rose even more than the logistics sector in general, increasing 330 basis points to 15.6%. Grubb researchers attribute this to the impact of new construction, but with the logistics construction pipeline emptying rapidly, they say the variance between Class A and other logistics product will narrow. Some 98 million square feet of logistics space was delivered to the market in '08, nearly four times the 26 million square feet absorbed. By contrast, only 34 million was in construction at year end, and very little is scheduled to enter the pipeline for '09.