Grubb attributes the change to negative net absorption of 40 million square feet, which marked yet another record, the largest quarterly decline of the decade. What's more, the volume of leasing activity fell 35% from Q4 and 41% from Q1 '08, while the average lease term of 44.2 months and size of 23,260 square feet were the lowest readings of the decade.
The report says the warehouse/distribution sector accounted for more than half the negative absorption and 85% of new space delivered in the quarter. As a result, vacancies rose by 110 basis points for that segment. By contrast, the vacancy level for R&D/flex space and general industrial space increased by 70 basis points and 10 basis points, respectively.
Though the brokerage reports asking rental rates fell only slightly, it notes that effective rates fell sharply. The former, which stood at $5.57 a square foot per year triple net, was down a mere 1% from Q4 and 3% from Q1 '08, but the latter was 15% below the level recorded a year ago, as landlords rewarded tenants with generous concessions.
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