According to Grubb & Ellis, the vacancy rate soared by 120 basis points in the quarter to 10.7%. Not only was this by far the sector's largest single-quarter change in the 22-year history of the survey, it was also the largest vacancy increase this quarter among all four core property types. Reports from other brokerages show similar results. While CB Richard Ellis and Marcus & Millichap both found the rise a little less steep, the vacancy rates they reported were slightly higher – 12.4% according to the former and nearly 12% according to the latter.

The rise was not totally out of the blue, given that the previous Grubb & Ellis record was set in Q1 with a 70-basis-point increase. However, analysts say the steepness of the decline does not mean the industrial market is in worse shape than other sectors. Rather it reflects the fact the economic crisis was late in catching up with industrial users, as it took time for warehouses and distribution centers to empty of the backlog of orders.

Moreover, even as they emptied, many logistics tenants held on to the space, hoping business would recover. "Many space users have been finding large pieces of their warehouses go empty over the last two years," says Terry Reitz, senior vice president/global logistics in the Torrance, CA office of Grubb & Ellis. "This space has heretofore been unmeasured because until they bring it to market it doesn't hit the statistics."

But that space has at last come back to market, first as a trickle, now as a flood. "[N]ow that they see the business is not coming back as soon as they hoped, they are being forced to shed space to survive," Reitz explains.