INDUSTRIAL REAL ESTATE MARKET 'EXTREMELY ROBUST' IN Q2

THE INDUSTRIAL REAL ESTATE MARKET SAW AN "extremely robust" second quarter of 2005, with absorption totaling 69.4 million square feet-far surpassing the 40.9 million square feet recorded during the first quarter of 2005 and the 42.2 million square feet recorded during the second quarter of 2004, according to Bostonbased Colliers International Property Consultants Inc.

New construction during the second quarter totaled 30.5 million square feet, exceeding both the 23.2 million square feet recorded during the same quarter last year and the 27 million square feet recorded during the first quarter of 2005.

According to Colliers, its initial 2005 absorption forecast of 150 million to 200 million square feet appears to have been low, as year-to-date absorption totaled 114.7 million square feet.

"All the drivers of the U.S. industrial market are going strong-with a subsequent greater need for warehouse space," said Ross Moore, Colliers International's vice president and national director of research.

"Transportation and distribution companies, manufacturers, retailers, the housing market and consumer spending all continue to post positive results. There are no indications the industrial market will wane anytime soon," he added.

Colliers noted that nearly half, or 48 percent, of the nation's new warehouse construction occurred in five markets: Chicago (2.9 million square feet), Atlanta and Central New Jersey (each at 2.9 million square feet), Seattle (2.7 million square feet) and the Inland Empire, California (2.5 million square feet).

Strong absorption pushed the national vacancy rate down to 8.9 percent during the second quarter of 2005 compared with 9.2 percent during the first quarter and 10.1 percent during the second quarter of 2004. The lowest vacancy rates were posted by Los Angeles at 3.4 percent and the Inland Empire, California, at 3.8 percent.

Nationally, warehouse rents more than made up for the slight retreat shown during the first quarter, with a 4.7 percent increase during the April-throughJune period. Rents were up 3.4 percent for the year, according to Colliers.