Not too long ago, empty warehouses in Salt Lake County were a common sight.

But as thousands of people move to the Wasatch Front, manufacturing and distribution space is growing tighter, according to a new report by Commerce CRG.

In this year's second quarter, the vacancy rate for industrial space fell to 6.43 percent, down from 7.62 percent in the second quarter of 2005 and 7.14 percent in the first quarter of 2006.

As recently as 2001, the industrial vacancy rate was at 10.2 percent, the highest since 1987.

When vacancy rates fall below 8 percent, developers take notice, said Greg Hunter, senior industrial agent with Commerce CRG.

"That's when builders start looking at building," Hunter said. "The big picture, I believe, is in-migration. In-migration drives the housing market. Retail is being driven by that housing growth, and retail is the front edge of industrial."

In fact, roughly 2 million square feet of industrial big-box buildings totaling more than 50,000 square feet is now under construction.

Most of those new buildings are by industrial real estate developer Freeport West, which has three new buildings planned for Salt Lake County totaling more than 1.6 million square feet and is betting the low vacancy rates will offer big returns.

Keri Cannon, marketing representative for Freeport West, said it has two potential tenants, each expressing interest in 350,000 square feet of industrial space.

"They're aren't many of those deals existing in Utah," Cannon said. "It's a lot harder to get people to relocate or to move their operations to Utah unless there is actually a building there. We can do build-to-suit, but people don't like to get into something until they see it.

"We believe in Utah. We think that if we can get this space completed, we can get some good companies out here."

In the last year, Cannon said, Freeport West has leased more than 780,000 square feet of new industrial space.

Hunter said many of the new tenants coming to town are manufacturers and assemblers, which take components from Asia and turn them into finished products here in Utah.

"That is a real nice sign," he said. "In the past, it has been very quiet. Everything goes overseas. Now, at least, we're reaping some benefits of taking some of the product that's coming over in containers and assembling them. That's a good, strong indicator of positive things in the future, as well as it drives the economy."

According to a separate report by NAI Utah, rising construction costs are slowing industrial space absorption, or new leases. Still, vacancy levels are continuing to drop with no near-term changes anticipated.

Jim Sheldon, an industrial property specialist with NAI, said in a prepared statement that Salt Lake County needs to add roughly 3 million square feet annually in order to meet future demand.

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E-mail: danderton@desnews.com