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Sensor networks and ad-hoc networks, where nodes inter-communicate without fixed infrastructure, have recently attracted interest due to potential use in industrial, environmental, and safety-related applications. The fading statistics of the propagation channels between sensor nodes are essential to determine the possible data rate, outage, and latency of sensor networks. This paper presents (to the best of our knowledge) the first in-depth analysis, based on measurements, of the propagation channels between typical sensor node locations in office environments. We find that the amplitude fading distribution can be characterized as Ricean. The Rice factor is analyzed as a function of distance and it is determined that it is not a monotonically decreasing function. Even in pure line-of-sight situations, Rice factors show a random behavior and are on the order of 10 or less. We propose models for the small- and large-scale fading correlation. A simulation model based on our analysis is also provided. Our results have relevance for the analysis of bit error rates and diversity order in clustered sensor networks.