The CARW/Xceligent second quarter numbers show that the commercial real estate market in southeastern Wisconsin continues to perform. The numbers also suggest a trend across all sectors that confidence is improving.
The office sector showed slight positive absorption and vacancy rates remain stable. “The data is clearly showing the results of the activity we see in the downtown office market vs. the suburbs,” said Ned Purtell, partner with RFP Commercial. He suggested that the urban (downtown) office market is still the preference for the majority of users as the demographics of the labor force shifts to younger workers. Purtell added, “In the past, users focused on the overall occupancy cost of their space, now they focus on attracting and retaining labor, and are willing to pay more as a result.”
The industrial sector experienced positive absorption for the twentieth quarter with over 1.23 million SF absorbed in Q2. “Absorption of industrial products continues to be strong in the Milwaukee Metro region,” said Adam Matson, Senior Vice President with NAI MLG Commercial. “We are seeing a few factors that are limiting the momentum of the market going forward,” he added, “including a shortened manufacturing lead time, and lack of quality products available.” Matson suggested that a continued increase in construction costs will likely prolong this shortage. As a result, he said, companies are increasing the number of employees on hand, adding 2nd and 3rd shifts. “Beyond that,” said Matson, “companies are outsourcing certain facets of business, as opposed to investing the capital into a new facility.”
In the retail sector, vacancy rates are slowly dropping. “The Milwaukee retail market continued its trend of measured improvement over the 2nd quarter,” said Ross Koepsel, partner with Commercial Property Associates. He noted that most movement in this market has come from big box spaces vacating (i.e. K-Mart, Pick N Save) and new buildings being delivered for occupancy (i.e. Meijer, Costco). “Smaller retailers are active but with a limited supply of quality shop space throughout metro Milwaukee, their activity isn’t having much impact on the perceived health of local real estate,” Koepsel added. “Looking forward, Q3 numbers should further increase marketplace confidence as absorption escalates and vacancy rates track down slightly. Retailers, including several that are new to our market, will drive creative retail redevelopments to secure locations so demand should remain relatively steady through the end of 2015.”
CARW is the voice for commercial real estate brokerage and related professionals in Wisconsin. Founded in 1993, CARW is dedicated to the success of our members by providing public policy advocacy, invaluable educational opportunities, networking experiences and data exchange.
CARW is a trade association representing more than 600 members from 200 Wisconsin businesses including REALTORS®, accountants, appraisers, architects, attorneys, bankers, builders, contractors, developers, environmental specialists, title insurance companies and other industry related businesses. CARW REALTOR® members are part of the REALTOR® network, the world’s largest professional association with over 1.1 million members worldwide and over 12,000 just in the State of Wisconsin.
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