Milwaukee-based commercial real estate brokerage releases 2007 market outlook
In its 2007 market outlook, The Boerke Company Inc., a Milwaukee-based commercial real estate brokerage, predicts that a new Class A office building will be announced later this year. "There are half a dozen sites that have developers with projects designed and ready to break ground, bu waiting for an anchor tenant or pre-leasing. It is anticipated that by year-end 2007, there will be an announcement of a new Class A building," Boerke stated.
The overall office space vacancy rate for the metro Milwaukee area is now about 16 percent, according to Boerke. Rental rates have been flat for several years.
“Overall, 2007 will see rental rates remain the same, except in some submarkets, such as Brookfield,” the Boerke report said. “The Brookfield market will be the first to recover with rental rates beginning to stabilize and potentially increase.”
The downtown class A office space vacancy rate is at about 15 percent, but most of that is concentrated in three of the nine downtown class A buildings, according to Boerke. Downtown is booming with residential and restaurant development, the report said. For industrial real estate, the region’s vacancy rate increased in 2006 but will stay below 10 percent in 2007, according to Boerke. Several speculative developments are occurring in the southern part of the metro area.
"The growth in the metro area continues to be around the General Mitchell International Airport and to the south along Interstate 94. There are several new speculative projects being planned or under construction between the airport and the Milwaukee-Racine county line that will add over 1 million new square feet to the market," Boerke stated.
"Overall, the industrial market in Milwaukee and the surrounding areas will realize a slow but steady increase in activity, especially as the economic climate continues to improve," Boerke said. "Absorption of existing stock will likely continue, even as several new speculative buildings come online during the year."
The metro Milwaukee retail real estate market is becoming polarized, as some retail centers, such as Bayshore Town Center in Glendale, are making improvements and attracting national retailers that pay high rental rates. Other, retail centers are offering low rent but have rising vacancy rates as they struggle to compete with the new developments for tenants. Retail tenants will continue to gravitate toward the more successful, better-located developments, according to the Boerke report.
"Many speculative small strip centers were built in 2005 and 2006 and are still experiencing difficulty finding tenants," Boerke stated. "With new strip centers being built, metro Milwaukee will soon reach the point of saturation. Already vacancies persist for longer periods, and with the additional pressure of the new developments, it will take creativity, rent concessions and good leasing to remain at full occupancy."
The region’s retail space vacancy rate is at 7.2 percent. Waukesha County has an 8.2-percent vacancy rate, and Milwaukee County has a 7.5 percent vacancy rate. Rental rates throughout the main retail corridors are expected to rise in the next year or two due to continued demand from national retailers for locations in the region. Rental rates are expected to start to decline in 2008 as the push by retailers into metro Milwaukee will subside, the Boerke report said.
