Downtown Milwaukee is a tenant’s market
By Steve Jagler, of SBT
Downtown Milwaukee is an office tenant’s market, as a game of musical chairs has landlords "bending over backwards" to keep and attract tenants.
That’s the assessment of Ben Shapiro, sales associate at NAI MLG Commercial, Brookfield.
"We’re seeing some of that, a lot of shuffling around within the market," Shapiro said. "A lot of landlords have left their rates fairly flat, just to get the deal done."
The flat rates have been a factor in many decisions to move within the Milwaukee market.
— The Marcus Corp. plans to move from the 250 Plaza to the 100 East Building on Wisconsin Avenue.
— The federal government plans to move the Milwaukee offices of the U.S. Forest Service, the National Park Service, the Federal Family Credit Union, the Bureau of Land Management and the U.S. Department of Agriculture’s General Counsel from the Reuss Federal Plaza at 310 W. Wisconsin Ave. to the Wisconsin Gas building at 626 E. Wisconsin Ave. The agencies plan to sign a 20-year lease for $50 million to occupy 93,000 square feet of space in the Wisconsin Gas building, which is being renovated.
Meanwhile, the vacant space is expected to rise, according to NAI MLG’s first-quarter report on the downtown office market.
The Bank of New York is leaving its 100,000 square feet of space the Milwaukee Center at 111 E. Kilbourn Ave. and is reportedly searching for an office location between Milwaukee and Madison.
The Foley & Lardner law firm is considering moving its offices out of the US Bank Center at 777 E. Wisconsin Ave. and may ultimately move to Chicago.
Add to the mix the fact that new office towers are being constructed, including the 875 East Wisconsin building and Cathedral Place at 555 E. Wells St., and landlords are in a free-for-all to find tenants.
"Landlords are willing to give in right now, especially when threatened with a large block of space in their buildings," NAI MLG’s quarterly report stated.
The report predicts the vacancies will actually be an impetus for the downtown to compete heartily with the western suburbs.
"The large, dramatic increase in downtown east Class A vacancy is not a sign of weakness in the downtown market but, rather, it is a strong sign of investor/developer confidence in the downtown Milwaukee office market," the report stated. "Developers currently undertaking projects are doing it because there is a need for new development and the space will be filled.
"Downtown Milwaukee only needs one large user or a series of medium-sized users to commit to downtown, and the existing new developments and quality existing spaces will be filled, and the other two proposed buildings will be kicked off," the report stated.
Class A office vacancy rates downtown have more than tripled from just over 5% in the first quarter of 2000 to 17.51% in the first quarter of this year, according to the report.
Those vacancies have created corresponding vacancies in sublease space, the report concluded.
Shapiro says smaller businesses are finding plenty of office options downtown.
In fact, the downtown market has 24 vacancies for Class A offices of 2,500 square feet or less, NAI MLG reported.
March 7, 2003 Small Business Times, Milwaukee
