Downtown office market shows slight improvement

The downtown Milwaukee office market improved slightly during 2009, according to Inland Companies fourth quarter office market report.
The downtown office vacancy rate improved from 20.11 percent in the first quarter to 19.85 percent in the fourth quarter.
The class A office space vacancy rate downtown improved from 12.46 percent in the first quarter to 11.97 percent in the fourth quarter. Absorption of class A office space downtown improved from negative 18,712 square feet to a negative 1,166 square feet.
The class B office space vacancy rate downtown remained high and remained flat from 27.97 percent in the first quarter to 27.29 in the fourth quarter.
However, the overall office market for the metro Milwaukee area increased from 17.5 percent in the first quarter to 18.88 percent in the fourth quarter.
Office tenants appear to be shifting in a flight to quality in the region. In all but one of the region’s office submarkets the class A vacancy rate is lower than the class B vacancy rate, according to the report.
For the entire Milwaukee metro area the class A office space vacancy rate is at 13.73 percent, according to the Inland report, compared to 18.88 for the total office market and 22.95 percent for the class B market.
The class A vacancy rate is at 10.09 percent in the west submarket (the Waukehsa County I-94 corridor) and 11.81 percent in the region’s northern submarket (southern Ozaukee County and northeastern Milwaukee County).
The northwest submarket (Menomonee Falls and parts of Milwaukee and Washington counties) is the only submarket in the region with a higher class A vacancy rate than class B vacancy rate. The class A vacancy rate in the northwest submarket is 25.22 percent and the class B vacancy rate is 5.92 percent.