Boston-based Colliers International’s third quarter report indicates that the downtown Milwaukee office market is soft.
Boston-based Colliers International’s third quarter report indicates what many Milwaukee office space brokers have been reporting anecdotally: the downtown Milwaukee office market is soft. According to the Colliers International report, the downtown office vacancy rate increased from 11.8 percent in the second quarter to 18.4 percent in the third quarter.
The move of Blue Cross Blue Shield’s offices from downtown Milwaukee to Summit Place in West Allis, may have contributed to the large drop in downtown’s office vacancy rate in the report.
For class A downtown office space, the vacancy rate increased from 10.6 percent in the second quarter to 12.9 percent in the third quarter, according to the Colliers report.
The region’s office space as a whole fared better, with the vacancy rate dipping a bit from 11.4 percent in the second quarter, to 10.6 percent in the third quarter, according to the report.
The Milwaukee region’s total office space vacancy was lower than the national average, and the downtown class A vacancy rate was only slightly higher than the national average. The nation’s office vacancy rate was 13.3 percent in the third quarter, and the nation’s downtown class A office space vacancy rate was 11.2 percent, according to the report.
For industrial space, the Milwaukee area had a 7.6 percent vacancy rate in the third quarter, up a tad from the 7.5 percent vacancy rate in the second quarter, according to the report. The national industrial space vacancy rate was 8.24 percent in the third quarter, according to the report.
“Milwaukee is still holding its own with regard to vacancy and lease rates,” said James T. Barry III, president and chief executive officer of Colliers Barry, the Milwaukee affiliate of Colliers International. “We believe that the Milwaukee market will continue to improve steadily relative to other markets due to the fact that we have very little oversupply and very little speculative product in either industrial or office real estate markets. In addition, as land and construction costs continue to rise, lease rates and sale prices will strengthen, while vacancy rates should stay in check. In sum, we have relatively healthy industrial and office real estate markets in southeastern Wisconsin that should see steady improvement.”
