The office space vacancy rate in downtown Milwaukee spiked upward during the first quarter of 2009, according to a new report from Boston-based Colliers International, whose local affiliate is Milwaukee-based Colliers Barry.
The downtown Milwaukee office space vacancy rate was 18.62 percent at the end of the March, up from 17.54 percent at the end of 2008. The vacancy rate in downtown Milwaukee is considerably higher than the national average of 12.79 percent for downtown office space vacancy, according to Colliers Barry.
The picture is a bit brighter in the suburbs. The suburban Milwaukee office space vacancy rate improved a bit during the first quarter, dipping to 16.37 percent compared to 16.44 percent at the end of 2008, according to Colliers Barry. The national average for suburban vacant office space is 15.67 percent.
"There’s more vacancy within the last year to 18 months," said Andrew Jensen, an office space broker with Milwaukee-based The Boerke Company, during the Commercial Association of Realtors Wisconsin (CARW) Commercial Real Estate Roundtable Forum Tuesday.
Jensen complied a list of 36 office buildings in the metro Milwaukee area with 30,000 square feet or more of contiguous vacant office space, a total of 2.5 million square feet of vacant office space.
The list of available contiguous office spaces of 30,000 square feet of space or more in the Milwaukee area:
- Milwaukee Center, 111 E. Kilbourn Ave., Milwaukee, 40,000 square feet of available contiguous space.
- Adams Building, 790 N. Jackson St., Milwaukee, 48,000
- 411 East Wisconsin Center, 411 E. Wisconsin Ave., Milwaukee, 47,000
- 250 Plaza, 250 E. Wisconsin Ave., Milwaukee, 28,000
- Van Buren Building, 727 N. Van Buren St., Milwaukee, 42,000
- Kennedy II Builidng, 790 N. Milwaukee St., Milwaukee, 38,000
- 735 N. Water St., Milwaukee, 30,000
- 401 W. Michigan St., Milwaukee, 249,334
- Executive Building at Schlitz Park, 235 W. Galenda St., Milwaukee, 140,000
- Federal Plaza, 310 W. Wisconsin Ave., Milwaukee, 75,000
- Schlitz RiverCenter, 1515 River Center Dr.
- The John Plankinton Building, 161 W. Wisconsin Ave., Milwaukee, 30,000
- Florida Street Offices, 234 W. Florida St., Milwaukee, 65,061
- The Atlas Building, 600 W. Virginia St., Milwaukee, 39,702
- The Mayer Building, 342 N. Water St., Milwaukee, 31,654
- The Timbers Building, 700 W. Virginia St., Milwaukee, 30,000
- Honey Creek Corporate Center IV, 9000 W. Chester Dr., Milwaukee, 30,679
- Two Park Plaza, 10850 W. Park Place, Milwaukee, 159,020
- 7800 N. 113th St., Milwaukee, 80,212
- Mayfair Woods, 10700 Research Dr., Wauwatosa, 67,386
- 10000 W. Innovation Dr., Wauwatosa, 67,000
- The Forum, 3333 N. Mayfair Road, Wauwatosa, 45,440
- Heritage House at Mayfair, 2323 N. Mayfair Road, Wauwatosa, 30,000
- 440 S. Executive Dr., Brookfield, 66,000
- Executive Center IV, 235 N. Executive Dr., Brookfield, 52,327
- Watertown Crossing, 20855 W. Watertown Road, Brookfield, 36,554
- Park Plaza, 15850 W. Bluemound Road, Brookfield, 31,806
- Ridge View Office Center II, 23993 W. Ridgeview Parkway, Pewaukee, 56,739
- N16 W23377 Stone Ridge Dr., Pewaukee, 32,983
- Tower Executive Office Building, N14 W24200 Tower Place, Pewaukee, 30,000
- South 126th Street and West National Avenue, New Berlin, 56,000
- U.S. Bowling Congress Building, 5301 S. 76th St., Greendale, 116,835
- Brown Deer Business Park Building 6, 4300 W. Brown Deer Road, Brown Deer, 62,065
- Liberty II, 4555 W. Schroeder Dr., Brown Deer, 37,223
- Lydell Corporate Center, 5055 N. Lydell Ave., Glendale, 60,000
- Ryan Professional Center, 200 E. Ryan Road, Oak Creek, 48,000
"I was a little surprised to see there are 36 buildings (with that much vacant, contiguous space)," Jensen said. "That is more than I expected."
But despite the large number of vacant spaces, that does not automatically mean that new office buildings will not be constructed anytime soon, Jensen said. If a developer can secure enough tenants, a new building could be constructed he said. Some tenants might want a new building, or space in a particular area that is not currently available, he said.
For the U.S. office market as a whole, the first quarter of 2009 was the worst quarter since the Sept. 11, 2001 terrorist attacks, said Colliers International.
Underscoring the severity of the current recession, all submarkets and space classes in the U.S. registered negative absorption in Q1 – that is, a net negative change in occupied space.
"Unfortunately, not a ton of good news can be gleaned from the first quarter office numbers," saidRoss Moore, executive vice president and director of market and economic research at Colliers International. "As jobs continue to disappear nationwide, we see a commensurate decline in office occupancy."
In terms of office rents, rates fell in almost all markets surveyed
"It’s important to note, though, that asking rents only tell half the story," said Moore. "Tenant incentives also increased during the first quarter."