Milwaukee area industrial real estate market improves slightly

The industrial space vacancy rate in southeastern Wisconsin dipped from 7.9 percent in the second quarter to 7.7 percent in the third quarter, according to The Dickman Company’s third quarter industrial market statistics and analysis for southeastern Wisconsin.

The decrease in the region’s industrial space vacancy rate is largely attributed to Racine and Kenosha counties, which had a positive net absorption of 325,978 square feet during the quarter, the report said. During the third quarter Kenosha County’s industrial space vacancy rate fell from 12.2 percent to 9.7 percent and Racine County’s fell from 8.5 percent to 5.6 percent.

Milwaukee County’s vacancy rate increased from 9.9 percent to 10.0 percent (the highest in the region), but its net absorption improved during the quarter from -691,806 square feet in the second quarter to positive 222,701 in the third quarter.

The news was not as good in Waukesha, Ozaukee, Sheboygan, Walworth and Washington counties, which all had increases in industrial space vacancy during the third quarter. Waukesha’s increased from 5.3 percent to 5.6 percent, Ozaukee from 8.5 percent to 9.9 percent, Washington from 6.6 percent to 7.7 percent Walworth from 6.7 percent to 7.8 percent and Sheboygan from 2.5 percent to 2.6 percent.

Ozaukee and Washington counties had the most negative net absorption during the third quarter. Ozaukee County had negative net absorption of 127,717 square feet of space and Washington County had negative net absorption of 214,927 square feet of space.

Despite the third quarter dip in the region’s overall industrial space vacancy rate to 7.7 percent, Dickman Company said the region’s availability rate increased from 9.7 percent in the second quarter to 9.8 percent in the third quarter.

“The gap between the vacant and availability percentages suggests there is some slack in the marketplace that could increase the vacancy rate if the available but occupied space is not leased in the fourth quarter,” the report states. “Therefore, we predict the vacancy rate will remain stable or approach 8 percent during the fourth quarter of 2009 and first quarter of 2010.”

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