Milwaukee area office market shows improvement

After years of stagnation the Milwaukee area office real estate market is finally showing signs of improvement. The metro area’s office market had 132,223 square feet of positive absorption in the first quarter as the region’s vacancy rate fell from 20.4 percent in the fourth quarter of 2013 to 19.6 percent, according to the latest market report from Xceligent and the Commercial Association of Realtors Wisconsin.

The first quarter performance followed up on a healthy fourth quarter for the area’s office market when more than 150,000 square feet of space was absorbed. The area’s office market has absorbed 307,000 square feet of space during the last year, according to Xceligent.

Class A office properties in the region had 98,033 square feet of absorption in the first quarter and the vacancy rate for class A office properties has fallen from 14.15 percent to 12.28 percent in the last year, according to Xceligent.

Noteable metro Milwaukee office submarket first quarter data:
– Milwaukee County: 20.1 percent vacancy (down from 20.9 percent a year ago), 93,191 square feet of absorption
– Downtown East: 15.9 percent (down from 16.4 percent), 18,309
– Downtown East class A: 9.1 percent (down from 9.6 percent), 18,418
– Downtown West: 29.8 percent (down from 31.7 percent), 27,804
– Third Ward/Walker’s Point: 14.5 percent (down from 19.6 percent), 17,562
– Mayfair/Wauwatosa: 21.4 percent (up from 20.0 percent), 4,798
– North Shore: 23.6 percent (up from 23.9 percent), 26,987
– West Allis: 20.1 percent (down from 21.3 percent), 2,197
– Waukesha County: 18.7 percent (down from 21.1 percent), 34,729
– Brookfield: 21.2 percent (down from 21.9 percent), 24,079
– Waukesha/Pewaukee: 14.3 percent (down from 18.4 percent), 10,650
– Ozaukee County: 13.8 percent (down from 15.5 percent), 4,303

The most noteworthy office space absorption announced in the first quarter was Reader’s Digest Association Inc.’s plans to move the offices of its Enthusiast Brands division from Greendale to the Schlitz Park office complex in downtown Milwaukee, according to the Xceligent report. The move will bring 200 employees to Schlitz Park, and will fill 54,000 square feet office space in the Bottlehouse buildings in the complex.

The improved office market is good news for the owners of area office buildings, like the Schlitz Park complex, and for developers that plan to build new office buildings, including Wauwatosa-based real estate development firm Irgens, which plans to build a 17-story 358,000-square-foot building at 833 E. Michigan St. in downtown Milwaukee. Construction of that project could begin soon.

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