In a sign that the improving economy is boosting the region’s commercial real estate market, vacancy rates for office space and industrial space in southeastern Wisconsin declined during the first quarter of 2011, according to the first quarter report from Xceligent and the Commercial Association of Realtors Wisconsin (CARW).
The region’s office market had positive net absorption of 44,090 square feet of space and the vacancy rate improved to 21.4 percent in the first quarter of 2011, compared to 22.1 percent in the fourth quarter of 2010. The region’s office space vacancy rate was at 21.0 percent in the first quarter of 2010.
The class A office market in the downtown central business district continues to be one of the region’s strongest office submarkets. The class A office space vacancy rate downtown, east of the Milwaukee River, was at 8.6 percent in the first quarter of 2011. However, the submarket had negative absorption of 2,643 square feet of space during the quarter.
The Waukesha/Pewaukee office submarket absorbed 33,878 square feet of space during the first quarter. It’s vacancy rate is now 17.5 percent, and its class A vacancy rate is 11.9 percent.
The southeastern Wisconsin industrial real estate market had a positive net absorption of nearly 1.1 million square feet of space and its vacancy rate dipped to 8.2 percent in the first quarter of 2011. The vacancy rate was an improvement compared to the 8.4 percent vacancy rate in the fourth quarter of 2010 and the 9.3 percent vacancy rate in the first quarter of 2010.
Racine County was the strongest industrial real estate submarket during the first quarter. The Racine County industrial real estate market had 381,566 square feet of positive net absorption, and its vacancy rate is now at 3.9 percent.
Milwaukee County had 801,879 square feet of positive net absorption during the first quarter and its vacancy rate is now at 10.9 percent.
The region’s industrial space vacancy rate has improved steadily since the first quarter of 2010. That could be an indicator that the region’s office market will improve in the months ahead, said Kevin Talbot, vice president of regional operations for Xceligent.
“If the theory that industrial growth is a leading indicator of office demand holds true, then the Milwaukee office market will benefit from four consecutive quarters of solid positive absorption in the industrial market,” he said.
The southeastern Wisconsin industrial real estate market has absorbed more than 4 million square feet of space during the last five quarters.
“In large part to increasing demand, but also to a smaller degree to border jumping companies taking advantage of state law changes,” Talbot said.
