Commercial real estate companies predict that vacancy rates will continue to increase in the metropolitan Milwaukee office market in 2003.
"In 2003, opportunities will continue to favor smaller tenants in the Milwaukee office market, reaping the benefits of a competitive market with vacancies yielding a multitude of possibilities, while bigger tenants will face the challenge of a decline in large contiguous spaces," noted Grubb & Ellis/Boerke Co., Milwaukee, in its 2003 Real Estate Forecast.
Downtown Milwaukee’s vacancy rate for Class A office space will increase to 10.3% in 2003, up from 6.26% last October, according to NAI MLG Commercial in Brookfield.
"One year from now, the composition of downtown office towers could be drastically different," NAI MLG reported in its Downtown Milwaukee Market Summary. "The shuffling around of firms and construction of new buildings will leave some large blocks of space on the market."
NAI MLG expects the following events to have significant impact on the downtown Milwaukee office market in 2003:
— Space formerly occupied by Arthur Anderson at 100 E. Wisconsin Ave. will go on the direct market.
— Office buildings at 875 E. Wisconsin Ave. and 555 E. Wells St. will have at least 100,000 square feet of combined vacant space for lease.
— White, Hirschboeck & Dudek will move from the Bank One building to 555 E. Wells St.
— Artisan Parnters will move from 1000 N. Water St. to 875 E. Wisconsin Ave., leaving more than 20,000 square feet of vacant space.
— Rockwell Automation will place its space in the U.S. Bank Center up for sublease.
— The Bank of New York is close to leaving the Milwaukee Center on Kilbourn Avenue for the southeast suburbs and a satellite location in Madison.
— Deloitte & Touche has extended its lease for another three years and increased its space to 65,000 square feet at 411 E. Wisconsin Ave.
— Marcus Corp. is considering moving out of 250 Plaza at 250 E. Wisconsin Ave. and taking 50,000 square feet of space in another downtown office building.
Another factor in the downtown office market is the reemergence of the former Wisconsin Gas Co. building, which is being renovated for commercial use by Paul Weise Real Estate Corp. Weise is attempting to secure leases from some of the federal government agencies currently located in the Reuss Federal Plaza building to the flame-topped gas building at 626 E. Wisconsin Ave.
Meanwhile, developers will be plotting for future projects as the Park East Freeway is demolished, the Marquette Interchange is rebuilt, the former Pabst Brewery complex is redeveloped and the Marcus Center for the Performing Arts considers building a new office tower at the site of its parking structure on North Water Street.
The uncertain economy has prompted many businesses to seek only one- or two-year leases, rather than make long-term commitments, according to Grubb & Ellis/Boerke Co.
"The challenges and opportunities for the metropolitan Milwaukee office market will be to locate and define future development zones," the firm’s report stated. "In the suburban areas, Wauwatosa and Brookfield continue to have a very limited quantity of land available for development."
Jan. 10, 2003 Small Business Times, Milwaukee
