The metro Milwaukee office and industrial space vacancy rates have remained steady for about a year.
The region had a 21.0 percent office space vacancy rate in the third quarter, which was the same as in the second quarter and only a slight increase from the 20.9 percent vacancy rate in the first quarter of this year and the fourth quarter of 2009, according to the third quarter office market report from the Commercial Association of Realtors Wisconsin (CARW) and Xceligent.
The region had a 9.1 percent industrial space vacancy rate in the third quarter, which was down slightly from 9.2 percent in the second quarter, according to the CARW and Xceligent quarterly industrial market report.
“For the past five quarters the Milwaukee office and industrial markets are notable in that they remain virtually unchanged,” said Kevin Talbot, vice president of regional operations with Xceligent. “The good news is that the market remains resilient in spite of the slow economy. The bad news is that industry professionals are working much harder to close deals.”
For the metro Milwaukee office market, one of the strongest segments is for class A space in the downtown east submarket, which has a vacancy rate of 12.1 percent. That relatively low vacancy rate for class A office space in the central business district is one reason that some developers are trying to build a new office building downtown.
The only submarkets with lower office space vacancy rates are all much smaller than the class A downtown east submarket, which consists of 10 buildings and a total of 4.3 million square feet of space. The Wauwatosa class C office space vacancy rate is at 1.8 percent, the class C office space vacancy rate in the Third Ward and Walker’s Point is 8.0 percent, the Waukesha class A office space vacancy rate is at 9.7 percent, the southwest class A office space vacancy rate is at 11.5 percent and the north shore class A office space vacancy rate is at 12.4 percent.
The downtown office market is polarized. While the class A market east of the Milwaukee River is strong, the entire office market rest of the river has a 29.7 percent vacancy rate and the class B market is weak on both sides of the river (26.2 percent vacant on the east side of downtown and 32.4 percent vacant on the west side of downtown).
The Third Ward and Walker’s Point area has a high office space vacancy rate of 26.5 percent.
The region’s lowest industrial space vacancy rates are in Sheboygan County, 4.2 percent, and Waukesha County, 6.6 percent. Milwaukee County has the highest industrial space vacancy rate at 12.2 percent, followed by Kenosha County at 11.0 percent. The second highest is Ozaukee County, with a 13.1 percent vacancy rate.
The highest vacancy rates in Milwaukee County are in the North Shore, 15.4 percent, and downtown, 13.6 percent, areas. The lowest vacancy rate in Milwaukee County was in the south central area, with a 9.6 percent vacancy rate.
CARW president and chief executive officer Jim Villa said the flat industrial and office space vacancy rates for the region could be a sign that the market is on the verge of a recovery.
“The market is stabilizing and poised for a strong recovery,” he said. “Access to capital and lower unemployment continue to be the keys to unlocking the potential of the market and spurring a full recovery. There is a great deal of positive energy in the market and it is clear that there is pent-up demand waiting to get off the sidelines. This combined with potential changes to the political and economic landscape could mean a positive fourth quarter and signs for a strong recovery in 2011.”
