More office space in southeastern Wisconsin is going vacant, but industrial space is filling up.
The office space vacancy rate in southeastern Wisconsin dipped in the fourth quarter of 2010 to 22.1 percent, down from 21.2 percent in the third quarter and 20.9 percent in the fourth quarter of 2009, according to Xceligent and the Commercial Association of Realtors Wisconsin (CARW).
For all of 2010 the southeastern Wisconsin office market had negative absorption of 292,583 square feet.
Downtown, the office space vacancy rate is at 18.5 percent east of the Milwaukee River and 34.0 percent west of the river.
Class A space east of the river, the heart of the central business district, has a significantly lower vacancy rate of 12.0 percent.
The region’s industrial market is faring much better than the region’s office market. The region had an 8.6 percent industrial space vacancy rate in the fourth quarter of 2010, down from 9.0 percent in the third quarter and 8.8 percent in the fourth quarter of 2009.
The lowest industrial space vacancy rates are in Sheboygan County (4.1 percent) and Racine County (4.7 percent). The highest industrial space vacancy rates are in Ozaukee County (13.5 percent), Milwaukee County (11.9 percent) and Kenosha County (9.7 percent). Waukesha County has a 6.1 percent industrial space vacancy rate.
For all of 2010 the southeastern Wisconsin industrial market had positive absorption of 1,983,488 square feet of space.
“Sales transactions this year were the key to the nearly 2 million square feet of positive absorption generated in the industrial market,” said Kevin Talbot, vice president of operations for Xceligent. “While the office market has not experienced the same increase in recent sales, the coming year should see an improvement in sales for well positioned properties. Market experts are projecting that traditional institutional investors, long sidelined due to market fluctuations, will return this year.”
“Market vacancy and lease rates remained relatively steady in 2010 as the economy stabilized,” said Jim Villa, CARW president and chief executive officer. “There is cautious optimism that activity will increase as businesses look to grow and add employees in 2011.”
