Region’s office vacancies rise, industrial vacancies flat in 2nd Quarter

In a sign that the southeastern Wisconsin economy is still struggling, more office space in the region went vacant during the second quarter.
The Milwaukee area’s office space vacancy rate rose from 19.8 percent in the first quarter to 20.6 percent in the second quarter, according to the Commercial Association of Realtors Wisconsin (CARW) and Xceligent second quarter report.
The region’s office space had a negative absorption of 36,994 square feet of space during the quarter.
In downtown Milwaukee the office space vacancy rate is at 16.8 percent east of the river and 29.7 percent to the west of the river, according to the report.
The class A office space vacancy rate east of the river is at 11.8 percent, according to the report.
Other submarket office space vacancy rates in the second quarter were: Brookfield, 19.9 percent; Wauwatosa, 22.1 percent; Waukesha, 15.7 percent; North Shore, 19.9 percent.
The Milwaukee area’s industrial market is performing better than the office market. The region’s industrial space vacancy rate dipped slightly from 9.2 percent in the first quarter to 9.1 percent in the second quarter. The region’s industrial market had a net positive absorption of 1,298,118 square feet of space.
“(Commercial real estate) brokers are seeing a higher level of interest and activity as businesses and investors look to take advantage of the market and put themselves in a better position moving forward,” said Jim Villa, president and chief executive officer of CARW. “What we are not seeing yet, however, are the big deals that are a result of businesses growing, expanding and moving, nor are we seeing the kind of growth and development that helps drive the local market.”
Still, southeastern Wisconsin’s commercial real estate market continues to avoid the big busts that other more volatile markets are experiencing, Villa said.
“Our region continues to remain stronger than many markets where the boom far exceeded local growth,” he said. “We didn’t have the wild speculation that has contributed to the dramatic declines in property values and vacancies that you are seeing elsewhere.”
“Compared to other similar markets, southeastern Wisconsin continues to fare better despite the challenges being faced,” said Kevin Talbot, vice president of regional operations for Xceligent. “We expect that Milwaukee will continue to recover slowly, but at a stronger pace than many of the areas hardest hit.”