Milwaukee is one of 14 U.S. markets that stand out as a strategic option for industrial and logistics real estate investors looking for growth opportunities outside of the nation’s primary markets, according to the findings of a new report from real estate firm CBRE.
CBRE noted in a news release that in these strategic markets, demand for industrial and logistics real estate has outpaced their supply by a collective 89 million square feet since 2013. In the same span, their industrial rents have increased by an average of 25.2%.
The other markets identified in the report are: Savannah, Georgia; Las Vegas; California’s Central Valley; Phoenix; Salt Lake City; northeastern Pennsylvania; Reno, Nevada; El Paso, Texas; San Antonio; Dayton, Ohio; St. Louis; Detroit; and Greenville-Spartanburg, South Carolina.
According to the report, the Milwaukee market benefits from being near Chicago, the largest industrial market in the U.S. Milwaukee’s industrial vacancy is also at a cyclical low, while asking rental rates are at their highest level since CBRE began tracking the market.
“A booming manufacturing industry and excellent market fundamentals make Milwaukee ripe for further industrial investment,” the report states.
Specifically, Milwaukee area has seen its industrial vacancy rate drop from 6.9% in 2013 to 3.4% in 2019, while average asking lease rates have increased from $3.72 to $4.25 during the same period. In addition, there has been more than 18 million square feet in positive net absorption, bringing the market’s industrial property total to 4,272 buildings.
“With our close proximity to several other major industrial locations, including Chicago, a manufacturing segment that is steadily growing and a labor supply to match it, Milwaukee continues to be one of the most attractive cities for industrial investors throughout the U.S.,” Scott Furmanski, senior vice president with CBRE in its Milwaukee office, said in a statement.
CBRE selected these strategic markets after polling its Industrial & Logistics Capital Markets teams about which areas represent emerging opportunities for yield for investors.
Some markets, like Detroit and Phoenix, are primary markets in terms of population but are still coming into their own as hubs of industrial real estate, according to CBRE.
BizTimes noted in a special report in May that the Milwaukee area continues to see strong demand from users and investors for industrial real estate. Indicators such as low vacancies were further encouraging developers to push forward with more spec developments and corporate parks.
As a result of strong demand and a short supply of development-ready land, developers are looking further outward in the metro area for sites to build new industrial facilities. For instance, Germantown is seeing an explosion of new industrial projects going up just east of the Interstate 41 and Holy Hill Road interchange. The most significant proposed development is a 240,500-square-foot industrial building at the southwest corner of Rockfield Road and Goldendale Road.