Despite the recession, a recent report by Santa Ana, Calif.-based Grubb & Ellis Co. predicts lower vacancy rates, steady leasing activity and positive absorption for the southeastern Wisconsin industrial real estate market.
The region’s industrial market will continue to buck national trends. The national commercial real estate market is expected to have a rough year in 2009 by many industry observers, but the southeastern Wisconsin industrial market will be an exception, according to the Grubb & Ellis 2009 Real Estate Forecast report for the Milwaukee market.
"We didn’t get all the upside (when the economy was booming), so we don’t get all of the downside," said Jeff Horn, vice president of Brookfield-based Grubb & Ellis affiliate, Apex Commercial.
Some observations from the Grubb & Ellis report include:
- "The region is positioned well to ride out the economic storm of 2009."
- "The 2009 southeastern Wisconsin market is positioned well for positive absorption with limited speculative development throughout at least the first half of 2009."
- "Leasing activity will continue to be steady."
- "Average asking rental rates should increase only slightly and sale prices will likely hold firm throughout most markets."
- "Vacancy rates will continue to decrease as selected redevelopment and moderate speculative development is absorbed into the market."
- "The limited supply of modern product will continue to spur construction of speculative and build-to-suit developments."
- "It is anticipated new speculative projects will break ground in 2009 as a result of the increased demand and a shortage of high-bay facilities with modern amenities."
The report also says the I-94 corridor between Milwaukee and the Illinois state line will continue to be a hot spot for the industrial real estate market. The state’s plans to expand the freeway could attract more development to the corridor.
"The Kenosha/Racine market continued to be robust (in 2008) and is attracting interest from metro Chicago and Milwaukee industrial developers and users, with new construction contributing to the positive net absorption for the region," the report states. "The Kenosha/Racine market also continues to expand ever closer to southern Milwaukee County and both markets enjoyed significant declines in vacancy in 2008. (In 2008) eight new speculative buildings were completed or started, ranging from 50,000 to 626,000 square feet. Several new business park expansions have already been announced and developers continue to position themselves with inventory for future projects."
Industrial development is also planned in southern Milwaukee County, including the 820,000-square-foot regional distribution and processing center that the U.S. Postal Service plans to build in Oak Creek.
