The southeastern Wisconsin industrial real estate market showed signs of softening during the first quarter of the year, according to the latest market report from the
Commercial Association of Realtors Wisconsin (CARW) and
REDIComps.
The region's industrial real estate market had a vacancy rate of 5.8% during the first quarter, which is up from 5.4% in the fourth quarter of 2023 and up from 3.6% a year ago.
The region's industrial market had negative absorption of 153,869 square feet of space during the first quarter of this year, a significant decline from positive absorption of 712,000 square feet of space during the first quarter of 2023.
There is currently more than 3 million square feet of industrial space under construction in the region, including 1.45 million square feet in the Kenosha area, according to the report.
[caption id="attachment_464614" align="alignleft" width="250"]
Jeff Hoffman[/caption]
In a recent post on LinkedIn,
Jeff Hoffman, an industrial real estate broker and principal with
Cushman & Wakefield | The Boerke Company, said there is currently no industrial space under construction in the region on speculation, which had been commonplace in southeastern Wisconsin for years.
"While overall market activity has been strong for much of the past year, deal velocity has not followed," Hoffman wrote on LinkedIn. "However, deals are happening again and the 20,000 to 60,000-square-foot size frame has provided key support to the market. The 100,000 to 150,000-square-foot range is also starting to awaken with three recent transactions occurring in the Kenosha submarket."
Hoffman said Waukesha County remains a hot market for industrial real estate, particularly Pewaukee and New Berlin. He said Chicago-based HSA Commercial Real Estate plans to build a 226,800-square-foot spec industrial building on a
site it recently acquired at Pabst Farms in Oconomowoc.
Large industrial spaces in the I-94 North-South corridor have lost momentum, Hoffman said in the LinkedIn post.
"The woes of Racine and Kenosha County continue for vacancies above 150,000 square feet," he wrote. "Given the surge of bulk deliveries over the past 18 months, Class A vacancies across Racine and Kenosha have spiked to 25%."
However, Kenosha County had the highest amount industrial space absorption in the region during the first quarter at 337,500 square feet, largely as a result of
Haribo leasing 447,000 square feet while vacating 157,600 square feet in another building, according to the CARW and REDIComps report.
Milwaukee County had negative absorption of 965,000 square feet of industrial space during the first quarter, the most in the region, largely as a result of
Briggs & Stratton vacating 566,700 square feet, according to the report.
Here's a breakdown of first quarter industrial space vacancy rates by county:
- Walworth: 0.7%
- Waukesha: 1.2%
- Sheboygan: 1.2%
- Ozaukee: 1.5%
- Washington: 3.6%
- Milwaukee: 7.3%
- Racine: 8.8%
- Kenosha: 13.7%
Here's a breakdown of first quarter industrial space absorption by county:
- Kenosha: 337,492
- Washington: 248,042
- Waukesha: 94,921
- Ozaukee: 92,569
- Walworth: 39,050
- Sheboygan: 0
- Racine: -731
- Milwaukee: -965,212
