The southeast Wisconsin office real estate market was stagnant during the second quarter of the year as vacancy improved slightly and a small amount of space was absorbed, according to the quarterly market report from the
Commercial Association of Realtors Wisconsin (CARW).
The region's office market only absorbed 3,000 square feet of space during the second quarter. For the first half of the year, the southeastern Wisconsin office market has had positive absorption of 125,965 square feet of space.
In a sign of a flight to quality trend, the region's class A office market has had positive absorption of 234,412 square feet of space so far this year, while the class B office market has had negative absorption of 109,396 square feet. During the second quarter, class A office space saw a positive absorption of nearly 60,000 square feet, while class B office space saw a negative absorption of about 57,000 square feet.
Overall, the region's vacancy rate improved slightly from 16.4% in the first quarter to 16.3% during the second quarter, but it's up from about 15.5% this time last year.
The region's class A office space vacancy rate is at 14.6% and class B is at 17.6%.
The CARW report notes that while Wisconsin's unemployment was 2.4% during the second quarter and the Milwaukee metropolitan area saw an increase in job growth, the number of office-using jobs in the metro area decreased by about 8,200 during the same period, contributing to softening demand for office space.
In the downtown Milwaukee area, there was negative absorption of about 67,400 square feet of office space with a vacancy rate of 17.6% during the second quarter. That compares to the suburban areas posting 70,500 square feet of positive absorption and a vacancy rate of 15.4% during the quarter.
Brookfield submarket had the largest increase for positive absorption in the region, led by Old Republic Surety leasing 31,500 square feet. Conversely, the Third Ward - Walker's Point area topped all markets for negative absorption, led by Eversana vacating 42,000 square feet.
There is currently 102,000 square feet of office space under construction in the region.
