Waukesha County leads region’s industrial market

Waukesha County is the strongerest submarket of the southeastern Wisconsin industrial real estate market, based on 2013 data from Xceligent and the Commercial Association of Realtors Wisconsin.

Waukesha County led the region absorbing 1,862,819 square feet of industrial space in 2013 and an industrial space vacancy rate of 3.7 percent at the end of the year, down from 5.78 percent in the fourth quarter of 2012.

Here’s how the counties stacked up in 2013 for the industrial real estate market:

  • Waukesha, 1,862,819 square feet of absorption, 3.7 percent vacancy
  • Kenosha, 1,661,639 square feet of absorption, 3.9 percent vacancy
  • Milwaukee, 668,495 square feet of absorption, 9.2 percent vacancy
  • Ozaukee, 208,107 square feet of absorption, 8.6 percent vacancy
  • Washington, 73,581 square feet of absorption, 4.8 percent vacancy
  • Walworth, -79,217 square feet of absorption, 4.2 percent vacancy
  • Shegoygan, -96,685 square feet of absorption, 5.1 percent vacancy
  • Racine, -135,429 square feet of absorption, 4.5 percent vacancy

The entire southeastern Wisconsin industrial market performed well in 2013. The region has had 15 consecutive quarters of positive industrial space absorption and absorbed 4.3 million square feet of space in 2013. The region has absorbed 17.5 million square feet of industrial space since the second quarter of 2010.

The region’s industrial space vacancy rate is now at 6.1 percent, down from 7.37 percent a year ago.

The strong industrial space absorption is starting to lead to increases in asking lease rates, according to the Xceligent data. Again Waukesha County leads the region with an asking direct lease rate of $4.99 per square foot in the fourth quarter of 2013, up from $4.89 in the fourth quarter of 2012.

Milwaukee County’s industrial space asking lease rate is $3.99, up from $3.96 in the fourth quarter of 2012. Sheboygan County’s lease rate is $4.75, up from $4.58; Walworth County’s is $4.38, up from $3.94 and Racine County’s lease rate is $3.73, up from $3.62 a year ago. Other counties are seeing lease rate declines: Kenosha County’s lease rate is $4.85, down from $5.11; Washington County’s lease rate is $4.48, down from $4.56; and Ozaukee County’s lease rate is $4.19, down from $4.41 a year ago, according to Xceligent.

After leading the region’s industrial market in 2013, Waukesha County industrial space activity could slow in 2014, said Judson & Associates vice president Jeff Hoffman in a report on the Waukesha County industrial real estate market.

“The market is close to equilibrium at 3.7 percent and I do not see further compression of the vacancy rate,” Hoffman said. “Waukesha County will not be in the news as much this year and I am forecasting year end vacancy of 3.6 percent with a net market absorption of 350,000 square feet.”

However, as inventory continues to decline industrial space development could pick up this year, he said.

“Businesses will have to take a much closer look at the construction process to satisfy expansion needs,” Hoffman said. “This could slow overall market momentum given timing and pricing of new construction.”

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