Market Reports

Local, Regional Tenants Drive Milwaukee’s Retail Market

by Kristin Harlow December 5, 2024

By Russ Sagmoen, Isaac Berg and James McKenna, Colliers The greater Milwaukee retail landscape continues to thrive, with notable activity in regions such as Oconomowoc, Grafton, Franklin, Oak Creek and the Racine metro area. Franklin and Oak Creek have experienced steady growth over the past decade and are well-positioned to maintain this momentum. Meanwhile, Racine County has seen a surge of recent activity, largely fueled by Microsoft’s announcement of a $3.3 billion state-of-the-art data center in Mount Pleasant. The Racine/Kenosha I-94 corridor serves as a vital connector between the Milwaukee and Chicago MSAs, enhancing its attractiveness for economic expansion. Market-wide, we are seeing a great amount of activity from local and regional retailers/franchisees and a slowdown from national brands. While there is some activity from national retailers, they tend to be selective about their site choices, highlighting the importance of prime locations and price sensitivity. Because of this, the majority of retail activity is driven by local and regional enterprises. New retail product is scarce, with a lack of new construction due to rising interest rates and increasing land and construction costs. This has resulted in a decline in multi-tenant strip centers, with the bulk of new construction coming in …

December 5, 2024

Market Reports Midwest Midwest Market Reports Office Wisconsin

Flight to Quality Persists in Milwaukee Office Market

by Kristin Harlow November 21, 2024

By Matt Hunter, Hunter Real Estate Over the past few years, we have seen a noticeable trend in office tenants relocating to new office buildings, particularly in downtown Milwaukee. Notable companies such as Baker Tilly (~40,000 square feet), Old National Bank (~20,000 square feet), CBRE (~15,000 square feet) and Silvercrest Asset Management (~11,000 square feet) have all moved into new office buildings, which are classified as being constructed within the past five years. While these relocations highlight a shift in tenant preferences toward newer buildings, most leasing activity has been observed in recently renovated office buildings. One prime example of this is Baird, which expanded and renewed over 450,000 square feet at 777 E. Wisconsin Ave., reinforcing the demand for renovated office buildings. Other significant leasing transactions include Fiserv, which leased ~160,000 square feet at HUB640; Enerpac’s ~50,000-square-foot lease and Veolia’s ~30,000-square-foot lease at 648 N. Plankinton; Marcus Corp.’s ~50,000-square-foot lease at The Associated Bank River Center; and Allspring Global Investments leasing ~40,000 square feet at 417 E. Chicago St. These transactions further demonstrate the attractiveness of renovated spaces for businesses looking to enhance their operations. This trend reflects a broader “flight to quality” in the office market. Tenants are …

November 21, 2024

Industrial Market Reports Midwest Midwest Market Reports Wisconsin

Milwaukee Industrial Growth Sees Ripple Effects in Submarkets

by Kristin Harlow November 14, 2024

By James Young, JLL Through 2023 and 2024, JLL industrial has seen a historically high number of new leases signed. JLL research saw positive absorption in the third quarter of 2024 at 48,200 square feet, primarily driven by the completion of owner-built projects. This activity, combined with existing occupier commitment to the region and record-high asking rents, points to a thriving market. As the Milwaukee industrial market continues to grow its regional presence, there are a few factors that set it apart from its larger peer cities like Indianapolis or Minneapolis. In this article, we will discuss what is driving regional industrial activity and the market’s strong growth trajectory. Industrial evolution We continue to see wide expansion into the suburban market, though this has not always been the case. Relocating a tenant from an established urban industrial area to a suburban location was often challenging 15 years ago. Such a move could entail workforce relocation, warehouse closures and complex logistical changes that potentially risked business disruption. Today, JLL research shows other large occupiers are not only retaining their spaces in the Milwaukee market but are also actively expanding into suburbs like Waukesha and Menomonee Falls. JLL is tracking 11 build-to-suit …

November 14, 2024

Market Reports Midwest Midwest Market Reports Office Wisconsin

Milwaukee Office Tenants Focus on Quality Spaces, Talent Retention

by Kristin Harlow May 9, 2024

By Matt Hock, NAI Greywolf In the active landscape of Milwaukee’s commercial real estate market, several trends are reshaping the way businesses, both tenants and landlords, approach office spaces. From the enduring impact of remote work to the changing preferences of tenants, the market is currently witnessing a focus on quality, adaptability and talent retention. Flight to quality persists While the market continues to see the flight to quality we have experienced for the past few years, the Milwaukee office sector is now also experiencing what has been termed as “competing with the couch.” Companies are battling the challenge of bringing employees back to the office and with that they are looking to solve this issue with providing spaces that offer more than your standard office setup. Basically, they are looking for amenities and features within the office that entice workers to come back, compared with what remote workers have with their home office setup. So, competing with the comforts of home, or the couch, in these cases. This has catalyzed a “flight to quality,” where businesses are investing in premium office spaces designed to enhance the overall employee experience. In effort to attract and retain top talent, companies are …

May 9, 2024

Market Reports Midwest Midwest Market Reports Office Wisconsin

How Milwaukee’s Hottest Downtown Buildings Continue to Drive Leasing Activity

by Kristin Harlow November 16, 2023

By David Pudlosky and Patrick Savoie, JLL Milwaukee remains a strong office market with leasing activity showing no sign of slowing. Post-pandemic, companies took a fresh look at their workplace strategies to adjust to hybrid working environments, and many rightsized their overall square footage while adding significant amenities and attractions that provide a rewarding office experience for returning workers. Despite a smaller footprint, tenants are seeking updated, highly amenitized spaces in Class A buildings. While amenities have always been a focus for landlords, the buildings that stand out today are the ones that focus on quality amenities over quantity. For example, today’s tenant will likely not be as interested in a building lounge unless it has comfortable seating, a café, strong Wi-Fi and more. To be relevant to tenants, amenities must be high end and culture focused. We’ve seen companies like Milwaukee Tool, Fiserv, Komatsu Mining Corp. and Northwestern Mutual invest in their downtown office spaces and make commitments to bring more employees downtown, and we expect this trend to continue. Building owners can learn from what Class A building landlords are doing to drive leasing activity, and learn how investing in quality, amenity-driven spaces will likely bring in new …

November 16, 2023

Market Reports Midwest Midwest Market Reports Retail Wisconsin

Milwaukee Market Is Ripe for Out-of-State Investment

by Kristin Harlow May 11, 2023

By Adam Connor, Colliers When the pandemic hit in 2020, most of the media jumped to write articles about the downfall of retail properties and how shoppers were going to get all their goods flown from drones from their Amazon overlords. The reality is that every day, normal people shop at grocery stores, go work out at the gym, and buy lunch or dinner somewhere. Now that 2020 is far behind us, the 2023 retail landscape in the Milwaukee region looks much different. Most of the retail space, including the mid-box and big-box vacancies, have been backfilled and, as a result, owners saw healthy rent growth in their assets. With the lack of construction over the past five to seven years, retailers are now competing for high quality space and paying a premium in rent to be located there. With only 134,000 square feet under construction and a 12-month absorption of 660,000 square feet, quality space is in high demand. Asking rents are up 7 percent to $14.80 since the second quarter of 2020 and vacancy is down to 5 percent. Development The Milwaukee area has some large development projects that are underway, including Fiserv moving its corporate headquarters back …

May 11, 2023

Market Reports Midwest Midwest Market Reports Retail Wisconsin

Multifamily, Mixed-Use Driving Evolution of Milwaukee Retail

by Kristin Harlow May 4, 2023

By Tony Colvin and Michael Fitzgerald, Mid-America Real Estate In the absence of significant new construction, the evolution of the retail real estate market in Milwaukee is largely being driven by the conversion and demolition of existing spaces. Some prominent places are being reimagined in creative ways that often include multifamily and other uses in addition to retail. HUB640 in downtown Milwaukee is a perfect example. A historic building formerly occupied by a Boston Store, the property is being transformed by North Wells Capital and Urban Innovations Management. The new mixed-use project will feature Kohl’s as the retail anchor tenant, loft apartments and office space occupied by Fiserv’s corporate headquarters. Other corporate office users, including Milwaukee Tool and Northwestern Mutual, also are betting on the central business district (CBD), with Milwaukee Tool relocating upwards of 1,200 employees, and Northwestern Mutual redeveloping and enlarging its headquarters. At the same time, new multifamily high-rises are remaking the architecture of Milwaukee including the river and lakefronts. The 25-story Ascent opened last year, and 333 North Water (31 stories) and Couture (44 stories) are on the horizon. Additionally, Iron District MKE is an 11-acre mixed-use sports and entertainment development slated to be phased in …

May 4, 2023

Industrial Market Reports Midwest Midwest Market Reports Wisconsin

Tenants Turn to Third-Party Logistics in Milwaukee Market

by Kristin Harlow November 17, 2022

By David Hodge, NAI Greywolf The demand for commercial industrial real estate was exceedingly strong in the Milwaukee market leading up to the onset of COVID-19. The economy and labor markets were also strong and incentives for onshoring spurred on this growth. Post-pandemic commercial industrial product continues its upward trend. The catalyst for this, however, is international supply chain disruptions. The reaction to this unfortunate circumstance is the accumulation of higher inventories of raw material and finished goods. The resulting impact is high demand, especially for warehouses, in an extremely low vacancy rate environment. Demand beating inventory According to Catylist, in the second quarter of 2022, the Milwaukee market’s vacancy rates were 3.3 percent for all commercial industrial products. This is largely due to the continued lack of available inventory. High demand in part has spurred increases in rental rates to approximately $5.98 per square foot triple net. While this is good news for landlords who look to capitalize, it presents challenges for tenants who are expanding their operations. The other factor driving rental rates is the rapid increase in interest rates. The upcoming election may also affect the rates in the later part of the fourth quarter of …

November 17, 2022

Market Reports Midwest Midwest Market Reports NAI Office Wisconsin

Office Designs, Layouts Look Different in Post-Pandemic Marketplace

by Kristin Harlow May 19, 2022

It’s safe to say office space design has been transformed over the past two years in large part due to COVID-19 and the work-from-home experience. It has changed for now, the foreseeable future and maybe forever. Though many people are still working from home, others have returned to the office, even if only for a few days a week, and many of the office spaces are looking entirely different. While this may be happening in other markets, it is a trend we are seeing in the Milwaukee office market. The idea of the design and aesthetic of the office has changed. Current trends in office design are focusing on safety and comfort, while also creating a sense of home at the office. Tenants are being more thoughtful about their space layout and design. Instead of trying to fit as many people as possible into the space, tenants are occupying roughly the same size, or even slightly smaller spaces, but focusing on making those spaces more welcoming to help ease those workers coming back into the office, as well as recruiting new employees. Bring home into the office This design trend has the goal to provide comfort and safety at every …

May 19, 2022

Industrial Market Reports Midwest Midwest Market Reports Wisconsin

Industrial Cap Rate Spread Narrows in Milwaukee as Demand Continues to Surge

by Kristin Harlow May 12, 2022

Like much of the country, the Milwaukee industrial market flourished over the last 12 to 24 months and has continued to shatter records across the board. Tenant demand far exceeded supply, driving vacancy rates down and rental rates up. Pent-up capital chased deals at record numbers, compressing cap rates further in this sector. And new construction continued its speedy pace, with over 8 million square feet on schedule to be delivered in 2022. But with inflation surpassing 8 percent and interest rates on the rise, the question now is how long will we continue this record-setting pace? Just-in-time to just-in-case As supply chain constraints emerged during the pandemic, businesses switched from the widely used just-in-time model to just-in-case, meaning drastic increases in inventory storage and logistic needs for many companies. Tenants scrambled to lease additional space to house what inventory they could get in stock. At the start of 2021, Class A industrial vacancy in Milwaukee was 9.68 percent. By the end of the year, that number had been slashed in half to just 4.39 percent as the flight to quality industrial product exceeded deliveries. In the fourth quarter of 2021, 1.65 million square feet of new industrial space …

May 12, 2022

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