Market Reports

From Brews to J. Crew: Retailers Tap Revamped Milwaukee-Area Warehouses

by Christina Cannon May 26, 2016

In real estate, where some see an eyesore, others can sometimes find opportunity. Such was the case with The Mayfair Collection, a new regional shopping center in Wauwatosa, Wis., located approximately 10 miles west of downtown Milwaukee. Just a few years ago, the 69-acre site was filled with old, obsolete industrial buildings that were mostly unoccupied, but the City of Wauwatosa and our firm, Chicago-based HSA Commercial, shared the vision of transforming the vacant industrial park into a vibrant mixed-use community. The project initially involved adaptively repurposing 1 million square feet of warehouse space into a contemporary retail destination that has brought national retailers like Nordstrom Rack and Saks Fifth Avenue OFF 5TH to Wisconsin. The development also has helped launch new national brands such as J. Crew Mercantile and Off/Aisle by Kohl’s. The once-empty industrial structures are now completely transformed into lively shops and restaurants that are drawing customers from all over southeast Wisconsin. Phase I: Find the right mix What historically made the site attractive for industrial use — its highly accessible location, at the interchange with U.S. Highway 45 and Burleigh Street, less than five miles north of Interstate 94 — also made it ideal for retail, …

May 26, 2016

Market Reports Midwest Midwest Market Reports Multifamily Wisconsin

Milwaukee Apartment Market on Track to Post Another Strong Year in 2016

by Christina Cannon March 24, 2016

We can expect to see a combination of new and familiar trends in the Milwaukee apartment sector in 2016 that will continue to attract investors to the local apartment market. What makes the start of 2016 different from 2015 is progress toward the normalization of monetary policy. In December, the Federal Reserve Board decided to raise the federal funds rate by a quarter percentage point, the first such increase in nearly a decade. The Federal Reserve Board’s widening may have an impact on the short-term rates, but the long-term interest rates that impact real estate values the most are influenced by the yields on the long-term U.S. Treasury bonds. We expect the long-term interest rates to stay low for the foreseeable future. When there is high demand for the Treasury bonds, the price of the bonds increase and the yields decrease, keeping long-term lending rates low. The two factors responsible for driving rates down in early 2016 are the high levels of volatility in stock markets around the globe and the drastic drop in oil prices. The volatility in the stock markets drives global capital to flow into the safe haven of bonds, and specifically the U.S. Treasury bonds, as …

March 24, 2016

Industrial Market Reports Midwest Midwest Market Reports Wisconsin

Milwaukee Industrial Market Is Primed for New Round of Development

by Christina Cannon February 25, 2016

Metropolitan Milwaukee has experienced a robust industrial real estate market for the past several years. This strength should continue in 2016 and for the foreseeable future. Like many other metro areas, Milwaukee’s industrial sector experienced slow but steady economic growth as it emerged from the Great Recession. However, unlike many other metro areas, Milwaukee has not yet exhibited a strong uptick in new industrial development. Minimal speculative construction has occurred during the past few years. Consequently, while demand for industrial space has continued to increase, supply has remained fairly flat. This phenomenon of increased absorption without a corresponding increase in new product coming to market has driven down the overall vacancy rate to slightly under 5 percent, near a record low, according to Xceligent. Moreover, the new industrial development that has occurred has been primarily driven by users expanding, relocating or consolidating existing facilities, or by new build-to-suit or speculative developments undertaken by Milwaukee-based firms such as Zilber Property Group, Luterbach Properties, Briohn Building and Wangard Partners. Larger regional and national industrial developers such as Centerpoint Properties and First Industrial Realty Trust, which once drove industrial development in Milwaukee, ceased construction in Milwaukee during the Great Recession and have not …

February 25, 2016

Market Reports Midwest Midwest Market Reports Office Uncategorized Wisconsin

Downtown Milwaukee Continues Its Hot Streak, but Will It Cool in 2016?

by Christina Cannon December 17, 2015

The long-held perception of the Milwaukee office market is that it mostly trades tenants between buildings with one landlord winning at the other’s expense, while the overall pie remains the same size. However, with cranes dotting the horizon, large blocks of vacant space quickly leasing up, a number of major new developments waiting to break ground, and the inflow of outside dollars into Milwaukee, the market has recently experienced some amazing deal velocity. This activity is expected to continue as we head into 2016. However, the office market could slow down due to the completion of several projects currently under construction. The greater Milwaukee office vacancy rate stood at 15.5 percent in the third quarter, down slightly from 15.6 percent in the third quarter of 2014. The vacancy rate in the central business district (CBD) dropped from 16.2 percent to 14.9 percent during the same period. Meanwhile, rental rates have increased slightly in both the overall market and the CBD. Cranes in the skies Construction on the Northwestern Mutual Tower and Commons began in late 2014 in downtown Milwaukee and is scheduled for completion in late 2017. A 32-story office tower will adjoin a two-block-long, three-story space known as The Commons. The new development …

December 17, 2015

Market Reports Midwest Midwest Market Reports Retail Wisconsin

Variety of Retail Construction Ramps Up Across Greater Milwaukee

by Christina Cannon October 15, 2015

Milwaukee is in the midst of a new construction boom in the retail sector, with three major projects currently underway and a fourth that was delivered in 2014 for a total of more than 1.1 million square feet of new space in the market. The majority of this space is being delivered fully leased. In many cases, these retailers are brand new tenants to the Milwaukee area. In the second quarter, overall vacancy ticked up 10 basis points to 10.2 percent. However, this was mainly due to store closures and consolidation in the Milwaukee market by retailers such as Office Depot, OfficeMax, Pick ’n Save, Sears and Kmart. But don’t be rattled by the uptick in vacancies. In reality, the market is incredibly active with new tenants entering the region and several expanding. Retailers recognize that there is ample room to compete for market share in Milwaukee and the surrounding area. Many of these new retailers will come on line in large ground-up projects now underway. Here are some of the notable projects: • In Menomonee Falls, a new Costco will open this fall and anchor a 300,000-square-foot development known as White Stone Station from Cobalt Partners LLC. • The …

October 15, 2015

Market Reports Midwest Midwest Market Reports Mixed-Use Wisconsin

Proposed New Arena for Milwaukee Bucks Could Lead to Development Run

by Jeff Shaw August 6, 2015

An article highlighting the fortunes of the Milwaukee Bucks that appeared July 6 on CBSSports.com couldn’t be more accurate. “There’s something powerful and sustainable growing in Milwaukee, rising out of the weeds of small-market irrelevance and into a team you’re going to want to watch next season,” wrote Matt Moore who covers the NBA. Since New York hedge fund investors Wes Edens and Marc Lasry purchased the Bucks last year for $550 million, the team has been on the rise. Founded as an expansion team in 1968, the Bucks went from being the worst team in the league during the 2013-14 season to the sixth seed in the 2014-2015 playoffs. The new owners, along with former owner Herb Kohl, have committed $250 million for the construction of a new $500 million arena as a replacement for the team’s current home, BMO Harris Bradley Center, which opened in 1988. But if the new arena is not built by the 2017 season, Milwaukee could be left without an NBA team. Once complete, the entire development, which would sit on approximately 30 acres in the Park East corridor, could include up to 3 million square feet of office, entertainment, retail, residential and hotel …

August 6, 2015

Market Reports Midwest Market Reports Wisconsin

Private, Public Sector Come Together to Revitalize the Brew City's Downtown

by admin April 2, 2014

Manufacturing, beer and the Green Bay Packers are typically the three things that come to mind when one thinks of Wisconsin. Although we will always love beer and our Green Bay Packers, the real estate landscape is changing. During the past decade — and even more so over the past few years — Milwaukee has begun its transformation into a hip and vibrant city and is making its mark in progressive green technologies, water research and startups. As Steve Palec, managing principal of Cresa Milwaukee, pointed out in his May 2012 article for Heartland Real Estate Business, for the first time since 2001 we are finally going to see a new office development and a change in our skyline. With the exception of the world-renowned Calatrava Art Museum and Pier Wisconsin in 2001 and 2006, respectively, Milwaukee’s lakefront has remained relatively unchanged for decades. The recession is only partly to blame. A 1915 deal made by the city of Milwaukee divided the lakeshore into land reserved for public use and land eligible for private development. Although the city entered into this agreement for several reasons, it was partially to ensure that all, not just the elite, could utilize the shores …

April 2, 2014

Market Reports Midwest Market Reports Wisconsin

Expect Milwaukee's Industrial Recovery to Broaden This Year

by admin May 20, 2013

The industrial real estate market in Southeast Wisconsin continued its climb upward during 2012 as the overall vacancy rate fell from 7.1 percent to 6.5 percent. The result was positive net absorption of 3.6 million square feet for the year. This trend marks two-and-a-half straight years without a quarter of negative absorption. Seven of the eight counties in the Milwaukee industrial market area posted a reduction in vacancies during 2012. In Kenosha County, for example, the vacancy rate dropped from 11.1 percent in the fourth quarter of 2011 to 9.4 percent in the fourth quarter of 2012. Two transactions by Venture One Real Estate LLC accounted for most of the positive net absorption. The first transaction, which occurred in December 2012, was the sale of a 62,000-square-foot facility to EMCO Chemical Distributors Inc. This deal was followed shortly by Venture One’s acquisition of the 160,300-square-foot former Cenveo Inc. facility in Kenosha. Kenosha’s industrial market should perform well this year because of overflow demand from the Racine County market, which will necessitate deals in Kenosha. The shortage of space in Racine County will make it a better candidate for build-to-suit and speculative developments in 2013. Transaction Highlights Strong demand in Waukesha …

May 20, 2013

Market Reports Midwest Market Reports Wisconsin

Tenant Activity Begins to Percolate

by admin January 7, 2013

A rise in office-using employment and corporate profits has benefited underutilized Milwaukee space and spurred some companies in the metro area to expand their space needs. Several leases above 30,000 square feet were finalized in the first half of 2012. The accounting firm Baker Tilly Virchow Krause LLP took 68,000 square feet. Healthcare information systems provider Connecture Inc. inked a deal for 32,200 square feet. Marshall & Swift/Boeckh, a provider of building cost data and estimating technology to the property insurance industry, leased 38,200 square feet. Leasing activity helped push absorption into positive territory during the first two quarters, although rent growth remains minimal. It will take a few quarters of strong absorption before any significant upward trend in rents is realized. The limited construction pipeline has helped stabilize vacancy. The few competitive projects to break ground must have major leases in place before building activity gets under way. A rise in owner-occupied and government construction, however, could affect short-term vacancy in targeted areas, if leased space is vacated. About 30,000 square feet of office space came on line in the second quarter upon the completion of the refurbished Clock Shadow Building on Bruce Street in Milwaukee. The mixed-use building …

January 7, 2013

Market Reports Midwest Market Reports Wisconsin

Food industry absorbing space in Milwaukee.

by admin June 8, 2012

Milwaukee ended 2011 with its sixth consecutive quarter of positive net absorption and more than 3 million square feet of absorption for the year. Xceligent Inc. reported that the Milwaukee industrial market ended 2011 with a vacancy rate of 7.6 percent, down from 8.6 percent at the end of 2010. The national industrial vacancy rate by comparison ended 2011 at 9.9 percent, according to CoStar Group. Hungry for space Of the 67 national industrial markets tracked by Cassidy Turley, 59 recorded positive demand for warehouse space. Milwaukee was among the top 10 performers along with Dallas, Indianapolis, Atlanta, Houston and Chicago, the latter of which only surpassed Milwaukee by 200,000 square feet in 2011. Milwaukee and Southeast Wisconsin continue to attract food industry manufacturers, distributors and packagers. Most recently, Seda International Packaging Co., an Italian firm, opened its North American headquarters in Pleasant Prairie. It joined other food retailers like Gordon Food Services and Affiliated Foods Midwest, which have opened distribution centers in the last 2 years. ALDI and Roundy’s Foods also both have distribution centers greater than 1 million square feet in Southeast Wisconsin. Janesville, Wisconsin also attracted Melster Candy, which relocated its manufacturing operations to a 100,000-square-foot plant, …

June 8, 2012

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