Wisconsin’s unemployment rate declined to 4.6% for March, a decrease of 0.2 percentage point (pp) from the prior month and 1.3 pp decrease from a year ago. The 4.6% unemployment rate for Wisconsin is also the lowest since October 2008 and remains lower than the national unemployment rate of 5.5%. According to the latest ManpowerGroup survey, the metropolitan Milwaukee area has the fourth best employment outlook in the nation.
The Institute of Supply Management Report on Manufacturing scored Wisconsin and Northern Illinois at 53.25 for March 2015, indicating a positive growth outlook. A score in excess of 50 demonstrates growth as a measure of new orders, production, employment, supplier deliveries and inventories in the manufacturing industry. Growth is starting an upward trend, however it has still not rebounded from a high of 70.25 recorded in November 2014.
According to the ASQ 2015 Manufacturing Outlook Survey, manufacturers are becoming increasingly positive and optimistic. Of those surveyed, 53% expect positive growth in the coming months.
CONTINUED POSITIVE ABSORPTION
For the 19th consecutive quarter, the Milwaukee industrial market experienced positive overall absorption, with over 864,000 square feet (sf) absorbed in the first quarter alone. This represents an 834% increase from Q1 2014 and over 2.8 million square feet (msf) absorbed during the prior four quarters. All four counties experienced positive absorption in Q1 2015. Milwaukee County captured the majority of absorption for the quarter, with over 597,000 sf absorbed. In addition to overall positive absorption, the vacancy rate continued to decline, with Q1 2015 posting a 0.1 percentage point decrease quarter-over-quarter to 5.6%, marking a 1.1-percentage-point decrease year-over-year.
SALE ACTIVITY ON THE RISE
The metropolitan Milwaukee industrial market’s sales activity is on the rise. The first quarter resulted in 76 industrial properties transferring ownership, compared to only 45 a year ago. Three large investment sales in the first quarter resulted in over 2.5 msf changing hands. Furthermore, these transactions totaled over $110 million with the price per square foot (psf) averaging $48.02. The largest transaction included a ten-building, 1.7-msf sale by CenterPoint Properties Trust that was purchased by WMI Milwaukee LLC.
Industrial real estate investment and activity will be a major sector of the market through 2015. There will continue to be a strong demand for space as vacancy remains low throughout the area. In spite of the new construction along the I-94 corridor, the region’s positive absorption trend is anticipated to persist. There will likely be tightening vacancy through 2015.
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