Wisconsin’s unemployment rate declined to 5.5% for September, a decrease of 0.1 percentage points (pp) from the prior month and 1.1 pp decrease from a year ago. The 5.5% unemployment rate for Wisconsin is also the lowest it has been since October of 2008 and remains lower than the national unemployment rate of 5.9%.
The Institute of Supply Management Report on Manufacturing, scored Wisconsin and Northern Illinois at 63.18 for September 2014, indicating positive growth. A score in excess of 50 demonstrates growth as a measure of new orders, production, employment, supplier deliveries and inventories in the manufacturing industry.
According to the Metropolitan Milwaukee Association of Commerce’s fourth quarter Business Outlook Survey and the Paranet Group’s Mid-Year Survey, a survey of 100 local manufacturing executives, both resulted in employment optimism to remain at a healthy level and to have an increase in hiring in the fourth quarter. Local Manufacturers, according to the MMAC respondents, project nearly two-thirds of those surveyed see fourth quarter, year-over-year job growth.
CONTINUED POSITIVE ABSORPTION
For the 17th consecutive quarter, the Milwaukee industrial market experienced positive overall absorption, with nearly 1.2 million square feet absorbed year-to-date. All four counties experienced positive absorption in Q3 2014. Milwaukee County experienced the majority of absorption for the quarter, with over 405,000 square feet (sf) absorbed. In addition to overall positive absorption, the vacancy rate continued to decline, with Q3 2014 posting a 0.5 percentage-point decrease quarter-over-quarter to 6.1%, marking a 0.7-percentage-point decrease year-over-year.
CONSTRUCTION ACTIVITY ON THE RISE
Metropolitan Milwaukee has seen a rise in construction activity as user demand is outpacing the supply of quality industrial product. Milwaukee County in Q3 2014 has over 583,000 sf currently under construction, the highest level of activity in the four county metro Milwaukee area. Most of the development is driven by user build-to-suit projects. However, Milwaukee County broke ground on the first speculative construction with a 172,000-sf facility built by Liberty Property Trust in Oak Creek since the recession began. In addition, Ryan Companies and Wangard have proposed developments in Oak Creek and West Allis, respectively. Waukesha County is second in pace to Milwaukee, with over 464,000 sf currently under construction.
Although no speculative development is currently underway, Zilber Ltd. recently completed various multi-tenant facilities in the Westridge Business Park in New Berlin in 2013 and the beginning of 2014. In addition, multiple proposed speculative development should break ground in the next few quarters for a combined total of 500,000 sf.
With the Wisconsin Gubernatorial election around the corner, anticipate continued cautious optimism for the coming weeks. Should Scott Walker prevail, expect to see additional construction announcements from the Milwaukee manufacturing community.
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