Wisconsin’s economy has been the subject of positive news in the third quarter, a contrast to lackluster economic headlines of prior quarters. The State of Wisconsin ended the fiscal year with nearly a $760 million surplus, $89 million more than what was anticipated when the 2013-15 budget was released this past summer. In addition, The Philadelphia Federal Reserve Bank issued new rankings that put Wisconsin first in economic outlook for the next six months and has Wisconsin ranked number two in the nation for economic growth in September 2013. Wisconsin’s unemployment rate of 6.7 percent also continues to be below the national average of 7.3 percent. Along with positive state news, Milwaukee’s manufacturing industry has been making headlines as well. According to the latest report from the Institute for Supply Management-Milwaukee, the Milwaukee manufacturing industry saw a significant increase in activity in September. The Institute of Supply Management scores Milwaukee at 55.0 for Q3 2013, a number showing positive growth. A score over 50 indicates growth as a measure of new orders, production, employment, supplier deliveries and inventories in the manufacturing industry.
CONTINUED POSITIVE ABSORPTION
For the 13th consecutive quarter, the Milwaukee industrial market experienced positive absorption. Year-to-date 2013, Milwaukee saw 2.39 million square feet (msf) of positive absorption, with Q3 2013 posting 939,000 square feet (sf) absorbed. Large space absorptions can be attributed to PM Plastics leasing 285,000 sf on North Shore Drive in Hartland as well as Lyall absorbing 94,250 sf on Ryerson Road in New Berlin. In addition to positive absorption, the vacancy rate continues to decline, with Q3 2013 posting a 0.5-percentage-point decrease quarter-over-quarter to reach a 6.8% vacancy rate.
KENOSHA COUNTY IS BURSTING WITH ACTIVITY
Kenosha County has been a hotbed of activity given its close proximity to the Chicago area. Recently, several firms announced their plans to relocate their offices from Illinois to the Kenosha County area, including Kenall Manufacturing Co and Hanna Cylinders, as well as EMCO Chemical Distributors Inc., Konecranes, L&M Corrugated Container Corp and Good Foods Group. The latter announced its plans earlier in 2013 to hop over the border to Wisconsin. In addition, several firms announced plans to develop build-to-suit or spec buildings and a new industrial park, including Majestic Realty Company, KTR Capital Partners, Venture One Real Estate, Zilber Property Group and Meijer Inc. to name a few.
The manufacturing sector of the economy has always been a strong suit for the Milwaukee area, with the foundation of Milwaukee being built upon the industrial sector. As Wisconsin continues to take numerous actions to make the state more desirable as a strong location for businesses, more companies are expected to decide for Wisconsin. Speculative developments are expected to spread to other counties, while the market will see continued positive absorption and vacancy compression.
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