The Wisconsin economy is making headway with steady signs of recovery as we start off the beginning of 2014. Wisconsin’s unemployment rate declined to 6.1% for February, a decrease of 1.1 percentage points (pp) from a year ago and still remains below the national unemployment rate of 6.7%.
Wisconsin’s job report, which spans 12 months from September 2012 through September 2013, showed Wisconsin gained 28,000 private-sector jobs in the 12 month period, a 1.2% employment increase and ranks Wisconsin 35th among the nation in the pace of job creation.
According to the Manpower Employment Outlook Survey, the second quarter of 2014 could bring more hiring in Metropolitan Milwaukee and Wisconsin, enough to rank the area second in the nation for job growth.
OFFICE MARKET CONTINUES TO IMPROVE
The office market showed continued signs of improvement in the first quarter, another sign that the market is improving. The Milwaukee office market started 2014 with the lowest vacancy rate seen in over three years, with a vacancy rate of 19.6%, down 1.0 percentage points quarter-over-quarter and 1.1 percentage points year-over-year.
The North Shore, Waukesha/Pewaukee, and Downtown-West, submarkets helped contribute to the overall decrease, as the direct vacancy rates declined 4.4 percentage points, 1.2 percentage points, and 1.1 percentage points respectively quarter-over-quarter. The highest level of absorption in Q1 2014 occurred in the Downtown-West submarket, with RDA Enthusiast Brands leasing over 49,000 square feet (sf) at Schlitz Park.
CONSTRUCTION AND REDEVELOPMENT
Several noteworthy developments are moving forward in Metro Milwaukee. Northwestern Mutual Life Insurance Company (NML) is altering the Milwaukee skyline with the development of a 32-story, 1.1 million-square foot (msf) state-of-the-art corporate headquarter office campus. One block to the south of NML, Milwaukee-based Irgens has plans to develop a 17-story office building, 833 East, in the central business district (CBD) with construction scheduled to break ground this spring.
In addition to ground up office construction, there are a few redevelopments of lower class office buildings into residential uses. Recent announcements include converting the former 11-story Blue Cross Blue Shield building at 401 W Michigan Street into 200-units and converting the Germania Building at 135 W Wells Street into 78-units.
The office market continues to show a healthy appetite for leasing and sales activity, leading to positive absorption and decreased vacancy. Private-sector job growth from April 2013 through the end of 2013 was the best since 1994 as more firms are hiring and more people are working. Predictions from ManpowerGroup suggest Q2 2014 will also bring increased hiring to our area, a fundamental that is necessary for businesses to invest in their real estate needs and in order to sustain positive absorption and decreased vacancy in the office market.
To download this report and view past Milwaukee MarketBeat reports for both Industrial and Office, head over to our Research page.
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