30 Apr 2015
April 30, 2015

Milwaukee Office MarketBeat Q1 2015

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ECONOMIC OVERVIEW

Wisconsin’s unemployment rate declined to 4.8% for February, a decrease of 0.2 percentage point (pp) from the prior month and 1.3 pp decrease from a year ago. The 4.8% unemployment rate for Wisconsin is currently the lowest since July 2008 and remains lower than the national unemployment rate of 5.5%.

Wisconsin’s job report, which spans the 12 months from September 2013 through September 2014, reported that Wisconsin gained 27,491 private-sector jobs in the 12-month period.  This represents a 1.16% employment increase and ranks Wisconsin 38th among the nation in the pace of job creation.

In addition, according to the latest Manpower Employment Outlook Survey, the metropolitan Milwaukee area has the fourth best employment outlook in the nation.  Employers surveyed in the Metropolitan Statistical Area (MSA) are expected to hire at a vigorous pace during the second quarter of 2015, with a 28% net employment outlook, an increase of four pp from the first quarter outlook.  Net employment outlook is measured by percentage of plan hires offset by percentage of plan reduction in payroll.  The end result is a 6% increase year-over-year and 12 pp higher than the U.S as a whole, which has a net employment outlook of 16%.

According to the latest Business Outlook Survey, conducted by the Metropolitan Milwaukee Association of Commerce, economic growth continues to point upward in February, with 17 of the 23 business activity indicators registering improvement over prior year levels.

CONTINUED OFFICE MARKET IMPROVEMENT 

The Milwaukee office market continues to show slight improvement as we enter 2015.  Overall positive absorption continued for the ninth consecutive quarter, with 45,213 square feet (sf) absorbed in the first quarter of 2015.  The overall vacancy crept down, decreasing 0.8 pp year-over-year, decreasing to 18.8%.

NORTHWEST VACANCY 

The northwest section of the metro area could experience an infux of activity as  Kohl’s Corp finishes its estimated $40-million renovation of the 330,000-sf , former InnoWare warehouse, into office space.  The company plans to relocate around 1,000 employees and vacate surrounding office leases.  The former warehouse is located across the street from the main Kohl’s headquarters in the Silver Spring Corporate Park in Menomonee Falls.  In addition, Kohl’s retains two former manufacturing properties within the same corporate park that could bring possible expansion activity as well.

In March 2015, Wells Fargo announced the layoff of 1,000 employees and the closing of the home lending servicing offices at 11200 W Parkland Ave in northwest portion of Milwaukee, adding 230,000 sf to the market.

OUTLOOK

Milwaukee is preparing for a strong 2015, with continuing positive interest in the downtown market.  There remains a variety of new users entering the market through job growth, creating strong office demand.  Although, the large potential vacancies continue to leave owners and developers cautiously optimistic.

To download this report and view past Milwaukee MarketBeat reports for both Industrial and Office, head over to our Research page.