ECONOMY

Wisconsin’s unemployment rate declined to 4.2% in May 2016, a figure that gradually declined since February 2016, and only a slight decrease of 40-basis-points from a year ago. The 4.2% unemployment rate for Wisconsin remains lower than the national unemployment rate of 4.7%. The latest National Manpower Employment Outlook survey indicates positive prospects for job growth in the third quarter. Nationally, employers included in the survey indicated that 23% are expecting hiring to increase in the 3Q 2016. Locally, the outlook is slightly more upbeat as 31% of those surveyed expect to increase staff levels in the third quarter of 2016, with 5% planning to reduce levels. The Milwaukee-Waukesha-West Allis market reported a 26% net employment outlook, a figure that scores Milwaukee 12th in the country’s largest metro areas. Since the beginning of 2015, Milwaukee has consistently ranked in the upper quarter of metropolitan areas.  The net employment outlook is measured by percentage of plan hires offset by percentage of plan reduction in payroll.

Milwaukee Economy Office q2 2016MARKET OVERVIEW

The Milwaukee office market reported its fourth consecutive quarter of positive absorption. In the second quarter of 2016, the office market posted 90,980 square feet (SF) of absorption. The overall vacancy rate continued to decline at 18.0%, and marks a 20-basis-point decline from 1Q 2016. Another investor made a significant investment in the Milwaukee Class A CBD office market.  The 22-story, 472,500 SF Chase Tower was purchased for $30.5 million, or $64.55 per square foot in late June. The 472,500-SF building is currently 87% occupied, with JPMorgan Chase & Co as the anchor tenant. This deal represents yet another example of the growing number of national real estate investors that are extremely bullish on the Downtown Milwaukee market. The Downtown market also had two tenants, FBI and Assurant Health, leave large tracts of space vacant in the market. The FBI vacated 99,718 SF at 330 E Kilbourn Avenue and moved into a standalone facility in St. Francis, while Assurant Health vacated 80,000 SF at Schlitz Park due to their exit from the health insurance market.

Overall Abosorption

OUTLOOK

The second quarter of 2016 continued in stellar fashion for both job growth and absorption. Although employers remain cautious in their hiring as the election nears, the United States hiring outlook is amongst the strongest globally. Therefore, we expect high quality office space in the Downtown markets to remain in demand.

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