The Wisconsin economy is slowly inching towards recovery as positive economic announcements are made. One such announcement came from the Philadelphia Federal Reserve Bank. According to the report, the Philadelphia Fed issued new rankings that put Wisconsin first in the economic outlook for the next six months. The economic growth index is a predictor of economic activity for the coming six months for each of the 50 states, based upon state housing permit data, initial unemployment insurance claims, the Institute for Supply Management manufacturing survey and prior coincident indexes created by the Federal Reserve Bank of Philadelphia. Also included in the report, Wisconsin jumped to number two in the nation for economic growth in September 2013 and the unemployment rate stood at 6.7 percent (below the national average of 7.3 percent). While Wisconsin still has its work cut out to climb out from the bottom, recent positive indicators have boded well for the state.
The Milwaukee office sector saw a slight uptick in vacancy and posted slower than anticipated activity for the third quarter of 2013. While direct absorption was positive, multiple subleases came onto the market, leaving overall absorption just teetering over the cusp into the black. Although the statistics showed lackluster results, positive local and statewide economic news are expected to help gain positive traction on a macro level.
The Southeastern Wisconsin office market took a slight turn for the worse in Q3 2013, as the overall vacancy rate increased 0.3 percentage points to 20.6%. The Downtown – East submarket, however, experienced a 0.8 percentage point decrease, putting overall vacancy at 15.8%, and multiple suburban submarkets posted decreased vacancy as well. The CBD benefitted from the majority of leasing activity this quarter, with Schlitz Park signing over 120,000 sf.
PROPOSED DOWNTOWN CONSTRUCTION BOOM
Northwestern Mutual Life Insurance (NML), one of Milwaukee’s major employers, recently released renderings of the company’s proposed 32-story, 1.1-million-square-foot (msf) downtown office tower anticipated to break ground in 2014, with estimated completion in 2017. This building will replace the former headquarters location, while adding space that could accommodate another 1,900 employees by 2030. In addition to NML, Irgens proposed constructing an 18-story, $100 million class A office building along the lakefront, with an anticipated construction start in February 2014. The Couture, a 44-story apartment and high-end hotel with a $160 million price tag is also in the works in close proximity to the lakefront, with an anticipated 2015 groundbreaking.
Wisconsin could begin to see not only a changing skyline, but also an uptick in the local economy as recent indicators point in favor of the state. Milwaukee still has a long way to a full recovery, but as more investors continue to enter the market, and as local companies and developers invest in Milwaukee, the business landscape is bound to change for the better.
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