Report Compiled by Jeff Hoffman and The Boerke Co. Research Department


2014 completed another dynamic year for the regional industrial marketplace with nearly 5.4 million square feet of absorption and new deliveries.

Heading into 2015, Wisconsin is entering the stage of the real estate cycle in which companies will be predominantly forced to construct new facilities given the lack of functional inventory within the market place.


  • It is a great time to be a seller of modern Class A product. There is insatiable demand for institutional portfolios of industrial real estate with two Class A portfolios and one class B portfolio set to trade in Q1 of 2015. Cap Rates of institutional grade assets are below 8% and buyers are looking at deals with under 5 years of term. Modern user buildings in the Waukesha County market appreciated an average of 25% since 2013.
  • Industrial users are starting to realize the benefits of using their facility as a recruiting tool for talent and this trend will drive new construction projects moving forward.
  • Tenants have been more amenable to self-fund improvements as a capital expenditure and they are once again investing in the functionality of the space and not solely focused on low cost.
  • The market bifurcation accelerated with pricing of Class B/C pricing stagnating and Class A property experiencing double digit growth.

Jeff Hoffman Prediction from Q1 2014


  • With over 64,000 active job postings at the Job Center of Wisconsin we will finally start to see accelerated hiring in the Wisconsin private sector. This bodes well for all areas of Commercial Real Estate.
  • Interest rate increases will be nominal at best. The collapse of oil markets will limit inflationary pressures (sub 2%), there is still significant slack in the job market with a participation rate of 62.8%, the Euro Zone is on the brink of another recession and China has slowed. The US is a safe haven for foreign investment and the 10 year T Bill will still be below 3% at year end.
  • Tax Incremental Financing assistance remains a critical tool to bring new development projects out of the ground.
  • Pricing for Class A user properties is close to hitting the ceiling in the Build vs. Buy analysis. This bodes well for New Construction.
  • We are projecting 7.3 Million SF of new construction deliveries in the market in 2015.
  • The Milwaukee Region as a whole will end 2015 in the High 4% vacancy rate which I believe will be the cyclical low.

To see if I can make it 2 years in a row for Waukesha County, I am calling for 1,690,000SF of absorption and deliveries in the County and a year end vacancy rate of 3.08%

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