Southeastern Wisconsin commercial real estate markets are moving into 2017 with vacancy rates and positive absorption creating positive momentum, according to the commercial real estate market reports for the fourth quarter of 2016 from CARW and Xceligent.
During 4Q 2016, the Milwaukee office market saw the overall vacancy rate decrease by 30 basis points to 16.7%, down 90 basis points from 4Q 2015. This is reflected in the overall health of the market and the optimism tenants have as they move and/or expand operations.The weighted average asking rents for the Milwaukee market continue to rise, ending the year at $19.55 FSG, up $0.14 per sf from last quarter and $0.46 from 4Q 2015. This is fueled by new office developments and a perceived lack of supply.
The largest net gain for 4Q 2016 came from the completion of Zilber Industrial II, a 179,820 sf industrial building in Menomonee Falls. It was fully-leased at the time of completion to a confidential tenant. At the close of 2016, there is 3,068,800 sf of industrial space under construction in Southeastern Wisconsin, of which 880,000 sf is being built for Uline. The next largest project under construction is First Park 94 – Building B, a 602,348 sf speculative building in Somers.
The largest gains this quarter came from the completion of Calhoun Crossing at Bluemound and Calhoun roads, adding over 106,000 sf of new space to the market. Another positive gain came from the purchase of a former Jewel Food store along Highway 164 in Waukesha by U-Haul.The weighted average asking rent for the Milwaukee retail market ended the year at $11.69 per sf NNN, up $1.03 from 1Q 2016. This is due to the influx of new retail space and the increase in demand.
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