The Barry BulletinIndustrial Q1 2017
Milwaukee industrial market remains strong
Though the Milwaukee industrial market had a slow start during the first quarter of 2017, strong fundamentals and steady activity should produce another strong year overall.
The unemployment rate for the Milwaukee metropolitan statistical area (MSA) dropped to 4.2% in January 2017, down 50 basis points from the 4.7% unemployment rate of January 2016. Nationally , the unemployment rate for January 2017 was 5.1%.
The Milwaukee industrial market saw 445,620 SF of positive absorption during the first quarter of 2017. Though absorption was down from the 1.2M recorded during Q1 2016, it increased considerably from the 16,540 SF of positive absorption reported in Q4 2016. The Milwaukee industrial market has seen positive absorption during every quarter for the past 7 years. This absorption has helped keep the area’s vacancy rate well below its historical average, and also below the national industrial vacancy rate of 8.4% as reported by the National Association of Realtors for Q1 2017. The vacancy rate in the Milwaukee industrial market increased by 12 basis points to end the quarter at 4.27%.
Asking rental rates in the market increased slightly overall during the first quarter of 2017, up 6 basis points to $4.60/SF NNN. Asking rental rates averaged $4.21/SF NNN for industrial/manufacturing space and $4.19/SF NNN for warehouse/distribution space. Flex space, which had an average asking rental rate of $4.95/SF NNN at this time last year, has steadily increased over time, ending the quarter at $5.30/SF NNN.
219,902 SF of industrial space was delivered during the first quarter of 2017, representing several building expansions. The Milwaukee industrial market currently has more than 2.2MSF under construction, with a majority of the space concentrated in Kenosha County, encompassing Uline’s 880,000 SF distribution center and First Industrial’s 602,000 SF speculative construction in First Park 94. The remainder of development is split between Milwaukee, Racine and Waukesha counties.
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James T. Barry III