The Barry BulletinIndustrial Q2 2017
Milwaukee industrial market experiences robust quarter
The Milwaukee industrial market experienced a robust second quarter of 2017. Although the vacancy rate in the market grew slightly from 4.2% to 4.3%, there was more than 1.5 MSF absorbed during the quarter. This is a phenomenal jump from the 316,696 SF recorded during the first quarter.
The Milwaukee industrial market added more than 1.8 MSF of new product during Q2 2017. Large completions included Uline’s 880,000 SF distribution center in Kenosha, which was immediately absorbed, as well as First Park 94’s Building B, a 602,000 SF speculative industrial building. Madden Communications leased half of the property, but the remaining space, along with other speculative space added to the market means there is 400,000 SF of new speculative industrial space currently available. This accounts for the slight increase in the area’s vacancy rate for the quarter.
The Milwaukee industrial market has more than 900,000 SF still under construction, including 313,000 SF of speculative space in Franklin and Kenosha.
Lease rates in the Milwaukee industrial market continued to improve during the second quarter. Overall, the average asking rate for the industrial market rose from $4.58/SF at then end of Q1 2017 to $4.66/SF at the end of Q2 2017.
Industrial/Manufacturing properties remained relatively steady, increasing by $0.02 since the previous quarter, to end Q2 at $4.25/SF. Flex/R&D properties saw the largest rental rate incrase, from $5.24 during Q1 2017 to $5.38/SF during Q2. Warehouse/Distribution properties saw a similar increase during Q2 2017, increasing by $0.13/SF to $4.32/SF. Waukesha County saw the most improvement in rental rates across the board during Q2 2017, with both industrial and flex asking rates going up by $0.14/SF.
The unemployment rate for the Milwaukee metropolitan statistical area (MSA) dropped to 3.1% in May 2017, down 110 basis points from the 4.2% unemployment rate in January. Statewide, the unemployment rate is lower still, reported at 2.8% in May 2017. Nationally, the unemployment rate is 4.1%.
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James T. Barry III