As industry veterans will attest, commercial real estate is cyclical, going up and down. But after nearly eight years of prosperity in the metro-Milwaukee commercial real estate market, the good times continue to roll on.
Occupancy rates are high in the office and industrial sectors and rental rates are steady. New product in both sectors is being absorbed within a year or less after construction.
Industrial strong High occupancy rates in the office market are not the only good news in suburban Milwaukee. The industrial real estate sector is strong, with occupancy rates between 95% and 96%.
In fact, the metro-Milwaukee industrial market absorption is so good, Milwaukee is quickly running out of land for new industrial development.
Milwaukee-based Towne Realty Inc. is building two industrial projects. Towne Corporate Park, a 100-acre site in New Berlin, is sold out, and 35 of the 70 acres in Towne Corporate Park Granville have been sold.
Office boom Absorption of new product in both the office and industrial market segments in metro-Milwaukee is acceptable, but there is concern about office market overbuilding. Milwaukee's suburban office market absorbs about 200,000 sq. ft. of Class-A space yearly but last year, more than twice that amount came online.
Wauwatosa, Wis.-based Wangard Partners, and Milwaukee-based Stevens Construction Corp., completed development of Highpointe, a 134,000 sq. ft. Class-A office building last year. The building is 75% leased.
Central business district behind The office market in Milwaukee's central business district is healthy, but seemingly frozen in time. The only activity in recent years is, Milwaukee-based Rockwell Automation moving its headquarters from Seal Beach, Calif., to Firstar Center.
Another successful office building is the 270,000 sq. ft. Lydell Corp. Center. Frank Giuffre, president of Milwaukee-based Mallory Properties, bought the former Oster manufacturing building and convinced Manpower to locate its headquarters there. Now the building is 75% occupied.
Downtown rockin' The Mallory and Rockwell deals are exceptions within the unspectacular downtown office market. The downtown area itself is another matter.
Projects downtown include the Midwest Express Center, a new $200-million, convention center; the $50 million expansion of the Milwaukee Art Museum, scheduled for completion next year; and Miller Park, which will be ready for next year's home opener.
Another project downtown is the former 600,000 sq. ft. Marshall Field building. Ivory Tusk LLC will begin a $58 million makeover to a mixed use building in Sept.
Home sweet home Downtown has seen an increase of nearly 1,000 new apartments and condominiums in the past 12 months and more are under construction.
Last November, Mandel Group completed Lake Bluff, a 110-unit apartment development. Mandel is nearing completion of The Franklin at East Pointe, a 114-unit project and started construction of Library Hill, a 139-unit apartment development.
Retail struggles With all these positive developments, downtown Milwaukee is still struggling to attract certain types of retail. Entertainment retail, such as Barnes & Noble or a theme restaurants, will probably settle downtown rather than high-end retail.
Milwaukee-area real estate professionals continue to revel in a market which remains solid. And although Milwaukee is enjoying a booming real estate market, the market may fall. Until that day comes, real estate professionals are enjoying good times.
Ivory Tusk LLC purchased the 600,000 sq. ft. Marshall Field department store and will spend $58 million to renovate the building into retail, office and hotel space.