Milwaukee
INDUSTRIAL MARKET REPORT
Milwaukee 3rd Quarter 2016 2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Table of Contents/ Methodology of Tracked Set Xceligent is a leading provider of verified commercial real estate information which assists real estate professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell, buy and develop commercial properties.
Table of Contents/Methodology of Tracked Set
2
Industrial Market Map
3-4
Milwaukee Industrial Overview
5-6
Statistics by Market
7-8
Vacancy Rates & Asking Rates
9-10
Leasing & Sales Activity
11-12
New Construction
13
Industrial Advisory Board Members
14
Xceligent Milwaukee Team
15
The Milwaukee tracked set consists of an inventory of buildings considered to be competitive within the brokerage community. All buildings within the competitive tracked set have been reviewed and verified by members of the Advisory Boards for each market area. Inventory
The total square feet of all existing single and multi tenant retail properties greater than 10,000 sf.
Total Available (sf) All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. Space can be available but not vacant, for example, if the landlord, or his agent, is marketing space that will be coming available at a future date because a tenant is planning to move.
Total Vacant (sf)
The total of all of the vacant square footage within a building, including both direct and sublease space.
Direct Vacant (sf)
The total of the vacant square footage in a building that is being marketed by an agent representing the landlord.
Sublease (sf)
Space that is offered for lease by a current tenant, or his agent, within a property. Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied.
Net Absorption
The net change in physically occupied space from quarter to quarter, expressed in square feet.
Weighted Average Direct Lease Rate
The weighted average of all direct asking lease rates expressed as a NNN rental rate and weighted on total direct available square feet.
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
2
Industrial Market Map
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
3
Industrial Market Map
Milwaukee
Waukesha
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
4
Milwaukee Industrial Overview
Overview
At 4.0%, the industrial market for Southeastern Wisconsin saw the vacancy rate diminish by 10 basis points during 3Q 2016. This is due to a large amount of tenant expansion activity, the largest being 601,439 square feet (sf) in Kenosha.
The market posted another quarter of positive net absorption, with 819,932 sf. The year-to-date net absorption was 3,760,049 sf, aided by the completion of several large projects and steady tenant activity.
The Kenosha submarket posted the largest positive absorption during 3Q 2016 with 601,439 sf, due to Ariens leasing all of First Park 94, Building A. The Racine submarket witnessed the largest negative absorption for the quarter with -348,580 sf, attributed to JRS Distribution vacating two separate warehouse spaces totaling 299,335 sf.
The weighted average asking rental rate for the Milwaukee market decreased $0.04 per sf to $4.38 NNN during 3Q 2016, due to the shift in rents on available space and the direct correlation with the class and quality of property.
Despite elevated construction costs, Southeastern Wisconsin boasts just over 3.1 million sf in construction projects currently under way. The Kenosha submarket leads the pack with 2.1 million sf in projects, with the largest being Uline's 880,000 sf distribution center at 38th Street and 120th Avenue in Kenosha.
# of Bldgs
Flex/R&D
Inventory (sf)
Total Available (sf)
Total Vacant (sf)
Total Vacancy Rate (%)
Total Quarterly Net Absorption (sf)
YTD Total Net Absorption (sf)
1,028
45,600,812
3,312,594
1,912,787
4.2%
68,533
608,199
704
72,710,030
7,287,304
4,789,780
6.6%
-205,706
1,552,576
Light Industrial
2,640
158,146,845
7,770,494
4,265,099
2.7%
957,105
1,599,274
Overall
4,372
276,457,687
18,370,392
10,967,666
4.0%
819,932
3,760,049
Direct Available (sf)
Direct Vacant (sf)
Direct Vacancy Rate (%)
Direct Quarterly Net Absorption (sf)
Warehouse Distribution
# of Bldgs
Flex/R&D
Inventory (sf)
YTD Direct Net Absorption (sf)
1,028
45,600,812
3,170,998
1,799,308
3.9%
77,538
708,683
704
72,710,030
7,196,304
4,789,780
6.6%
-205,706
1,552,576
Light Industrial
2,640
158,146,845
7,658,353
4,203,399
2.7%
1,016,605
1,668,774
Overall
4,372
276,457,687
18,025,655
10,792,487
3.9%
888,437
3,930,033
Available Sublease (sf)
Sublease Vacant (sf)
Sublease Vacancy Rate (%)
Sublease Quarterly Absorption (sf)
Warehouse Distribution
# of Bldgs
Flex/R&D
Inventory (sf)
YTD Sublease Net Absorption (sf)
1,028
45,600,812
162,116
113,479
0.2%
-9,005
-100,484
704
72,710,030
91,000
-
0.0%
-
-
Light Industrial
2,640
158,146,845
112,141
61,700
0.0%
-59,500
-69,500
Overall
4,372
276,457,687
365,257
175,179
0.1%
-68,505
-169,984
Warehouse Distribution
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
5
Milwaukee Industrial Overview
Historical Vacancy Rate & Net Absorption Absorption
Vacancy
2,500,000
5.0%
2,000,000
4.5%
1,500,000 4.0% 1,000,000 3.5%
500,000
-
3.0% 3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Historical Vacancy Rates by Use Flex/R&D
Warehouse - Distribution
Light Industrial
7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Historical Net Absorption by Use Flex/R&D
Warehouse - Distribution
Light Industrial
1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 (200,000) (400,000) 3Q 2015
4Q 2015
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
1Q 2016
2Q 2016
3Q 2016
6
Statistics by Market
# of Bldgs
Inventory (sf)
Total Vacant (sf)
Sublease Vacant (sf)
Vacancy Rate (%)
Total Quarterly Absorption (sf)
YTD Total Net Absorption (sf)
1,448
94,584,752
4,441,990
61,700
4.7%
266,321
762,952
Downtown
179
12,326,540
785,905
-
6.4%
115,268
196,096
Flex/R&D
8
304,465
9,926
-
3.3%
-
-
Milwaukee
40
2,873,448
272,200
-
9.5%
-49,200
-48,200
131
9,148,627
503,779
-
5.5%
164,468
244,296
North Central
143
9,561,052
1,120,275
-
11.7%
99,661
238,004
Flex/R&D
16
758,043
73,903
-
9.7%
7,549
7,549
Warehouse - Distribution
28
2,838,257
639,656
-
22.5%
25,212
-9,788
Light Industrial
99
5,964,752
406,716
-
6.8%
66,900
240,243
North Shore
108
8,070,546
194,344
-
2.4%
-
115,150
Flex/R&D
18
1,011,216
-
-
0.0%
-
10,000
Warehouse - Distribution
27
2,577,676
184,300
-
7.1%
-
-
Light Industrial
63
4,481,654
10,044
-
0.2%
-
105,150
Northwest
332
18,280,300
519,542
-
2.8%
104,737
243,436
Flex/R&D
71
3,033,787
152,159
-
5.0%
9,852
35,941
Warehouse - Distribution Light Industrial
Warehouse - Distribution Light Industrial
76
6,309,997
216,762
-
3.4%
98,927
155,927
185
8,936,516
150,621
-
1.7%
-4,042
51,568
468
29,924,435
855,036
61,700
2.9%
71,356
39,255
Flex/R&D
110
5,201,757
288,990
-
5.6%
-32,027
-23,503
Warehouse - Distribution
120
10,439,346
91,800
-
0.9%
25,306
17,472
Light Industrial
238
14,283,332
474,246
61,700
3.3%
78,077
45,286
South Central
157
10,432,495
917,188
-
8.8%
-112,000
-102,666
Flex/R&D
17
987,460
45,500
-
4.6%
-10,000
6,194
Warehouse - Distribution
44
2,848,519
666,686
-
23.4%
-102,000
-102,000
Light Industrial
96
6,596,516
205,002
-
3.1%
-
-6,860
61
5,989,384
49,700
-
0.8%
-12,701
33,677
14
848,512
4,486
-
0.5%
-
-
South
West Flex/R&D Warehouse - Distribution Light Industrial Waukesha Northeast Flex/R&D Warehouse - Distribution
8
1,037,184
-
-
0.0%
-
-
39
4,103,688
45,214
-
1.1%
-12,701
33,677
1,508
71,816,196
1,804,629
42,000
2.5%
263,940
1,469,024
496
21,404,959
450,119
31,500
2.1%
21,844
404,527
204
8,447,947
251,171
31,500
3.0%
2,805
48,287
52
3,934,884
90,000
-
2.3%
-
334,482
240
9,022,128
108,948
-
1.2%
19,039
21,758
Northwest
332
18,816,576
477,641
-
2.5%
66,859
429,753
Flex/R&D
81
2,381,361
61,472
-
2.6%
7,159
49,512
Warehouse - Distribution
64
6,600,721
145,401
-
2.2%
-14,800
84,850
187
9,834,494
270,768
-
2.8%
74,500
295,391
317
15,377,694
78,927
10,500
0.5%
102,947
283,218
Flex/R&D
55
2,273,459
61,947
10,500
2.7%
63,247
76,959
Warehouse - Distribution
37
3,312,070
-
-
0.0%
-
-
Light Industrial
Light Industrial Southeast
225
9,792,165
16,980
-
0.2%
39,700
206,259
Southwest
363
16,216,967
797,942
-
4.9%
72,290
351,526
Flex/R&D
126
3,879,594
37,775
-
1.0%
14,290
223,431
47
3,395,044
447,133
-
13.2%
8,000
10,250
190
8,942,329
313,034
-
3.5%
50,000
117,845
Light Industrial
Warehouse - Distribution Light Industrial
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
7
Statistics by Market
# of Bldgs
Racine Racine Flex/R&D Warehouse - Distribution Light Industrial
Inventory (sf)
Total Vacant (sf)
Sublease Vacant (sf)
Vacancy Rate (%)
Total Quarterly Absorption (sf)
YTD Total Net Absorption (sf)
385
28,848,011
1,749,177
-
6.1%
-348,580
-259,271
385
28,848,011
1,749,177
-
6.1%
-348,580
-259,271
24
1,463,635
134,029
-
9.2%
-2,029
58,971
31
5,290,735
1,020,442
-
19.3%
-209,151
-154,642
330
22,093,641
594,706
-
2.7%
-137,400
-163,600
329
19,711,444
765,509
-
3.9%
81,187
151,217
Washington
329
19,711,444
765,509
-
3.9%
81,187
151,217
Flex/R&D
156
6,733,928
257,196
-
3.8%
13,987
166,314
43
3,602,358
461,632
-
12.8%
-
-10,097
Washington
Warehouse - Distribution Light Industrial Kenosha Kenosha Flex/R&D Warehouse - Distribution Light Industrial
130
9,375,158
46,681
-
0.5%
67,200
-5,000
213
26,027,205
671,465
45,479
2.6%
601,439
1,781,083
213
26,027,205
671,465
45,479
2.6%
601,439
1,781,083
29
2,195,824
55,386
45,479
2.5%
-
-19,156
42
12,386,343
397,768
-
3.2%
-
1,216,800
142
11,445,038
218,311
-
1.9%
601,439
583,439
143
14,747,237
368,800
-
2.5%
-
45,522
Sheboygan
143
14,747,237
368,800
-
2.5%
-
45,522
Flex/R&D
30
2,656,199
58,800
-
2.2%
-
5,000
Warehouse - Distribution
17
2,478,006
-
-
0.0%
-
40,522
Sheboygan
Light Industrial Ozaukee Ozaukee Flex/R&D Warehouse - Distribution Light Industrial Walworth Walworth
96
9,613,032
310,000
-
3.2%
-
-
178
11,826,179
830,110
26,000
7.0%
-25,852
-68,792
178
11,826,179
830,110
26,000
7.0%
-25,852
-68,792
53
2,565,992
420,047
26,000
16.4%
-6,300
-37,300
14
1,268,762
-
-
0.0%
-
5,000
111
7,991,425
410,063
-
5.1%
-19,552
-36,492
168
8,896,663
335,986
-
3.8%
-18,523
-121,686
168
8,896,663
335,986
-
3.8%
-18,523
-121,686
Flex/R&D
16
857,633
-
-
0.0%
-
-
Warehouse - Distribution
14
1,516,680
156,000
-
10.3%
12,000
12,000
138
6,522,350
179,986
-
2.8%
-30,523
-133,686
4,372
276,457,687
10,967,666
175,179
4.0%
819,932
3,760,049
Light Industrial Overall
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
8
Vacancy Rates & Asking Rates
Vacancy Rate %
Average Weighted Direct Asking Rate
3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Kenosha
0.7%
2.6%
2.7%
4.9%
2.6%
$4.34
$4.55
$4.56
$4.56
$4.62
Flex/R&D
1.9%
1.6%
3.0%
2.5%
2.5%
$5.31
$6.79
$8.75
$8.75
$6.97
Warehouse - Distribution
0.9%
3.5%
3.2%
3.2%
3.2%
$4.91
$4.59
$4.64
$4.64
$4.64
Light Industrial
0.3%
1.9%
2.1%
7.2%
1.9%
$4.15
$4.42
$4.41
$4.41
$4.47
Milwaukee
5.6%
5.3%
5.3%
4.9%
4.7%
$4.06
$4.10
$4.04
$4.04
$3.89
Flex/R&D
3.6%
4.5%
4.2%
4.5%
4.7%
$4.91
$5.00
$4.78
$4.70
$4.62
Warehouse - Distribution
7.8%
7.2%
7.2%
7.2%
7.2%
$3.71
$3.55
$3.52
$3.51
$3.65
Light Industrial
4.8%
4.5%
4.4%
3.8%
3.4%
$4.28
$4.34
$4.27
$4.39
$3.91
Ozaukee
6.4%
6.4%
6.6%
6.8%
7.0%
$4.66
$4.68
$4.19
$4.23
$4.08
Flex/R&D
14.8%
14.9%
15.1%
16.1%
16.4%
$5.63
$5.63
$4.09
$4.04
$3.80
Warehouse - Distribution
0.6%
0.4%
-
-
-
$2.50
$2.50
-
-
-
Light Industrial
4.7%
4.7%
4.9%
4.9%
5.1%
$4.56
$4.54
$4.61
$4.84
$4.92
Racine
3.3%
3.2%
4.7%
4.3%
6.1%
$4.28
$4.41
$4.47
$4.50
$4.63
10.8%
9.4%
9.0%
9.0%
9.2%
$5.42
$5.42
$5.39
$5.39
$5.38
Warehouse - Distribution
7.0%
7.0%
14.2%
12.8%
19.3%
$3.86
$3.86
$4.28
$4.33
$4.47
Light Industrial
2.0%
2.0%
2.2%
2.1%
2.7%
$3.96
$4.37
$4.69
$4.61
$4.93
Sheboygan
3.5%
2.8%
2.5%
2.5%
2.5%
$3.31
$3.31
$3.25
$3.12
$3.12
Flex/R&D
2.4%
2.4%
2.2%
2.2%
2.2%
$3.22
$3.22
$3.12
$3.12
$3.12
Warehouse - Distribution
1.6%
1.6%
-
-
-
-
-
-
-
-
Light Industrial
4.3%
3.2%
3.2%
3.2%
3.2%
$3.50
$3.50
$3.50
-
-
Walworth
2.3%
2.4%
3.3%
3.3%
3.8%
$3.66
$3.77
$3.85
$3.88
$3.61
-
-
-
-
-
-
-
-
-
-
10.9%
10.9%
10.9%
10.9%
10.3%
$3.62
$3.62
$3.62
$3.69
$3.73
Light Industrial
0.5%
0.7%
2.0%
2.0%
2.8%
$3.94
$4.61
$4.31
$4.30
$3.49
Washington
4.3%
3.9%
3.9%
4.3%
3.9%
$5.58
$5.60
$5.67
$5.66
$5.85
Flex/R&D
5.3%
4.0%
4.1%
4.0%
3.8%
$5.52
$5.55
$5.65
$5.62
$5.83
12.7%
12.5%
12.5%
12.8%
12.8%
$6.47
$6.36
$6.36
$6.36
$6.45
Light Industrial
0.3%
0.4%
0.4%
1.2%
0.5%
$5.40
$5.40
$5.51
$5.51
$5.57
Waukesha
2.6%
3.1%
2.9%
2.4%
2.5%
$4.98
$5.05
$5.08
$5.14
$5.22
Flex/R&D
3.4%
3.0%
3.2%
2.9%
2.4%
$5.80
$6.01
$5.75
$5.72
$5.68
Warehouse - Distribution
2.7%
4.4%
2.9%
2.7%
4.0%
$4.41
$4.52
$4.72
$4.71
$5.00
Light Industrial
2.2%
2.5%
2.7%
2.0%
1.9%
$4.85
$5.10
$4.90
$5.04
$5.09
Overall
3.9%
4.0%
4.1%
4.1%
4.0%
$4.33
$4.42
$4.42
$4.42
$4.38
Flex/R&D
Flex/R&D Warehouse - Distribution
Warehouse - Distribution
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
9
Vacancy Rates & Asking Rates
Vacancy Rate by Submarket 7.0% 6.1% 4.7% 3.8%
2.6%
Kenosha
3.9% 2.5%
2.5%
Milwaukee
Ozaukee
Racine
Sheboygan
Walworth
Washington
Waukesha
Weighted Average Asking Rents by Submarket $5.85 $5.22 $4.63
$4.62 $4.08
$3.89
$3.61 $3.12
Kenosha
$14.00 $12.00
Milwaukee
Ozaukee
Racine
Sheboygan
Walworth
Washington
Waukesha
Asking Rent Range by Type (NNN) $12.00
$10.00
$10.00
$11.00
$8.00
$6.00 $4.00 $2.00
$4.96
$4.14
$2.25
$1.50
$4.34 $2.50
$Flex/R&D
Warehouse - Distribution
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Light Industrial 10
Leasing & Sales Activity
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
11
Leasing & Sales Activity
Largest Absorption Changes Occupied or Vacated (sf)
Property Name
Tenant Name
Specific Use
Market
First Park 94 Bldg A
601,439
Ariens Company
Light Industrial
Kenosha
807-915 W Juneau Ave
175,968
Milwaukee Brewing Company / Self-storage space
Light Industrial
Milwaukee
7300 N 60th St
98,927
Sellars Absorbent Materials
Warehouse Distribution
Milwaukee
Pewaukee Corporate Park South
77,700
Confidential Tenant
Light Industrial
Waukesha
18456 W Fulton Dr
67,200
Westrock
Light Industrial
Washington
2501-2525 W Hampton Ave
66,900
Jonco
Light Industrial
Milwaukee
1924 S Hilbert St
-35,000
Lara Associates
Warehouse Distribution
Milwaukee
6600 Washington St
-61,700
Avalon Rail
Light Industrial
Milwaukee
1221 Grandview Pkwy
-90,184
JRS Distribution Company
Light Industrial
Racine
3201-3257 S 20th St
-92,000
Premier Plastics
1333 Grandview Pkwy
-209,151
Warehouse Distribution Warehouse Distribution
JRS Distribution Company
Milwaukee Racine
Top Transactions Property Name
Sale Price
Sold (sf)
Buyer
11800 W Brown Deer Rd
$19,034,061 360,418
Reyes Holdings Operations
11100 W Cleveland Ave
$7,800,000 109,376
200 W Capitol Dr
$5,820,000 279,636
2485-2487 W Commerce Dr
$3,525,000
2300 S 51st St
$3,200,000 249,753
3720 N 124th St
$2,950,000
43,288 Gabaldon Properties
1111 Cedar Creek Rd
$2,750,000
74,678
W169 N5960 Ridgwood Dr
$2,275,000
35,851 Singleshot, LLC
N92 W14224 Anthony Ave
$2,000,000
63,140
3122 14th Ave
$2,000,000 303,592 Phoenix Investors
73,106
Seller
Coca-Cola Refreshments USA Inc. WI Self Storage Bradbury Properties West Allis LCM Funds 43 BWP Holdings, LLC High Bay LLC Imperial Lithographing First Industrial Company Realty Trust Global Power The Oilgear Company Components
Harry Sperber Family Revocable Trust
P&M Properties of Germantown, LLC
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Market
Specific Use
Milwaukee
Warehouse Distribution
Milwaukee
Light Industrial
Milwaukee
Warehouse Distribution
Waukesha
Light Industrial
Milwaukee
Light Industrial
Lauenstein & Associates Milwaukee
Flex/R&D
CPL Industries, Inc.
Ozaukee
Flex/R&D
JQ Enterprises, LLC
Waukesha
Light Industrial
Dairy Property, LLC
Waukesha
Light Industrial
Fifth Third Bank
Kenosha
Light Industrial 12
New Construction
Current New Construction by Market 2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
Kenosha
Milwaukee
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Racine
Washington
Waukesha
13
Industrial Advisory Board Members
Milwaukee Metro Industrial Advisory Board The Barry Company
Milwaukee Industrial Research Board
Kevin Barry
Katie Gremban The Boerke Company
The Boerke Company CARW
Jim Babiasz Tracy Johnson
Nick Unger CBRE
Ryan Rasmussen
Trent Poole
Colliers
Tyler Jauquet
Scott Furmanski
Colliers
Margaret Bruckner
CBRE
Colliers
Jim Larkin
JLL
The Dickman Company
Nick Keys
NAI MLG Commercial
JLL
Adam Matson
Paradigm RE
Brian Parrish
RFP Commercial
Nathan Winkel
Tony Haning
NAI MLG Commercial
Phoenix Investors
Kyle Koeller
Patrick Dedering Paul McBride
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
14
Xceligent Milwaukee Team
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy. For more information, please contact :
Josh Parrish
Director of Analytics
(414) 416-7092
[email protected]
Director of Client Services
(949) 306-8767
[email protected]
Brian Reece
Regional VP of Analytics
(919) 829-9627
[email protected]
Greg Hayden
Regional VP of Sales
(816) 303-2822
[email protected]
James Bertolli
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
15
Milwaukee 3rd Quarter 2016 2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Table of Contents/ Methodology of Tracked Set Xceligent is a leading provider of verified commercial real estate information which assists real estate professionals, appraisers, owners, investors and developers that make strategic decisions to lease, sell, buy and develop commercial properties.
Table of Contents/Methodology of Tracked Set
2
Industrial Market Map
3-4
Milwaukee Industrial Overview
5-6
Statistics by Market
7-8
Vacancy Rates & Asking Rates
9-10
Leasing & Sales Activity
11-12
New Construction
13
Industrial Advisory Board Members
14
Xceligent Milwaukee Team
15
The Milwaukee tracked set consists of an inventory of buildings considered to be competitive within the brokerage community. All buildings within the competitive tracked set have been reviewed and verified by members of the Advisory Boards for each market area. Inventory
The total square feet of all existing single and multi tenant retail properties greater than 10,000 sf.
Total Available (sf) All of the available leasable space within a building, whether it is occupied or vacant, for direct lease or sublease space. Space can be available but not vacant, for example, if the landlord, or his agent, is marketing space that will be coming available at a future date because a tenant is planning to move.
Total Vacant (sf)
The total of all of the vacant square footage within a building, including both direct and sublease space.
Direct Vacant (sf)
The total of the vacant square footage in a building that is being marketed by an agent representing the landlord.
Sublease (sf)
Space that is offered for lease by a current tenant, or his agent, within a property. Whether the tenant is paying rent or not, the space is considered vacant only if it is unoccupied.
Net Absorption
The net change in physically occupied space from quarter to quarter, expressed in square feet.
Weighted Average Direct Lease Rate
The weighted average of all direct asking lease rates expressed as a NNN rental rate and weighted on total direct available square feet.
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
2
Industrial Market Map
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
3
Industrial Market Map
Milwaukee
Waukesha
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
4
Milwaukee Industrial Overview
Overview
At 4.0%, the industrial market for Southeastern Wisconsin saw the vacancy rate diminish by 10 basis points during 3Q 2016. This is due to a large amount of tenant expansion activity, the largest being 601,439 square feet (sf) in Kenosha.
The market posted another quarter of positive net absorption, with 819,932 sf. The year-to-date net absorption was 3,760,049 sf, aided by the completion of several large projects and steady tenant activity.
The Kenosha submarket posted the largest positive absorption during 3Q 2016 with 601,439 sf, due to Ariens leasing all of First Park 94, Building A. The Racine submarket witnessed the largest negative absorption for the quarter with -348,580 sf, attributed to JRS Distribution vacating two separate warehouse spaces totaling 299,335 sf.
The weighted average asking rental rate for the Milwaukee market decreased $0.04 per sf to $4.38 NNN during 3Q 2016, due to the shift in rents on available space and the direct correlation with the class and quality of property.
Despite elevated construction costs, Southeastern Wisconsin boasts just over 3.1 million sf in construction projects currently under way. The Kenosha submarket leads the pack with 2.1 million sf in projects, with the largest being Uline's 880,000 sf distribution center at 38th Street and 120th Avenue in Kenosha.
# of Bldgs
Flex/R&D
Inventory (sf)
Total Available (sf)
Total Vacant (sf)
Total Vacancy Rate (%)
Total Quarterly Net Absorption (sf)
YTD Total Net Absorption (sf)
1,028
45,600,812
3,312,594
1,912,787
4.2%
68,533
608,199
704
72,710,030
7,287,304
4,789,780
6.6%
-205,706
1,552,576
Light Industrial
2,640
158,146,845
7,770,494
4,265,099
2.7%
957,105
1,599,274
Overall
4,372
276,457,687
18,370,392
10,967,666
4.0%
819,932
3,760,049
Direct Available (sf)
Direct Vacant (sf)
Direct Vacancy Rate (%)
Direct Quarterly Net Absorption (sf)
Warehouse Distribution
# of Bldgs
Flex/R&D
Inventory (sf)
YTD Direct Net Absorption (sf)
1,028
45,600,812
3,170,998
1,799,308
3.9%
77,538
708,683
704
72,710,030
7,196,304
4,789,780
6.6%
-205,706
1,552,576
Light Industrial
2,640
158,146,845
7,658,353
4,203,399
2.7%
1,016,605
1,668,774
Overall
4,372
276,457,687
18,025,655
10,792,487
3.9%
888,437
3,930,033
Available Sublease (sf)
Sublease Vacant (sf)
Sublease Vacancy Rate (%)
Sublease Quarterly Absorption (sf)
Warehouse Distribution
# of Bldgs
Flex/R&D
Inventory (sf)
YTD Sublease Net Absorption (sf)
1,028
45,600,812
162,116
113,479
0.2%
-9,005
-100,484
704
72,710,030
91,000
-
0.0%
-
-
Light Industrial
2,640
158,146,845
112,141
61,700
0.0%
-59,500
-69,500
Overall
4,372
276,457,687
365,257
175,179
0.1%
-68,505
-169,984
Warehouse Distribution
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
5
Milwaukee Industrial Overview
Historical Vacancy Rate & Net Absorption Absorption
Vacancy
2,500,000
5.0%
2,000,000
4.5%
1,500,000 4.0% 1,000,000 3.5%
500,000
-
3.0% 3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Historical Vacancy Rates by Use Flex/R&D
Warehouse - Distribution
Light Industrial
7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% 3Q 2015
4Q 2015
1Q 2016
2Q 2016
3Q 2016
Historical Net Absorption by Use Flex/R&D
Warehouse - Distribution
Light Industrial
1,600,000 1,400,000 1,200,000 1,000,000 800,000 600,000 400,000 200,000 (200,000) (400,000) 3Q 2015
4Q 2015
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
1Q 2016
2Q 2016
3Q 2016
6
Statistics by Market
# of Bldgs
Inventory (sf)
Total Vacant (sf)
Sublease Vacant (sf)
Vacancy Rate (%)
Total Quarterly Absorption (sf)
YTD Total Net Absorption (sf)
1,448
94,584,752
4,441,990
61,700
4.7%
266,321
762,952
Downtown
179
12,326,540
785,905
-
6.4%
115,268
196,096
Flex/R&D
8
304,465
9,926
-
3.3%
-
-
Milwaukee
40
2,873,448
272,200
-
9.5%
-49,200
-48,200
131
9,148,627
503,779
-
5.5%
164,468
244,296
North Central
143
9,561,052
1,120,275
-
11.7%
99,661
238,004
Flex/R&D
16
758,043
73,903
-
9.7%
7,549
7,549
Warehouse - Distribution
28
2,838,257
639,656
-
22.5%
25,212
-9,788
Light Industrial
99
5,964,752
406,716
-
6.8%
66,900
240,243
North Shore
108
8,070,546
194,344
-
2.4%
-
115,150
Flex/R&D
18
1,011,216
-
-
0.0%
-
10,000
Warehouse - Distribution
27
2,577,676
184,300
-
7.1%
-
-
Light Industrial
63
4,481,654
10,044
-
0.2%
-
105,150
Northwest
332
18,280,300
519,542
-
2.8%
104,737
243,436
Flex/R&D
71
3,033,787
152,159
-
5.0%
9,852
35,941
Warehouse - Distribution Light Industrial
Warehouse - Distribution Light Industrial
76
6,309,997
216,762
-
3.4%
98,927
155,927
185
8,936,516
150,621
-
1.7%
-4,042
51,568
468
29,924,435
855,036
61,700
2.9%
71,356
39,255
Flex/R&D
110
5,201,757
288,990
-
5.6%
-32,027
-23,503
Warehouse - Distribution
120
10,439,346
91,800
-
0.9%
25,306
17,472
Light Industrial
238
14,283,332
474,246
61,700
3.3%
78,077
45,286
South Central
157
10,432,495
917,188
-
8.8%
-112,000
-102,666
Flex/R&D
17
987,460
45,500
-
4.6%
-10,000
6,194
Warehouse - Distribution
44
2,848,519
666,686
-
23.4%
-102,000
-102,000
Light Industrial
96
6,596,516
205,002
-
3.1%
-
-6,860
61
5,989,384
49,700
-
0.8%
-12,701
33,677
14
848,512
4,486
-
0.5%
-
-
South
West Flex/R&D Warehouse - Distribution Light Industrial Waukesha Northeast Flex/R&D Warehouse - Distribution
8
1,037,184
-
-
0.0%
-
-
39
4,103,688
45,214
-
1.1%
-12,701
33,677
1,508
71,816,196
1,804,629
42,000
2.5%
263,940
1,469,024
496
21,404,959
450,119
31,500
2.1%
21,844
404,527
204
8,447,947
251,171
31,500
3.0%
2,805
48,287
52
3,934,884
90,000
-
2.3%
-
334,482
240
9,022,128
108,948
-
1.2%
19,039
21,758
Northwest
332
18,816,576
477,641
-
2.5%
66,859
429,753
Flex/R&D
81
2,381,361
61,472
-
2.6%
7,159
49,512
Warehouse - Distribution
64
6,600,721
145,401
-
2.2%
-14,800
84,850
187
9,834,494
270,768
-
2.8%
74,500
295,391
317
15,377,694
78,927
10,500
0.5%
102,947
283,218
Flex/R&D
55
2,273,459
61,947
10,500
2.7%
63,247
76,959
Warehouse - Distribution
37
3,312,070
-
-
0.0%
-
-
Light Industrial
Light Industrial Southeast
225
9,792,165
16,980
-
0.2%
39,700
206,259
Southwest
363
16,216,967
797,942
-
4.9%
72,290
351,526
Flex/R&D
126
3,879,594
37,775
-
1.0%
14,290
223,431
47
3,395,044
447,133
-
13.2%
8,000
10,250
190
8,942,329
313,034
-
3.5%
50,000
117,845
Light Industrial
Warehouse - Distribution Light Industrial
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
7
Statistics by Market
# of Bldgs
Racine Racine Flex/R&D Warehouse - Distribution Light Industrial
Inventory (sf)
Total Vacant (sf)
Sublease Vacant (sf)
Vacancy Rate (%)
Total Quarterly Absorption (sf)
YTD Total Net Absorption (sf)
385
28,848,011
1,749,177
-
6.1%
-348,580
-259,271
385
28,848,011
1,749,177
-
6.1%
-348,580
-259,271
24
1,463,635
134,029
-
9.2%
-2,029
58,971
31
5,290,735
1,020,442
-
19.3%
-209,151
-154,642
330
22,093,641
594,706
-
2.7%
-137,400
-163,600
329
19,711,444
765,509
-
3.9%
81,187
151,217
Washington
329
19,711,444
765,509
-
3.9%
81,187
151,217
Flex/R&D
156
6,733,928
257,196
-
3.8%
13,987
166,314
43
3,602,358
461,632
-
12.8%
-
-10,097
Washington
Warehouse - Distribution Light Industrial Kenosha Kenosha Flex/R&D Warehouse - Distribution Light Industrial
130
9,375,158
46,681
-
0.5%
67,200
-5,000
213
26,027,205
671,465
45,479
2.6%
601,439
1,781,083
213
26,027,205
671,465
45,479
2.6%
601,439
1,781,083
29
2,195,824
55,386
45,479
2.5%
-
-19,156
42
12,386,343
397,768
-
3.2%
-
1,216,800
142
11,445,038
218,311
-
1.9%
601,439
583,439
143
14,747,237
368,800
-
2.5%
-
45,522
Sheboygan
143
14,747,237
368,800
-
2.5%
-
45,522
Flex/R&D
30
2,656,199
58,800
-
2.2%
-
5,000
Warehouse - Distribution
17
2,478,006
-
-
0.0%
-
40,522
Sheboygan
Light Industrial Ozaukee Ozaukee Flex/R&D Warehouse - Distribution Light Industrial Walworth Walworth
96
9,613,032
310,000
-
3.2%
-
-
178
11,826,179
830,110
26,000
7.0%
-25,852
-68,792
178
11,826,179
830,110
26,000
7.0%
-25,852
-68,792
53
2,565,992
420,047
26,000
16.4%
-6,300
-37,300
14
1,268,762
-
-
0.0%
-
5,000
111
7,991,425
410,063
-
5.1%
-19,552
-36,492
168
8,896,663
335,986
-
3.8%
-18,523
-121,686
168
8,896,663
335,986
-
3.8%
-18,523
-121,686
Flex/R&D
16
857,633
-
-
0.0%
-
-
Warehouse - Distribution
14
1,516,680
156,000
-
10.3%
12,000
12,000
138
6,522,350
179,986
-
2.8%
-30,523
-133,686
4,372
276,457,687
10,967,666
175,179
4.0%
819,932
3,760,049
Light Industrial Overall
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
8
Vacancy Rates & Asking Rates
Vacancy Rate %
Average Weighted Direct Asking Rate
3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 3Q 2015 4Q 2015 1Q 2016 2Q 2016 3Q 2016 Kenosha
0.7%
2.6%
2.7%
4.9%
2.6%
$4.34
$4.55
$4.56
$4.56
$4.62
Flex/R&D
1.9%
1.6%
3.0%
2.5%
2.5%
$5.31
$6.79
$8.75
$8.75
$6.97
Warehouse - Distribution
0.9%
3.5%
3.2%
3.2%
3.2%
$4.91
$4.59
$4.64
$4.64
$4.64
Light Industrial
0.3%
1.9%
2.1%
7.2%
1.9%
$4.15
$4.42
$4.41
$4.41
$4.47
Milwaukee
5.6%
5.3%
5.3%
4.9%
4.7%
$4.06
$4.10
$4.04
$4.04
$3.89
Flex/R&D
3.6%
4.5%
4.2%
4.5%
4.7%
$4.91
$5.00
$4.78
$4.70
$4.62
Warehouse - Distribution
7.8%
7.2%
7.2%
7.2%
7.2%
$3.71
$3.55
$3.52
$3.51
$3.65
Light Industrial
4.8%
4.5%
4.4%
3.8%
3.4%
$4.28
$4.34
$4.27
$4.39
$3.91
Ozaukee
6.4%
6.4%
6.6%
6.8%
7.0%
$4.66
$4.68
$4.19
$4.23
$4.08
Flex/R&D
14.8%
14.9%
15.1%
16.1%
16.4%
$5.63
$5.63
$4.09
$4.04
$3.80
Warehouse - Distribution
0.6%
0.4%
-
-
-
$2.50
$2.50
-
-
-
Light Industrial
4.7%
4.7%
4.9%
4.9%
5.1%
$4.56
$4.54
$4.61
$4.84
$4.92
Racine
3.3%
3.2%
4.7%
4.3%
6.1%
$4.28
$4.41
$4.47
$4.50
$4.63
10.8%
9.4%
9.0%
9.0%
9.2%
$5.42
$5.42
$5.39
$5.39
$5.38
Warehouse - Distribution
7.0%
7.0%
14.2%
12.8%
19.3%
$3.86
$3.86
$4.28
$4.33
$4.47
Light Industrial
2.0%
2.0%
2.2%
2.1%
2.7%
$3.96
$4.37
$4.69
$4.61
$4.93
Sheboygan
3.5%
2.8%
2.5%
2.5%
2.5%
$3.31
$3.31
$3.25
$3.12
$3.12
Flex/R&D
2.4%
2.4%
2.2%
2.2%
2.2%
$3.22
$3.22
$3.12
$3.12
$3.12
Warehouse - Distribution
1.6%
1.6%
-
-
-
-
-
-
-
-
Light Industrial
4.3%
3.2%
3.2%
3.2%
3.2%
$3.50
$3.50
$3.50
-
-
Walworth
2.3%
2.4%
3.3%
3.3%
3.8%
$3.66
$3.77
$3.85
$3.88
$3.61
-
-
-
-
-
-
-
-
-
-
10.9%
10.9%
10.9%
10.9%
10.3%
$3.62
$3.62
$3.62
$3.69
$3.73
Light Industrial
0.5%
0.7%
2.0%
2.0%
2.8%
$3.94
$4.61
$4.31
$4.30
$3.49
Washington
4.3%
3.9%
3.9%
4.3%
3.9%
$5.58
$5.60
$5.67
$5.66
$5.85
Flex/R&D
5.3%
4.0%
4.1%
4.0%
3.8%
$5.52
$5.55
$5.65
$5.62
$5.83
12.7%
12.5%
12.5%
12.8%
12.8%
$6.47
$6.36
$6.36
$6.36
$6.45
Light Industrial
0.3%
0.4%
0.4%
1.2%
0.5%
$5.40
$5.40
$5.51
$5.51
$5.57
Waukesha
2.6%
3.1%
2.9%
2.4%
2.5%
$4.98
$5.05
$5.08
$5.14
$5.22
Flex/R&D
3.4%
3.0%
3.2%
2.9%
2.4%
$5.80
$6.01
$5.75
$5.72
$5.68
Warehouse - Distribution
2.7%
4.4%
2.9%
2.7%
4.0%
$4.41
$4.52
$4.72
$4.71
$5.00
Light Industrial
2.2%
2.5%
2.7%
2.0%
1.9%
$4.85
$5.10
$4.90
$5.04
$5.09
Overall
3.9%
4.0%
4.1%
4.1%
4.0%
$4.33
$4.42
$4.42
$4.42
$4.38
Flex/R&D
Flex/R&D Warehouse - Distribution
Warehouse - Distribution
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
9
Vacancy Rates & Asking Rates
Vacancy Rate by Submarket 7.0% 6.1% 4.7% 3.8%
2.6%
Kenosha
3.9% 2.5%
2.5%
Milwaukee
Ozaukee
Racine
Sheboygan
Walworth
Washington
Waukesha
Weighted Average Asking Rents by Submarket $5.85 $5.22 $4.63
$4.62 $4.08
$3.89
$3.61 $3.12
Kenosha
$14.00 $12.00
Milwaukee
Ozaukee
Racine
Sheboygan
Walworth
Washington
Waukesha
Asking Rent Range by Type (NNN) $12.00
$10.00
$10.00
$11.00
$8.00
$6.00 $4.00 $2.00
$4.96
$4.14
$2.25
$1.50
$4.34 $2.50
$Flex/R&D
Warehouse - Distribution
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Light Industrial 10
Leasing & Sales Activity
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
11
Leasing & Sales Activity
Largest Absorption Changes Occupied or Vacated (sf)
Property Name
Tenant Name
Specific Use
Market
First Park 94 Bldg A
601,439
Ariens Company
Light Industrial
Kenosha
807-915 W Juneau Ave
175,968
Milwaukee Brewing Company / Self-storage space
Light Industrial
Milwaukee
7300 N 60th St
98,927
Sellars Absorbent Materials
Warehouse Distribution
Milwaukee
Pewaukee Corporate Park South
77,700
Confidential Tenant
Light Industrial
Waukesha
18456 W Fulton Dr
67,200
Westrock
Light Industrial
Washington
2501-2525 W Hampton Ave
66,900
Jonco
Light Industrial
Milwaukee
1924 S Hilbert St
-35,000
Lara Associates
Warehouse Distribution
Milwaukee
6600 Washington St
-61,700
Avalon Rail
Light Industrial
Milwaukee
1221 Grandview Pkwy
-90,184
JRS Distribution Company
Light Industrial
Racine
3201-3257 S 20th St
-92,000
Premier Plastics
1333 Grandview Pkwy
-209,151
Warehouse Distribution Warehouse Distribution
JRS Distribution Company
Milwaukee Racine
Top Transactions Property Name
Sale Price
Sold (sf)
Buyer
11800 W Brown Deer Rd
$19,034,061 360,418
Reyes Holdings Operations
11100 W Cleveland Ave
$7,800,000 109,376
200 W Capitol Dr
$5,820,000 279,636
2485-2487 W Commerce Dr
$3,525,000
2300 S 51st St
$3,200,000 249,753
3720 N 124th St
$2,950,000
43,288 Gabaldon Properties
1111 Cedar Creek Rd
$2,750,000
74,678
W169 N5960 Ridgwood Dr
$2,275,000
35,851 Singleshot, LLC
N92 W14224 Anthony Ave
$2,000,000
63,140
3122 14th Ave
$2,000,000 303,592 Phoenix Investors
73,106
Seller
Coca-Cola Refreshments USA Inc. WI Self Storage Bradbury Properties West Allis LCM Funds 43 BWP Holdings, LLC High Bay LLC Imperial Lithographing First Industrial Company Realty Trust Global Power The Oilgear Company Components
Harry Sperber Family Revocable Trust
P&M Properties of Germantown, LLC
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Market
Specific Use
Milwaukee
Warehouse Distribution
Milwaukee
Light Industrial
Milwaukee
Warehouse Distribution
Waukesha
Light Industrial
Milwaukee
Light Industrial
Lauenstein & Associates Milwaukee
Flex/R&D
CPL Industries, Inc.
Ozaukee
Flex/R&D
JQ Enterprises, LLC
Waukesha
Light Industrial
Dairy Property, LLC
Waukesha
Light Industrial
Fifth Third Bank
Kenosha
Light Industrial 12
New Construction
Current New Construction by Market 2,500,000
2,000,000
1,500,000
1,000,000
500,000
-
Kenosha
Milwaukee
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
Racine
Washington
Waukesha
13
Industrial Advisory Board Members
Milwaukee Metro Industrial Advisory Board The Barry Company
Milwaukee Industrial Research Board
Kevin Barry
Katie Gremban The Boerke Company
The Boerke Company CARW
Jim Babiasz Tracy Johnson
Nick Unger CBRE
Ryan Rasmussen
Trent Poole
Colliers
Tyler Jauquet
Scott Furmanski
Colliers
Margaret Bruckner
CBRE
Colliers
Jim Larkin
JLL
The Dickman Company
Nick Keys
NAI MLG Commercial
JLL
Adam Matson
Paradigm RE
Brian Parrish
RFP Commercial
Nathan Winkel
Tony Haning
NAI MLG Commercial
Phoenix Investors
Kyle Koeller
Patrick Dedering Paul McBride
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
14
Xceligent Milwaukee Team
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy. For more information, please contact :
Josh Parrish
Director of Analytics
(414) 416-7092
[email protected]
Director of Client Services
(949) 306-8767
[email protected]
Brian Reece
Regional VP of Analytics
(919) 829-9627
[email protected]
Greg Hayden
Regional VP of Sales
(816) 303-2822
[email protected]
James Bertolli
2016 Q3 Market Trends © 2016 by Xceligent, Inc. All Rights Reserved
15
