HEARTLAND SNAPSHOT, JULY 2005

MILWAUKEE INDUSTRIAL MARKET

Older industrial properties are getting converted away from industrial uses in Milwaukee, according to Bill Sinsky, vice president of industrial properties for Siegel-Gallagher. “There has been very little speculative building,” he says. “Demand has been stagnant for more than 3 years.”

However, there is limited development currently going on throughout the Milwaukee area. One significant industrial development is Opus North Corporation’s Oakwood Crossings Business Center I, at nearly 140,000 square feet. “The Class A speculative building in Oak Creek is expected to fair well due to its proximity to the Mitchell Field International Airport and Interstate 94,” Sinsky says. The completion date for this project is set for October. In the northwest, Richfield, Wis.-based Helsan Development also is extending the 100-acre Endeavor Park with the purchase of an additional 40 acres to add a 55,000-square-foot office and distribution facility for Wurth Adams Nut & Bolt Co. Construction for this project is scheduled to begin this fall.

The majority of industrial development is taking place in the west and the southeast areas of Milwaukee due to new space becoming available from the rezoning and development of former farmland, according to Sinsky. In Oconomowoc, the 1,500-acre Pabst Farms is being developed for residential, commercial and industrial uses. In Pewaukee, the area northwest of Highway J and Interstate 94 continues to be developed with three mixed-use office and industrial parks, Ridgeview Corporate Park (130 acres), Riverwood Corporate Center (140 acres), and Stone Ridge Industrial/Business Park (60 acres). Likewise, in the southeast, the new 38-acre Oak Creek Commerce and Business Center and relatively new 124-acre Franklin Business Park continue to expand. “Growth in other Milwaukee areas is less pronounced due to higher land prices and the fact that the parcels available for industrial development are markedly smaller,” Sinsky says.

Industrial properties in Milwaukee are not focusing on attracting any one type of tenant, instead they are looking for anything they can get, according to Sinsky. “Manufacturing has been in decline for years,” he says. “However, distribution has shown a slight growth trend.”

Several major leases have closed recently in the Milwaukee market, including a 97,200-square-foot lease for Almo Distributing Wisconsin at 4200 North Port Washington Road in Glendale and an 83,424-square-foot lease for Joshen Papers and Packaging Co. at 8133 North Granville Woods Road in the Northeast. “Milwaukee’s rental rates can go as low as $2 per-square-foot for lower quality space,” Sinsky says. “On the higher end, we are seeing between $4 to $5. And, although occupancy hasn’t changed, vacancy is decreasing slightly due to the removal of older product on the market.”

People should keep an eye on the continued redevelopment of the West Allis and West Milwaukee corridor in the near future, according to Sinsky. “We may also see future growth in the Racine or Kenosha markets where a substantial inventory of land with proximity to I-94 still remains,” he says. “Expansion may be aided by the vast Chicago market that continues to grow to the north of the O’Hare Airport. As the Chicago influence drives up prices in these areas, older Racine County companies may look to southeast Milwaukee for industrial space.”

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