HEARTLAND SNAPSHOT, JULY 2006

Milwaukee Industrial Market

The Milwaukee industrial market is performing well, but has experienced a slight decrease in the velocity of deals recently. “Milwaukee has historically seen an equilibrium between available space and demand,” say Samuel D. Dickman, president, and Samuel M. Dickman Jr., vice president, of The Dickman Company, Inc./CORFAC International. “The vacancy rate is holding steady.”

Current vacancy rates in the metro area range between 8 and 10 percent depending upon the submarket. The range for rental rates depends upon the type of property — for newer buildings, the range is $4.25 to $4.75 per square foot triple-net and for older buildings, it ranges from $2 to $3.50 per square foot triple-net.

Small to medium-sized manufacturing and distribution companies comprise the majority of the Milwaukee market’s industrial tenants. “We see larger tenants becoming increasingly important, but they are very price sensitive,” say Dickman and Dickman Jr. “Milwaukee has long been known as a manufacturing center. Wisconsin has the second highest percentage of jobs in manufacturing of any state. While a lot of the older companies have ceased to exist, many companies are thriving and expanding.” Milwaukee is a major hub for both the printing and the machine tool industry. Companies that have grown and learned to compete on a worldwide basis are doing very well.

The majority of industrial development is taking place west of the city in Waukesha County and south near General Mitchell International Airport. Developers and tenants are moving into these markets because of the availability of land, as well as the submarkets’ proximity to decision makers and excellent transportation.

Pabst Farms, a 1,500-acre mixed-use project in Oconomowoc, Wisconsin, will eventually include more than 5 million square feet of industrial, office and healthcare space. The community’s industrial component is anchored by a new Roundy’s Supermarket Distribution Center that totals approximately 1.1 million square feet. In addition, there is a 100-acre tract of land currently being marketed for smaller industrial users. Pabst Farms is in the path of the expanding metropolitan area.

In Menomonee Valley, the former CMC Railroad Yards in the heart of Milwaukee has been redeveloped by the city and is attracting industrial users. The primary motivation by the city was to encourage job-creating industry to locate in this development.

An industrial complex in the center city that is owned by Tower Automotive is filling up. The 148-acre site was once home to A. O. Smith Corp. Recently, the City of Milwaukee Department of Public Works occupied a new 230,000-square-foot maintenance facility along with the Milwaukee Water Works.  Other buildings have been re-tenanted and approximately 2.2 million square feet of existing industrial space is expected to be sold shortly and will be available for manufacturers seeking low-priced space.

There are several submarkets in the Milwaukee metro area that are positioned for industrial growth in the near future. The submarket/corridor that the Dickman’s feel will attract the most attention is Waukesha County along Interstate 94 between Milwaukee and Madison. The increase in residential and retail development has spawned a self-contained community and many residents live, work and play in Waukesha County without visiting Milwaukee. Industrial and other commercial ventures are sure to follow the growing population. 

Another submarket that should be considered is downtown Milwaukee. Because of the proliferation of new condominium developments and the conversion of existing properties, those ascribing to the live/work/play philosophy and looking to attract these people will, at some point, consider in-city locations for their facilities.

The last area is that around the airport. It has experienced tremendous passenger volume growth in the last several years, and new speculative buildings are being planned within a few miles of the airport.

— Samuel D. Dickman is president and Samuel M. Dickman Jr. is vice president of The Dickman Company, Inc. in Milwaukee.



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