HEARTLAND SNAPSHOT, JULY 2008

Milwaukee Office Market

Currently, suburban Milwaukee’s office market is holding on a steady course. Vacancy rates are in a good range, and absorption has remained positive, due to fewer new office buildings in the pipeline. In a region of the country not known for peaks and valleys in the commercial real estate market, Milwaukee remains a model of moderation.

The movement toward environmental sustainability has swept across the United States, and suburban Milwaukee is no exception. Locally based Irgens Development Partners has constructed Mayfair Woods, one of the first LEED-certified multi-tenant office developments in Milwaukee. Located inside the 175-acre Milwaukee County Research Park, Mayfair Woods features 163,350 square feet of Class A office space in a natural setting. The green features of the property extend further than the building doors; the property itself features 10.8 acres of wooded land that include walking paths and ponds. Thanks largely to its reasonable land prices, Milwaukee County Research Park has greatly expanded over the past 10 to 15 years, making the area around Mayfair Woods a popular destination for office users.

“Its location at the interchange of Interstate 94 and U.S. Highway 45 makes it a very convenient and desirable location,” says Tim Brunow, a senior vice president with Milwaukee-based NAI MLG Commercial. “It is important that Milwaukee gets more actively involved in green building, and I hope that this is a focus of additional Milwaukee developments in the future.”

Farther west in Brookfield, Wisconsin, plans are finally being drawn up for a mixed-use development on the Ruby Farms property after a lengthy fight with local citizens seeking to preserve the historic property. Initial plans for the Ruby Farms property call for 500,000 square feet of Class A office space, along with a health club, retail, senior housing and residential components.

The tract of land contains prominent I-94 frontage, giving it high visibility from the heavily traveled corridor. The availability of such a large development site has made this submarket the place to watch for the next 12 months.

“Land is fairly scarce in Brookfield — not only is it scarce, but it’s expensive. What this project will do is provide the opportunity for a corporate user to develop Class A office space within the city limits, and in a good location,” Brunow says.

These marquee projects are adding to the overall positive outlook those in the industry have of suburban Milwaukee’s office market.

“It feels like there is good velocity in the market right now,” Brunow notes. “I see large blocks of space coming off the market and, because no new space is being added, that should mean positive absorption, specifically in the Brookfield, Pewaukee and south suburban Milwaukee office markets.”

And the future looks even brighter for the market. Talks have been underway for quite some time about a light rail linking Milwaukee to Chicago, and the ball seems to be rolling to make it a reality.

“All of a sudden, that makes Milwaukee a very viable alternative to northern Chicago,” Brunow says.

The trip would be much shorter than most would think — Milwaukee is located only 30 minutes from the Illinois state line. Also, with vast tracts of undeveloped land in the Kenosha and Racine, Wisconsin, markets, a light rail would make these suburbs very attractive places to develop. Milwaukee’s office market may seem like a work-in-progress at the moment, but the city is making great strides to become one of the Midwest’s top-tier cities for office users.

“With the redevelopment in downtown Milwaukee, the strength of the suburban office market and the continued dedication to quality development, Milwaukee is continuing to make a name for itself,” Brunow says.

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