HEARTLAND SNAPSHOT, JUNE 2009

Green Bay/Appleton, Wisconsin, Office Market

Perhaps reflecting the typical Midwest conservatism that defines the area, the office market in Green Bay and Appleton, Wisconsin, has not fluctuated much since the end of last year. That is not necessarily a good thing, though, as the market has maintained little activity.

“In the last 6 months, there really hasn’t been much of a change, because most people are waiting for the other shoe to drop,” says Mark Denis, a commercial real estate advisor with Grubb & Ellis|Pfefferle.

Those who are active in the market mostly consist of small owner/users looking for buildings in the 5,000- to 10,000-square-foot range. This is not that different from the norm, since Green Bay/Appleton is too small of a market to attract the large institutional investors that are active in neighboring Milwaukee, Minneapolis and Chicago. Those larger deals that have taken place — including a couple of relocations in the 30,000-square-foot range — were finalized long before the market turned.

One of the larger relocations to take place recently is Time-Warner’s consolidation of several of its facilities in Appleton. The company moved into an approximately $20 million, Class A building that totals approximately 65,000 square feet. It vacated an older flex building, upgrading its presence in the market in the process. Another relocation was Bay Valley’s leasing of an approximately 40,000-square-foot facility in Green Bay that had formerly been occupied by APAC.

“We’re starting to see a little bit — and I just want to say ‘a little bit’ — of optimism now with people, compared to 6 months ago,” says Tom Fisk, also a commercial real estate advisor with Grubb & Ellis|Pfefferle. He adds, for example, that owner/users are calling about properties and telling him that they do not want to occupy an entire property he may have for sale, but if he can find someone to take the rest of it, then the company will purchase it.

Denis also sees this abundance of caution in the market, but mixed with opportunism. He says that there is money out there, but many buyers are waiting for prices to drop even further. “Unless people can steal something, they don’t want to buy it,” Denis says, adding that what would have been considered a tremendous deal 1 or 2 years ago is not even looked at today, because the belief remains that the price can go even lower. Other buyers are waiting for lender-owned properties to come to market following a foreclosure.

On the development side, some activity remains in the market, just not at the pace seen in recent years. Thetacare is building an approximately 100,000-square-foot facility on the north side of Green Bay — a project that is expected to cost between $60 million and $70 million. Healthcare provider Bellin recently broke ground on a 72,000-square-foot college of nursing on its hospital campus, which is expected to be complete by September. In downtown Green Bay, the city’s waterfront mixed-use project that is currently under way will have an office component included in the development. 

Even with a slow market and the continued woes of the area’s ever-present paper industry, things are not as bad for Green Bay and Appleton as in other markets. The market did not experience the volatility of coastal markets, but its eventual recovery is still expected to take some time. Denis believes that this upcoming year will see more downsizing and consolidations, as well as a market restructuring cause by lower prices. Fisk also sees properties coming up for sale at bargain prices, but not an overall large shift in the market.

“If one were to take a snapshot and interview people from the area, you would see that a lot of things that got the rest of the country into trouble didn’t happen here,” Denis says.

— Coleman Wood

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