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2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
INDUSTRIAL MARKET REPORT
Milwaukee
4th Quarter 2016
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
2
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 Rents 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.
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
Inventory The total square feet (sf) of all existing single and multi tenant industrial 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
Asking Rents
The weighted average of all asking rents expressed as a NNN rental rate and weighted on total available
square feet.
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
3
Industrial Market Map
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
4
Industrial Market Map
Milwaukee
Waukesha
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
5
Overview
Milwaukee Industrial Overview
The vacancy rate for the Milwaukee industrial market for 4Q 2016 remained stable at 4.2%, the same figure posted at the start of this year. Given the perceived level of tenant activity in the market, the lack of change in the vacancy rate could signal a shortage of available space in the market.
The overall net absorption for this quarter came in at 127,040 square feet (sf), bringing the total year-to-date net absorption to 4.077 million sf. Over half of the space absorbed this year took place during 1Q 2016, which includes the completion of Uline's 1.1 million sf warehouse in Pleasant Prairie.
The largest net gain for 4Q 2016 came from the completion of Zilber Industrial II, a 179,820 sf industrial building in Menomonee Falls. It was fully leased at the time of completion to a confidential tenant.
At the close of 2016, there is 3,068,800 sf of industrial space under construction in Southeastern Wisconsin, of which 880,000 sf is being built for Uline. The next largest project under construction is First Park 94 - Building B, a 602,348 sf speculative building in Somers.
# of Bldgs Inventory (sf) Total
Available (sf) Total Vacant (sf)
Total Vacancy Rate (%)
Total Quarterly Net Absorption (sf)
YTD Total Net Absorption (sf)
Flex/R&D 1,027 45,492,646 3,301,806 2,102,368 4.6% -31,595 585,954
Warehouse - Distribution
698 72,585,157 6,942,612 4,708,444 6.5% -3,337 1,729,960
Light Industrial 2,648 159,036,418 8,434,417 4,704,102 3.0% 161,972 1,761,123
Overall 4,373 277,114,221 18,678,835 11,514,914 4.2% 127,040 4,077,037
# of Bldgs Inventory (sf) Direct
Available (sf) Direct Vacant (sf)
Direct Vacancy Rate (%)
Direct Quarterly Net Absorption (sf)
YTD Direct Net Absorption (sf)
Flex/R&D 1,027 45,492,646 3,171,190 2,008,889 4.4% -51,595 668,933
Warehouse - Distribution
698 72,585,157 6,851,612 4,708,444 6.5% -3,337 1,729,960
Light Industrial 2,648 159,036,418 8,283,976 4,681,227 2.9% 130,478 1,863,608
Overall 4,373 277,114,221 18,306,778 11,398,560 4.1% 75,546 4,262,501
# of Bldgs Inventory (sf) Available
Sublease (sf) Sublease Vacant (sf)
Sublease Vacancy Rate (%)
Sublease Quarterly Absorption (sf)
YTD Sublease Net Absorption (sf)
Flex/R&D 1,027 45,492,646 130,616 93,479 0.2% 20,000 -82,979
Warehouse - Distribution
698 72,585,157 91,000 - 0.0% - -
Light Industrial 2,648 159,036,418 150,441 22,875 0.0% 31,494 -102,485
Overall 4,373 277,114,221 372,057 116,354 0.0% 51,494 -185,464
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
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Milwaukee Industrial Overview
3.0%
3.5%
4.0%
4.5%
5.0%
(500,000)
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016
Historical Vacancy Rate & Net Absorption
Absorption Vacancy
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016
Historical Vacancy Rates by Use
Flex/R&D Warehouse - Distribution Light Industrial
(200,000)
-
200,000
400,000
600,000
800,000
1,000,000
1,200,000
1,400,000
1,600,000
1,800,000
4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016
Historical Net Absorption by Use
Flex/R&D Warehouse - Distribution Light Industrial
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
7
Statistics by Market
# of Bldgs Inventory (sf) Total Vacant (sf) Sublease Vacant
(sf) Vacancy Rate (%)
Total Quarterly Absorption (sf)
YTD Total Net Absorption (sf)
Milwaukee 1,448 95,021,022 5,023,586 - 5.3% -173,779 570,389
Downtown 179 12,319,608 786,705 - 6.4% 31,000 192,096
Flex/R&D 8 304,465 9,926 - 3.3% - -
Warehouse - Distribution 40 2,873,448 235,900 - 8.2% 36,300 -11,900
Light Industrial 131 9,141,695 540,879 - 5.9% -5,300 203,996
North Central 144 9,702,809 1,296,846 - 13.4% -58,424 179,580
Flex/R&D 16 758,043 62,638 - 8.3% - 7,549
Warehouse - Distribution 28 2,845,700 736,847 - 25.9% -102,093 -111,881
Light Industrial 100 6,099,066 497,361 - 8.2% 43,669 283,912
North Shore 108 8,066,859 279,518 - 3.5% -85,174 29,976
Flex/R&D 18 1,011,216 - - 0.0% - 10,000
Warehouse - Distribution 27 2,577,676 269,474 - 10.5% -85,174 -85,174
Light Industrial 63 4,477,967 10,044 - 0.2% - 105,150
Northwest 333 18,418,780 688,590 - 3.7% -125,176 112,225
Flex/R&D 71 3,033,787 182,996 - 6.0% 7,000 42,941
Warehouse - Distribution 76 6,309,997 208,958 - 3.3% 7,804 163,731
Light Industrial 186 9,074,996 296,636 - 3.3% -139,980 -94,447
South 465 30,048,900 1,033,239 - 3.4% 35,795 97,301
Flex/R&D 109 5,175,140 255,009 - 4.9% 4,708 38,419
Warehouse - Distribution 116 10,377,390 103,800 - 1.0% 42,000 59,472
Light Industrial 240 14,496,370 674,430 - 4.7% -10,913 -590
South Central 158 10,474,682 910,188 - 8.7% 7,000 -95,666
Flex/R&D 17 987,460 46,000 - 4.7% -500 5,694
Warehouse - Distribution 44 2,848,519 666,686 - 23.4% - -102,000
Light Industrial 97 6,638,703 197,502 - 3.0% 7,500 640
West 61 5,989,384 28,500 - 0.5% 21,200 54,877
Flex/R&D 14 848,512 4,486 - 0.5% - -
Warehouse - Distribution 8 1,037,184 - - 0.0% - -
Light Industrial 39 4,103,688 24,014 - 0.6% 21,200 54,877
Waukesha 1,508 71,853,954 1,941,270 44,875 2.7% 144,349 1,520,913
Northeast 497 21,568,719 458,549 11,500 2.1% 168,300 569,627
Flex/R&D 204 8,431,887 265,751 11,500 3.2% -14,580 33,707
Warehouse - Distribution 52 3,934,884 97,820 - 2.5% -24,620 306,662
Light Industrial 241 9,201,948 94,978 - 1.0% 207,500 229,258
Northwest 331 18,693,428 435,011 - 2.3% 106,890 487,383
Flex/R&D 81 2,381,361 53,284 - 2.2% 8,188 57,700
Warehouse - Distribution 62 6,463,411 102,813 - 1.6% 51,500 127,438
Light Industrial 188 9,848,656 278,914 - 2.8% 47,202 302,245
Southeast 317 15,377,694 229,868 10,500 1.5% -110,941 132,277
Flex/R&D 55 2,273,459 142,370 10,500 6.3% -40,423 -3,464
Warehouse - Distribution 37 3,312,070 - - 0.0% - -
Light Industrial 225 9,792,165 87,498 - 0.9% -70,518 135,741
Southwest 363 16,214,113 817,842 22,875 5.0% -19,900 331,626
Flex/R&D 125 3,788,539 42,800 - 1.1% -5,025 218,406
Warehouse - Distribution 47 3,395,044 441,133 - 13.0% 6,000 16,250
Light Industrial 191 9,030,530 333,909 22,875 3.7% -20,875 96,970
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
8
Statistics by Market
# of Bldgs Inventory (sf) Total Vacant (sf) Sublease Vacant
(sf) Vacancy Rate (%)
Total Quarterly Absorption (sf)
YTD Total Net Absorption (sf)
Washington 329 19,733,960 758,321 - 3.8% 28,553 238,856
Washington 329 19,733,960 758,321 - 3.8% 28,553 238,856
Flex/R&D 157 6,759,494 255,609 - 3.8% 22,952 181,402
Warehouse - Distribution 43 3,669,308 461,632 - 12.6% - 56,853
Light Industrial 129 9,305,158 41,080 - 0.4% 5,601 601
Walworth 168 8,896,663 395,986 - 4.5% -52,600 -181,686
Walworth 168 8,896,663 395,986 - 4.5% -52,600 -181,686
Flex/R&D 16 857,633 - - 0.0% - -
Warehouse - Distribution 14 1,516,680 211,700 - 14.0% -55,700 -43,700
Light Industrial 138 6,522,350 184,286 - 2.8% 3,100 -137,986
Racine 385 28,938,001 1,373,675 - 4.7% 232,896 215,331
Racine 385 28,938,001 1,373,675 - 4.7% 232,896 215,331
Flex/R&D 24 1,463,635 134,029 - 9.2% - 58,971
Warehouse - Distribution 31 5,290,735 773,913 - 14.6% 120,646 91,887
Light Industrial 330 22,183,631 465,733 - 2.1% 112,250 64,473
Kenosha 213 26,027,205 668,765 45,479 2.6% 2,700 1,791,583
Kenosha 213 26,027,205 668,765 45,479 2.6% 2,700 1,791,583
Flex/R&D 29 2,195,824 52,686 45,479 2.4% 2,700 -16,456
Warehouse - Distribution 42 12,386,343 397,768 - 3.2% - 1,216,800
Light Industrial 142 11,445,038 218,311 - 1.9% - 591,239
Ozaukee 179 11,896,179 941,047 26,000 7.9% -11,615 -80,407
Ozaukee 179 11,896,179 941,047 26,000 7.9% -11,615 -80,407
Flex/R&D 53 2,565,992 530,984 26,000 20.7% -11,615 -48,915
Warehouse - Distribution 14 1,268,762 - - 0.0% - 5,000
Light Industrial 112 8,061,425 410,063 - 5.1% - -36,492
Sheboygan 143 14,747,237 412,264 - 2.8% -43,464 2,058
Sheboygan 143 14,747,237 412,264 - 2.8% -43,464 2,058
Flex/R&D 30 2,656,199 63,800 - 2.4% -5,000 -
Warehouse - Distribution 17 2,478,006 - - 0.0% - 40,522
Light Industrial 96 9,613,032 348,464 - 3.6% -38,464 -38,464
Overall 4,373 277,114,221 11,514,914 116,354 4.2% 127,040 4,077,037
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
9
Vacancy Rates & Asking Rents
Vacancy Rate % Weighted Average Asking Rent (NNN)
4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016 4Q 2015 1Q 2016 2Q 2016 3Q 2016 4Q 2016
Kenosha 2.6% 2.7% 4.9% 2.6% 2.6% $4.22 $4.25 $4.25 $4.34 $4.34
Flex/R&D 1.6% 3.0% 2.5% 2.5% 2.4% - - - $6.00 $6.00
Warehouse - Distribution 3.5% 3.2% 3.2% 3.2% 3.2% $3.50 - - - -
Light Industrial 1.9% 2.1% 7.2% 1.9% 1.9% $4.25 $4.25 $4.25 $4.25 $4.25
Milwaukee 5.6% 5.5% 5.2% 5.0% 5.3% $3.83 $3.75 $3.74 $3.79 $3.93
Flex/R&D 5.1% 4.9% 4.6% 4.8% 4.6% $4.98 $4.70 $4.70 $4.80 $4.93
Warehouse - Distribution 7.3% 7.3% 7.2% 7.2% 7.7% $3.55 $3.52 $3.52 $3.62 $3.53
Light Industrial 4.8% 4.7% 4.3% 3.8% 4.1% $3.73 $3.65 $3.70 $3.66 $4.05
Ozaukee 7.2% 7.4% 7.6% 7.8% 7.9% $3.99 $4.06 $4.10 $3.92 $3.17
Flex/R&D 18.8% 19.0% 20.0% 20.2% 20.7% $3.98 $4.00 $3.95 $3.68 $2.80
Warehouse - Distribution 0.4% - - - - $2.50 - - - -
Light Industrial 4.6% 4.8% 4.8% 5.1% 5.1% $4.15 $4.36 $4.68 $4.78 $4.79
Racine 3.2% 4.3% 3.9% 5.2% 4.7% $4.03 $4.38 $4.41 $4.59 $4.31
Flex/R&D 9.4% 9.0% 9.0% 9.2% 9.2% $6.67 $6.67 $6.45 $6.41 $5.30
Warehouse - Distribution 7.0% 14.2% 12.8% 16.9% 14.6% $3.86 $4.28 $4.33 $4.45 $4.49
Light Industrial 2.0% 1.6% 1.5% 2.2% 2.1% $4.23 $4.69 $4.61 $4.93 $3.87
Sheboygan 2.8% 2.5% 2.5% 2.5% 2.8% $3.80 $3.64 $4.50 $4.50 $5.95
Flex/R&D 2.4% 2.2% 2.2% 2.2% 2.4% $5.50 $4.50 $4.50 $4.50 $5.95
Warehouse - Distribution 1.6% - - - - - - - - -
Light Industrial 3.2% 3.2% 3.2% 3.2% 3.6% $3.50 $3.50 - - -
Walworth 2.4% 3.3% 3.5% 3.9% 4.5% $3.77 $3.85 $3.88 $3.61 $3.66
Flex/R&D - - - - - - - - - -
Warehouse - Distribution 10.9% 10.9% 10.9% 10.3% 14.0% $3.62 $3.62 $3.69 $3.73 $3.73
Light Industrial 0.7% 2.0% 2.3% 2.9% 2.8% $4.61 $4.31 $4.30 $3.49 $3.57
Washington 3.9% 3.9% 4.3% 3.9% 3.8% $5.60 $5.67 $5.41 $5.83 $5.84
Flex/R&D 3.9% 4.0% 4.0% 3.9% 3.8% $5.55 $5.65 $5.12 $5.77 $5.70
Warehouse - Distribution 12.5% 12.3% 12.6% 12.6% 12.6% $6.36 $6.36 $6.36 $6.45 $6.36
Light Industrial 0.4% 0.4% 1.2% 0.5% 0.4% $5.40 $5.51 $5.51 $5.57 $5.91
Waukesha 3.1% 2.9% 2.5% 2.7% 2.7% $4.74 $4.97 $5.07 $5.23 $5.25
Flex/R&D 3.0% 3.2% 3.0% 2.7% 3.0% $5.49 $5.60 $5.62 $5.61 $5.72
Warehouse - Distribution 4.4% 3.0% 2.7% 4.1% 3.8% $4.52 $4.72 $4.71 $5.00 $4.85
Light Industrial 2.5% 2.8% 2.2% 2.0% 2.1% $4.58 $4.77 $4.95 $5.15 $5.19
Overall 4.1% 4.2% 4.2% 4.1% 4.2% $4.17 $4.22 $4.23 $4.29 $4.30
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
10
Vacancy Rates & Asking Rents
2.6%
5.3%
7.9%
4.7%
2.8%
4.5%3.8%
2.7%
Kenosha Milwaukee Ozaukee Racine Sheboygan Walworth Washington Waukesha
Vacancy Rate by Market
$2.25 $1.50
$2.50
$11.50
$10.00 $11.00
$4.92 $3.96 $4.31
$-
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
Flex/R&D Warehouse - Distribution Light Industrial
Asking Rent Range by Type (NNN)
$4.34 $3.93
$3.17
$4.31
$5.95
$3.66
$5.84
$5.25
Kenosha Milwaukee Ozaukee Racine Sheboygan Walworth Washington Waukesha
Weighted Average Asking Rents by Market (NNN)
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
11
Leasing & Sales Activity
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
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Leasing & Sales Activity
Largest Absorption Changes
Property Name Occupied or Vacated (sf) Tenant Name Specific Use Market
Zilber Industrial II 179,820 Confidential Tenant (new construction)
Light Industrial Waukesha
7515 N 81st St 114,844 Buske Lines Warehouse - Distribution Milwaukee
1860S Renaissance Blvd 99,100 Leman USA Expansion Light Industrial Racine
Enterprise Business Park Bldg II
83,146 Andis Co. Warehouse - Distribution Racine
7624 S 10th St 50,240 AIM Distribution Light Industrial Milwaukee
1849 Hobbs Dr -55,700 Stock Building Supply Warehouse - Distribution Walworth
6525 W Burnham St -61,153 Bentley Packaging Light Industrial Milwaukee
1700 W Cornell St -77,940 Dabo Properties, LLC Warehouse - Distribution Milwaukee
6600 N Industrial Rd -110,400 Buske Logistics Warehouse - Distribution Milwaukee
7701 W Calumet Rd -138,480 Sam's Club Light Industrial Milwaukee
Top Transactions
Property Name Sale Price Sold (sf) Buyer Seller Market Specific Use
8100 60th St $56,359,134 731,186 Associated Wholesale Grocers Inc
Affiliated Foods Midwest Cooperative Inc.
Kenosha Warehouse - Distribution
Liberty Point $9,000,000 123,332 Bear Realty LSOP WI LLS Milwaukee Flex/R&D
500 W North Shore Dr $7,400,000 131,172 Stag Industrial Inc. VEREIT Inc. Waukesha Warehouse - Distribution
9625 55th St $6,000,000 174,350 Stag Industrial Inc. VEREIT Inc. Kenosha Light Industrial
8901 102nd St $5,280,000 105,637 The Opus Group ML Realty Partners Kenosha Warehouse - Distribution
2220-2240 S 162nd St $3,000,000 76,494 Central Asset Management Gleischman Sumner Company Inc. Waukesha Light Industrial
420 S 1st St $1,825,000 42,300 Gabaldon Properties Richard Chudnow Milwaukee Warehouse - Distribution
5070 W State St $1,710,000 71,959 Robert S Cowen Vilma Enriquez Milwaukee Light Industrial
4160 S 13th St $1,630,000 54,358 Midwest Stairs & Iron Inc. The Fall River Group Inc. Milwaukee Light Industrial
1235 Dakota Dr $1,475,000 41,715 Alan Luther Robert J Bach Ozaukee Flex/R&D
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
13
New Construction
2,107,208
215,690 258,902
94,000
393,000
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
Kenosha Milwaukee Racine Washington Waukesha
Current Construction by Market
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
14
Industrial Advisory Board Members
Milwaukee Industrial Research
The Barry Company Kevin Barry
The Boerke Company
Katie Gremban
The Boerke Company Nick Unger Gard Pecor
CBRE
Trent Poole
CBRE
Christian Hunter
Scott Furmanski Ryan Rasmussen
Colliers Jim Larkin Colliers Margaret Bruckner
The Dickman Company
Nick Keys JLL Kyle Koeller
Zach Hansen NAI MLG Commercial Nathan Winkel
JLL Tony Haning
NAI MLG Commercial Adam Matson
Paradigm RE Brian Parrish
Phoenix Investors Patrick Dedering
RFP Commercial Paul McBride
2016 Q4 Market Trends © 2017 by Xceligent, Inc. All Rights Reserved
15
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]
James Bertolli Sales Executive (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]
Xceligent Milwaukee Team