Marcus & Millichap

Milwaukee Office Investment Report

2019 Outlook

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Affordable Office Market Achieves Cycle-Low Vacancy; Regionally High Yields Capture Investor Interest

Corporate relocations reduce vacancy, sparking pre-leasing activity. Home to a third of the metro’s office space inventory, Downtown Milwaukee has witnessed the absorption of 1.5 million square feet over the past five years. Moves by insurance, advisory and tech-related companies partially drove this leasing velocity, reducing local vacancy by more than 200 basis points. Condensed availability has warranted above-average asking rent growth at vacant floor plans downtown, while also encouraging new construction and redevelopment projects. Properties underway are experiencing strong pre-leasing activity, signaling heightened tenant demand for well-located, high-quality space in a metro noted for its affordable asking rents. BMO Harris Bank’s agreement to anchor a 25-story tower slated for 2019 delivery represents a notable recent lease, as does law firm Husch Blackwell’s decision to occupy three floors of a nine-story building on track for finalization next year. The Grand Avenue Mall renovation has secured its first office tenant in engineering firm Graef, signaling demand for repositioned buildings. These leases indicate future corporate growth in the downtown area, which should boost the local economy and the number of traditional office jobs.

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