Q4 2022 Office Space Report: Milwaukee, WI
Specializes in providing actionable insights into the commercial real estate space for investors, brokers, lessors, and lessees. He covers quarterly market data reports, investment strategies, how-to guides, and top-down perspectives on market movements.
Known as the "City of Festivals," Milwaukee is celebrated for its vibrant culture, friendly people, and award-winning breweries, eateries, and iconic landmarks. In addition, the city is home to several major businesses such as Harley-Davidson, MillerCoors, and Northwestern Mutual.
Unemployment in Milwaukee decreased by 1.2% quarter-over-quarter to 2.4% in Q4 2022.
Its metro population increased by 0.35% from 2021 to 2022. In Q4 2022, Milwaukee office space saw negative absorption, increased vacancy, and no new supply.
General Area Overview & Demographics
Milwaukee is the largest city in the state of Wisconsin, United States. Its estimated population is 587,721. The city has a racial makeup of 38.8% White, 38.0% Black or African American, 4.8% Asian, 0.9% Native American, and 0.1% Pacific Islander. The remaining 17.3% of the population identifies as belonging to other races or as multiracial.
Milwaukee, WI Median Household Income & Population
According to the U.S. Census Bureau, the median household income in Milwaukee is $43,725, lower than the national median household income of $57,652. Around 25.5% of Milwaukee residents lived in poverty, compared to the national poverty rate of 10.5%.
The city has a relatively young population, with a median age of 31.6 years. The gender ratio in Milwaukee is nearly even, with females comprising 51.2% of the people and males comprising 48.8%.
It’s home to several higher education institutions, including the University of Wisconsin-Milwaukee, the second-largest university in the state. Other colleges and universities in the city include Marquette University, Milwaukee Area Technical College, and Cardinal Stritch University.
One of the most popular attractions in the city is the Milwaukee Art Museum, which features a collection of over 30,000 works of art from around the world. The Harley-Davidson Museum is another popular destination, showcasing the history of the iconic American motorcycle brand.
Winters in Milwaukee are cold, with average temperatures ranging from the mid-20s to the low 30s F, and the city receives an average of around 47 inches of snow per year. Summers in Milwaukee are warm and humid, with average temperatures ranging from the mid-60s to mid-80s F.
Summary of Milwaukee Office Space Performance in Q4 2022
Overall vacancy for Milwaukee’s office space was 16.3% in Q4, an increase from Q3’s 15.7%.
The West submarket had the highest vacancy rate at 19.6%, with Downtown having the second highest at 16.5%.
Milkwaukee’s South submarket had the lowest vacancy at 6.3%, the only submarket with a rate below 10%.
Class B properties had the most overall vacancy at 17.7% compared to Class A (15.9%) and Class C (6.6%).
Absorption was negative in Q4, totaling -304,000 square feet, bringing the annual amount to -642,000.
The West and Central submarkets were lowest at -131,000 and -125,000, respectively. North was the only submarket to post a positive absorption of 5,600 in Q4 2022.
What are office space rents like in Milwaukee?
Rents for Milwaukee office space decreased quarter-over-quarter from $20.90 per square foot to $20.81 in Q4 2022.
CBD rents averaged $23.03, higher than the Suburban submarket’s $18.59.
Purchase & Leasing Activity
Sales volume for Milwaukee office space totaled $58.7 million in Q4 2022, a decrease from Q3’s $97.9 million.
The average sale price for each property was about $1.5 million.
In Q4, leasing activity reached 418,000 square feet across 111 leases. Over 80% of that took place in suburban submarkets.
Q4’s activity brought 2022’s leasing total to 1.6 million.
Notable Office Space Deals in Milwaukee in Q4 2022
There were several notable deals that took place for Milwaukee’s office space in Q4 2022:
- Water Accelerator purchased 86,000 square feet for $11.9 million.
- Bartels Management Services purchased 25,000 square feet for $1.9 million.
- Cornerstone Consulting leased 20,400 square feet.
- Confidential leased 18,300 square feet.
These are select examples among other activity.
New Office Space Development Activity in Milwaukee in Q4 2022
Milwaukee’s office space market had no new deliveries or activity in Q4 2022.
600,300 square feet of space remained in the pipeline from Q3, with CBD’s submarket accounting for 530,000.
All product under construction is for Class A office space.
Market Forecast for Milwaukee’s Office Space Market
Amidst economic challenges, office space tenants are rethinking how much office space they actually need, increasing sublet and direct space availability as they optimize their footprint.
This could lead to further increases in vacancy and declining rents.
Tenants are seeking to adjust their space usage to better align with their needs.
Additionally, there is local initiative to convert office space into multifamily property.
Takeaways for Office Space Investors
Investors considering Milwaukee’s office space market should focus on Class A spaces in suburban submarkets.
Tenants prefer quality spaces, and office spaces in suburban areas currently have higher occupancy than builds in Milwaukee’s CBD.
Stay diligent, do your research, and happy investing.
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