2011 mid year industrial market report
DESCRIPTION
The Dickman Company has released its Mid Year industrial report for the Southeastern Wisconsin real estate market.TRANSCRIPT
626 E. Wisconsin Avenue, Suite 1020Milwaukee, Wisconsin 53202
Phone: (414) 271-6100 Fax: (414) 271-5125
Mid-Year Statistics & Market ReportPublished July 2011
Southeastern Wisconsin2011 Industrial Market Report
Southeastern Wisconsin2011 Industrial Market Report
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verifi ed it and make no guarantee, warranty or representation about it.
626 E. Wisconsin Ave, Suite 1020Milwaukee, Wisconsin 53202Phone: (414) 271-6100Fax: (414) 271-5125www.dickmanrealestate.com
TABLE OF CONTENTS
I. 2011 Quarterly Vacancy Rates......…………………………………………....…...................… Page 2 Includes: Current Inventory, Q4 2010 vs. Q1 & Q2 2011 Vacancy Rates & YTD Absorption
II. 2011 Quarter 1 & Quarter 2 Recap..............................………………………………………… Page 3
III. 2011 Mid-Year Report..........……………………………………………………………………… Page 4 Includes: 2010 vs. 2011 Vacancy by County Comparison, Quarterly Absorption vs. Vacancy, & Quarterly Vacancy vs. Asking Lease Rates
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Southeastern Wisconsin2011 Industrial Market Report
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verifi ed it and make no guarantee, warranty or representation about it.
626 E. Wisconsin Ave, Suite 1020Milwaukee, Wisconsin 53202Phone: (414) 271-6100Fax: (414) 271-5125www.dickmanrealestate.com
County/Submarket Inventory (SF)
Total Vacant
(SF)
VacancyQ4 2010
(%)
Vacancy Q1 2011
(%)
Vacancy Q2 2011
(%)
YTD Net Absorption
(SF)*Milwaukee Downtown 12,285,559 1,678,534 13.6% 13.6% 13.7% -7,744
North Central 10,201,399 1,118,968 12.4% 12.4% 11.0% 59,474North Shore 7,295,515 868,112 14.4% 11.1% 11.9% 146,957Northwest 18,999,833 1,603,937 10.1% 8.6% 8.4% 323,461South 23,658,347 2,261,360 11.1% 9.5% 9.6% 371,288South Central 10,420,345 1,176,165 12.4% 12.4% 11.3% -2,100
West 13,183,597 1,437,291 11.5% 11.4% 10.9% 80,734Milwaukee Total 96,044,595 10,144,367 11.8% 10.9% 10.6% 972,070Waukesha Northeast 21,074,909 1,086,859 5.7% 5.4% 5.2% 245,022
Northwest 17,902,237 922,058 7.1% 5.8% 5.2% 380,516Southeast 15,017,701 793,567 5.8% 5.7% 5.3% 88,008Southwest 15,207,231 719,021 4.4% 5.0% 4.7% -85,620
Waukesha Total 69,202,078 3,521,505 5.8% 5.5% 5.1% 627,926Kenosha 20,959,862 2,076,237 10.2% 10.5% 9.9% 58,837Ozaukee 12,811,490 1,808,501 13.5% 14.2% 14.1% -81,923Racine 28,038,946 1,073,523 5.2% 3.8% 3.8% 372,578Sheboygan 12,760,606 828,314 4.1% 6.5% 6.5% -303,500Walworth 8,754,887 587,753 7.3% 6.7% 6.7% 51,750Washington 19,334,894 1,079,857 5.1% 5.6% 5.6% -41,193Grand Total 267,907,358 21,120,057 8.5% 8.1% 7.9% 1,656,545
Data Source: Xceligent
TerminologyInventory - The total square feet of all single and multi-tenant industrial properties above 10,000 square feet.
Vacant SF - Space that is available and not currently occupied.
Vacancy Rate - Percentage of space in the market that is not currently occupied (Vacant square feet divided by inventory).
Absorption - The amount of rentable space which is fi lled. Net absorption is equal ot the amount occupied at the end of the period minus the amount occupied at the beginning of the period, taking into consideration space vacated during the period.
* YTD Net Absorption (SF) is the net change in absorption between Q4 2010 and Q2 2011.
2011 Quarterly Vacancy Rates and Absorption
Page 2
2011 Quarter 1-Quarter 2 Recap
Despite the uncertainty resulting from global and national economic and political events, we have noted that the Southeastern Wisconsin industrial real estate market continues to be a juggernaut of strength and activity with positive absorption and declining vacancy throughout the region in 2011.
The Southeastern counties as a whole have experienced positive net absorption of 1,656,545 square feet since January 1, 2011. As a result of this increased absorption, Southeastern Wisconsin’s vacancy rate has dropped from 8.5% (Q4 ‘10) to 7.9% (Q2 ‘11). Many of the eight counties in our market area experienced a positive trend in vacancy rates. For Racine County, the vacancy rate dropped from 5.2% (Q4 ‘10) to 3.8% (Q2 ‘11), with 372,578 Sq. Ft. of positive absorption. This positive net change canbe largely attributed to the recent purchase of a Park 94 building by the Seda International
Packaging Group, as well as recent leases to Allstate Trucking Inc and Maysteel LLC. With that said, Sheboygan County has experienced negative net absorption of 303,500 Sq. Ft. since January 1, 2011. Demand continues to grow in the Racine and Kenosha submarkets where vacancies have fallen to their lowest levels in 12 months, 3.8% and 9.9% respectively. Milwaukee had the highest absorption rate with 972,070 Sq. Ft. and Waukesha was not far behind with 627,926 Sq. Ft.
We have noted a recent increase in supply of product near the airport and the southeast submarket including Milwaukee, Cudahy, Oak Creek, and Franklin. Lease rates will continue to be depressed as a result of this increased supply, allowing the submarket to be more competitive with areas such as Racine and Kenosha, where affordable space has depleted in recent months.
Southeastern Wisconsin2011 Industrial Market Report
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verifi ed it and make no guarantee, warranty or representation about it.
626 E. Wisconsin Ave, Suite 1020Milwaukee, Wisconsin 53202Phone: (414) 271-6100Fax: (414) 271-5125www.dickmanrealestate.com
2011 UpdateCompared to Q4 2010:
Vacancy
DOWN
Net Absorption
POSITIVE
Lease Rates
DOWN
Transactions
UP
Page 3
0
0.02
0.04
0.06
0.08
0.1
0.12
0.14
0.16
Vaca
ncy
Rate
2010 vs. 2011 County by County Comparison
2010 Q4
2011 Q1
2011 Q2
2011 Mid-Year Report
With leasing activity on the rise late into the second quarter, we expect this trend to carry over into the third and fourth quarters of this year. However, low rate lease deals will require landlords to offer minimal concessions to tenants for the foreseeable future. This is seen on a case by case basis through less aggressive tenant improvement packages and free rent. With the exception of Washington, Sheboygan and Ozaukee Counties, the other counties have experienced either constant or declining vacancy rates since the end of 2010. These are indicators of a stabilized industrial real estate market.
Zilber Property Group announced July 2011 their most recent industrial speculative building at LakeView Corporate Park in Pleasant Prairie. The 60,256 Sq. Ft. single or multi-tenant facility is expected to be completed by the end of this year. HSA Commercial Inc. recently signed a 63,838 Sq. Ft. lease at its park in Mount Pleasant, creating the potential for a new building to satisfy demand in the park later this year or next. With speculative development such as this and industrial users taking advantage of attractive pricing in the marketplace, it is evident that the market is continuing to improve and head in a more prosperous direction.
Southeastern Wisconsin2011 Industrial Market Report
This information has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verifi ed it and make no guarantee, warranty or representation about it.
626 E. Wisconsin Ave, Suite 1020Milwaukee, Wisconsin 53202Phone: (414) 271-6100Fax: (414) 271-5125www.dickmanrealestate.com
The data demonstrates a generally positive trend of declining vacancy in 2011 with positive absorption in the past fi ve quarters since Q2 2010.
The data demonstrates how vacancy rates have steadily declined since Q2 2010 while asking lease rates have held relatively steady. Despite stabilized asking rates, aggressive landlord incentives such as free rent, lower base rent, and higher build-out allowances continued in 2010 and into 2011.
Page 4
2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2
Direct Vacancy Rate 9.2% 9.0% 8.5% 8.1% 7.9%
Direct Average Asking Lease Rate $3.54 $3.52 $3.71 $3.46 $3.50
$3.00
$3.50
$4.00
$4.50
7.0%
8.0%
9.0%
10.0%
Quarterly Vacancy vs. Asking Lease Rates
Direct Vacancy Rate
Direct Average Asking Lease Rate
2010 Q2 2010 Q3 2010 Q4 2011 Q1 2011 Q2
Absorption (SF) 1,147,655.00 472,669.00 1,405,093.00 1,210,492.00 471,330.00 Vacancy Rate (%) 9.2% 9.0% 8.5% 8.1% 7.9%
7.2%
7.4%
7.6%
7.8%
8.0%
8.2%
8.4%
8.6%
8.8%
9.0%
9.2%
9.4%
-
200,000.00
400,000.00
600,000.00
800,000.00
1,000,000.00
1,200,000.00
1,400,000.00
1,600,000.00
Vaca
ncy
Rate
(%)
Abso
rptio
n (S
F)
Quarterly Absorption vs. Vacancy Rate
Absorption (SF)
Vacancy Rate (%)
626 E. Wisconsin Avenue, Suite 1020Milwaukee, Wisconsin 53202
Phone: (414) 271-6100 Fax: (414) 271-5125