A tough second quarter. That’s what JLL says that the Milwaukee office market experienced this year.
And the numbers back that up. JLL reported that the Milwaukee office market saw nearly 460,000 square feet of negative absorption during the second quarter.
The good news? Most of this negative absorption was concentrated in two large givebacks: GE Healthcare vacated nearly 400,000 square feet at 9900 W. Innovation Drive in Wauwatosa and ABB vacated nearly 90,000 square feet at 1425 Discovery Parkway, also in Wauwatosa.
These two large moves pushed the office vacancy rate in the Wauwatosa/Mayfair submarket above 35% in the second quarter, nearly 20 points higher than where this figure stood in the first quarter of the year. And, as JLL says in its report, given the size of each space, it will take several years to backfill these properties, especially considering that this submarket had just under 100,000 square feet of positive absorption in 2022 and 2023 combined.
Overall? The Milwaukee-area office market had a vacancy rate of 23.5% in the second quarter. JLL, though, says that outside of the Mayfair/Wauwatosa submarket, the rest of the Milwaukee office market remains relatively stable, especially within the Milwaukee CBD.
Year-to-date absorption stands at more than 120,000 square feet for the CBD. This positive absorption is led by Veolia taking space in the ASQ Center, soon to be renamed the Enerpac Center. Veolia will occupy more than 55,000 square feet by the end of the year.
The ASG Center is an office success story, with JLL reporting that it was nearly 91% occupied in the second quarter. More than 85,000 square feet of leasing activity has occurred here during the last 12 months.
What about the future? JLL’s Milwaukee-area team is largely optimistic, predicting that the demand for Class-A office space in the market will remain steady as tenants prioritize leasing space in high-quality facilities.
In response to this demand, owners will face pressure to invest in their office buildings and add desirable amenities if they want to attract tenants. These amenities will likely include flexible workspaces, collaboration areas, wellness facilities, sustainable design elements and enhanced security measures, JLL said.
