After months of trying to settle workplace policies following COVID-19, many companies are on the hunt for space again, giving a much needed boost to the region’s office market, based on Cushman & Wakefield’s Q4 2022 Milwaukee Office Report.
Home to six Fortune 500 companies, Metro Milwaukee is known for its strong manufacturing and financial services industries, while its growing water technology and energy industries position the city as a regional hub of innovation.
This, and the growing need for employees, drove many companies to relocate to the CBD in Q42022 resulting in positive absorption in the area for the first time since Q4 2020, led by Silvercrest Asset Management leasing 11,971 square feet at BMO Tower (790 N. Water St.) and the U.S. Bureau of Land Management leasing 8,797 square feet at 250 E. Wisconsin Ave.
Absorption in the non-CBD markets was negative, but non-CBD Class A absorption was positive at 9,680 square feet in Q4, led by National Insurance Services leasing over 15,000 square feet in Brookfield. Overall market leasing activity remained strong with 417,946 square feet leased over 111 leases.
The Historic Third Ward has also seen increased activity from growing firms needing more space, like Attoles Law SC and Atlas MKE.
Overall market asking rate is $21.82 per square foot, a 2.1% increase QOQ, and the Class A asking rate is $24.97 per square foot, a 5.1% QOQ, based on the report. Overall market leasing rates remained relatively stable around $21-$22 per square foot throughout 2022 as the flight to quality eased but could have upwards pressure this year due to inflation increasing NNN expenses.
Cushman & Wakefield did say that without continued mass movement and larger leases signed, low amounts of absorption, both positive and negative, could continue throughout 2023. Access to the workforce will continue to determine movement in the market, as there has been interest by suburban firms looking to relocate or open a new branch around the CBD.
