Like most office markets across the country, Milwaukee’s is in flux. Some companies are bringing their workers back to the office, but others are still waiting to see how the rest of the COVID-19 pandemic plays out. But one big trend reported by JLL? A growing number of new office leases in Milwaukee this year have come from companies relocating to new, often higher-class, space.
This has been particularly true for tenants looking for office space of 5,000 to 30,000 square feet, JLL reported in its first-quarter Milwaukee office outlook.
As is happening across the country, office tenants are searching out better space today. That’s partly because much of this space is being offered at lower rents, meaning that companies can move into a higher class of office space today that they might not have been able to afford before the pandemic hit.
Companies also need to offer more amenities in their offices if they hope to attract and retain the best workers today. Many workers won’t return to the office if the office environment hasn’t been improved in their absence. And with many employers desperate for workers, they’re willing to spend more on office spaces that feature on-site fitness centers, restaurants and landscaped walking areas and gathering spaces.
JLL says that of all tenants pursuing new office space, 70% chose space in a Class-A property. An even higher percentage opted for Class-A space in a suburban submarket. Notable Class-A leases signed during the first quarter included Cognex at Mayfair Woods for 16,803 square feet, Dykema Gossett at Associated Bank River Center for 11,904 square feet and two additional undisclosed tenants at Irgens’ Golf Parkway Corporate Center, bringing that project to 83% pre-leased.
This trend has led to an increased level of leasing activity in the Milwaukee office market today when compared to one year ago. According to JLL’s report, the Milwaukee office market had seen 48,593 square feet of positive absorption through the first quarter of this year.
And in further good news for future absorption levels, construction activity in this market is down. JLL reported that 276,000 square feet of new office space was under construction as of the end of the first quarter.
Office vacancy rates, though, are still high here. JLL says that as of the end of the quarter, this number stood at 22.2% for the Milwaukee market.
Sublease space continued to increase in the market, too, as von Briesen & Roper offered a full floor at 411 E. Wisconsin for sublease this quarter. JLL did say, though, that the rate that sublease space has come onto the market has been declining since May of 2021.