Wisconsin Industrial Market Leaders

1285 Sunnyridge Road

Pewaukee, WI 53072
262.695.8800
www.judsonrealestate.com
Contact
Jeff Hoffman, SIOR, CCIM
262.695.8800
jhoffman@judsonrealestate.com

2014 End of Q2 Market Summary
New Construction is breaking loose in the South East Wisconsin Industrial markets. Developers have broken
ground or are in serious discussions to add 1.8 million SF of new space in SE Wisconsin over the next 12 months.
There is also an additional 1.685 million SF of new user announcements, or deals that are on the cusp of
announcement, including Uline, Stella & Chewys and Oberlin Filter.

Q2 2014 - The Data
931,906 SF of positive absorption occurred in Q2 with total area vacancy dropping to 6.05%. Big deal
announcements for existing space were Joy Global signing a 305,000 SF lease for a distribution center in
Oak Creek, InSinkErator signing a 160,000 SF lease for a manufacturing facility in Kenosha and Jonco
Industries purchasing a former 202,500 SF Rock Tenn plant on the North Side of Milwaukee.
Total absorption at the half way point of 2014 has been 1.65 million SF, a remarkable performance
considering a 2.9% contraction in Q1 GDP.
Waukesha County had its first negative quarter since the recession. Absorption for Waukesha County in
Q2 was -176,412 SF and vacancy has moved back up to 4%. Expect this to be short lived as the numbers
were heavily influenced by the 287,950 SF American Distribution Centers coming online. Lake Country
Manufacturing and Federal Manufacturing will be delivering 160,000SF of new product to the market this
quarter and there are several deals in the pipeline for what remains of the existing inventory.

Q2 2014 - The Trends
The 2.9% drop in National GDP for Q1 was an aberration. There was a strong rebound in activity and
completed deals in Q2, which would not be occurring if a recession was on the horizon. General
Contractors focused on industrial work are indicating that their back log is as strong as it has been since
2007.
The flight to quality space for existing tenants in the marketplace is occurring and this trend is paving the
way for new development. The lowest cost space was winning the deal for the past 5 years, however this
trend is in transition. The image of the facility, and available amenities, have once again become key
drivers to facility selection.

Q3 2014 - The Forecast
Expect more new construction announcements in the news. Rates and pricing level will continue to
appreciate for modern product. Class B/C space will remain a commodity with little rent appreciation in the
near term.
Demand in the local investor market is coming back and cap rates are compressing into the 8 range for local
credit deals. that is IF a local investor can find a deal to purchase.