2014 Base Statistics

In the past 2 years Waukesha County has experienced 74 industrial expansions of +-20,000 SF or $1mm in investment. Total Industrial space absorption within the County for 2013 was 1.9 million SF. The reported vacancy rate stands at 3.7% over a 70.2 million SF tracked inventory set. There are presently 91 buildings that have 10,000 SF or more space available and only four that are in the 90,000 SF and up range. The existing inventory stock is dated. The average age of the 91 availabilities is 1985. Almost 30 years old!

2014 The Trends to Watch

Build to suit activity and new construction could be poised for a break out year. Within Waukesha County, there are only 26 buildings north of 10,000 SF that are for sale. Of the 26 buildings, 15 have been on the market for more than 12 months. Given the market strength, if a property has remained vacant for north of 12 months, there are either functional issues or pricing issues (or both). Without a proactive approach this class will continue to struggle. Appearance and functionality have supplanted lowest price as primary drivers for facility selection. There will be upward pressure on pricing for any well- conditioned asset constructed within the past 20 years should it come on the market. Expect price per square foot #s to get close to 2008 levels for user buildings. Manufacturing continues to lead the way on capital investments and this trend will benefit Waukesha Countys robust industrial base. IHS Global is predicting that there will be a 7% increase in capital spending for 2014 ($211 Billion) by manufacturers. Nearly double the 2013 amount. The State of Wisconsin will also be entering the 2nd year of the Qualified Production Tax Credit which is gradually eliminating State Income Tax for manufacturers.

2014- The Predictions

With an expansion cycle that has had a strong run (74 within the County in two years), and an inventory shortage for existing product, businesses will have to take a much closer look at the construction process to satisfy expansion needs. This could slow overall market momentum given timing and pricing of new construction. Expect 2 new multi-tenant buildings of 80,000-150,000 SF in the Pewaukee market in 2014. Small to medium size manufacturing firms will drive more demand in Waukesha County in 2014 than Warehouse/Distribution use. The market is close to equilibrium at 3.7% vacancy and I do not see much further compression of the vacancy rate. Waukesha County will not be in the news as much this year and I am forecasting year end vacancy of 3.6% with a net market absorption of 350,000 SF.
1285 Sunnyridge Road Pewaukee, WI 53072 262.695.8800 www.judsonrealestate.com

Wisconsin Industrial Market Leaders

Contact Jeff Hoffman, SIOR, CCIM 262.695.8800

jhoffman@judsonrealestate.com