Eight-county building report – Who’s building where and why?

It’s a partly sunny forecast for commercial real estate this year. But area developers say the sunny part is cause for optimism amid the national economic recession and changing market conditions in southeastern Wisconsin.
On the bright side, demand for new and renovated facilities remains, particularly for urban buildings which can accommodate the wiring and support needs of technology and communications-oriented firms.
Land availability remains a concern, with the tighter supply driving up costs that, in turn, will drive up development costs. On the other hand, they see savings from more cost-effective materials, more competition among sub-contractors and, more recently, prices for building lumber "dropping like a rock," according to Paul Votto of Burke Properties in Milwaukee, speaking at the recent real estate forecast breakfast presented by the Institute for Real Estate Management.
Also at that breakfast, MLG’s Charlotte Zurn said reduced interest rates may drive some action in the office building arena, but also observed that the market has no obvious gaps that would attract significant new construction.
And Inland Companies’ Mike Fardy predicted less speculative building in the industrial sector but added that the sale market will be strong. He sees a topping-off of land prices, which are reaching $125,000 per acre in some parts of the metropolitan Milwaukee area.
In the retail sector, Gary Stein of the Polacheck Co. sees a year of "great opportunity and great challenges." Among the challenges will be a continuation of vacancy rates. "There are far fewer startups" these days. The increased availability of space is not being demanded by the market, he observed. He sees a slowdown in drugstore and food store development, noting that drug store chains are turning down land due to high prices. Restaurants, on the other hand, "will continue to be aggressive."
A rundown of development in the eight counties of southeastern Wisconsin follows on the next several pages.