As many of the Milwaukee area’s legacy manufacturers reassess their physical footprints, Milwaukee County is on track to have more than 4 million square feet of old industrial space on the market in 2024 — the most since the early 1980s, according to one commercial real estate broker. Regal Rexnord, Master Lock, Komatsu, Stellantis and
As many of the Milwaukee area’s legacy manufacturers reassess their physical footprints, Milwaukee County is on track to have more than 4 million square feet of old industrial space on the market in 2024 — the most since the early 1980s, according to one commercial real estate broker.
Regal Rexnord, Master Lock, Komatsu, Stellantis and Briggs & Stratton have all announced that they are moving, reducing or eliminating operations in the Milwaukee area, leaving behind large and aging campuses.
Much of this 4 million square feet will be difficult to re-lease, industrial brokers say, but the 225 acres of land that it sits on could be prime for redevelopment.
The last time the Milwaukee area saw this amount of industrial space come on the market at one time was the early 1980s, according to Jeff Hoffman, an industrial real estate broker and principal at Cushman & Wakefield | Boerke.
“That was a very, very tough time for Milwaukee, but very, very different circumstances,” Hoffman said.
While the manufacturing closures of the 1980s were often associated with bankruptcies, today the metro Milwaukee industrial real estate market remains strong and is seeing historically low vacancy rates, as low as 2.4%.
“Our economy is much better suited to make this transition right now than back then,” Hoffman added.
Outside of Racine and Kenosha counties, many manufacturers in southeast Wisconsin have been struggling to find enough industrial space, brokers say.
“Anything that’s hit the market in the last couple of years really hasn’t taken very long to re-lease or to sell,” said Jim Larkin, industrial real estate broker and senior vice president at Colliers | Wisconsin. “(This space coming on the market) presents a good opportunity for some of the manufacturers and distributors out there that are in the market.”
However, the size and age of the large industrial properties in the metro area that are coming on the market will make it difficult for them to remain in industrial use because costly upgrades will be necessary and few tenants in the area can absorb large amounts of industrial space, brokers say.
“As for the actual type of (industrial) space coming back to the market, some of it does present challenges,” Larkin said.
4 million square feet of space
In Milwaukee’s Bay View neighborhood, the Stellantis-owned Mopar warehouse could shut down in 2024 as part of a tentative agreement reached with striking United Auto Workers employees. The timing of the facility's closing has yet to be announced, but Stellantis plans to consolidate the Milwaukee operation into a new parts-distribution hub in Illinois that could open as early as 2024.
The campus, located at 3280 S. Clement Ave., was first built in 1920 with additions throughout the 20th century. It sits on 43 acres and has almost 1 million square feet of building space.
On Milwaukee’s northwest side, Master Lock owns a 26-acre, 400,000-square-foot manufacturing plant at 2600 N. 32nd St. Some parts of the campus date back to 1909, according to the Wisconsin Historical Society.
Master Lock announced this year that it will close the facility and lay off the 325 employees at the 32nd Street facility by the end of March.
[caption id="attachment_569789" align="aligncenter" width="1024"] Master Lock's Milwaukee factory at North 32nd and West Center streets.[/caption]
Two large campuses could come available in West Milwaukee — a village of only one square mile:
In 2022, Komatsu Mining Corp. opened a new $285 million headquarters in Milwaukee’s Harbor District to consolidate office and manufacturing space. The company still owns a 44-acre manufacturing campus at 4400 W. National Ave. with around 1 million square feet of building space.
The company has said it will end operations at its West Milwaukee facility but did not respond to a request for comment on its future plans for the campus.
This year, manufacturer Regal Rexnord announced that it is closing its West Milwaukee plant. The company has listed the 56-acre campus, located at 4800 W. Mitchell St., for sale for $15 million. The campus has a total of 750,000 square feet of building space and was first built in 1920.
Lastly, manufacturer Briggs & Stratton Corp. announced that it would lay off 160 workers by the end of this year at its Wauwatosa plant, located at 3300 N. 124th St.
Last year, the company sold the Wauwatosa plant, built in 1955, to Milwaukee-based Phoenix Investors. The real estate firm is marketing the one million-square-foot building for continued industrial use.
The average age of these properties is 93 years old, the average campus size is 45 acres and the average building footprint is 820,000 square feet — all of which complicate the campuses’ industrial future.
“Are there 20 or 25 manufacturers waiting for a million square feet to come available? No,” Larkin said. “The unfortunate thing for some of these owners is that it’s all happening at the same time. If one of them came available, there’d probably be a feeding frenzy on it.”
[caption id="attachment_580997" align="aligncenter" width="1024"] Briggs & Stratton Corp.'s Wauwatosa facility. Image from LoopNet[/caption]
Redevelopment or re-leasing?
Brokers agree that the Briggs & Stratton facility in Wauwatosa is most suited for continued industrial use as the building is the newest of these campuses and it is surrounded by other industrial users and retail. The property is also easier to subdivide, Hoffman said, creating an opportunity for smaller users to occupy the space.
However, the other campuses’ future as industrial properties are less clear.
The Stellantis, Master Lock, Regal Rexnord and Komatsu campuses all sit in mostly residential neighborhoods.
The industrial benefit for these sites is they’re surrounded by housing and workforce, according to Larkin, which is something that industrial properties built on the periphery of the metro area don’t have.
“If you’re looking to run a couple of shifts and have a choice of building in Oconomowoc or Sussex versus buying a plant in Milwaukee or West Milwaukee, you’re going to have significant advantages when it comes to labor,” Larkin said.
Still, updating the properties for modern industrial use would be expensive, and strong demand for housing makes redevelopment an appealing option.
“Given their obsolescence and massive square-footage, it would be very difficult for these properties to remain as is and remain industrial,” said Dan Palec, director of research at Cushman & Wakefield | Boerke.
The average industrial lease square-footage in Milwaukee County this year was 30,000 square feet and the median was 12,000 square feet.
“The costs to subdivide these properties that are already very specific would just not be economically feasible in every instance, especially when there are redevelopment possibilities,” Palec said.
Each property has unique circumstances that will determine the redevelopment potential, Brokers said. For instance, Hoffman said the future of the Komatsu site could be contingent on what happens with possible development of American Family Field’s parking lots, which will be studied under a new funding package from the state.
[caption id="attachment_526277" align="aligncenter" width="1024"] The Komatsu site in West Milwaukee.[/caption]
Redevelopment would take some time, given the complex nature of the projects that would necessitate zoning approval, environmental testing and remediation, and site clearance, among others.
“What traditionally ends up happening with these is they’ll get marketed as industrial properties with, depending on the challenges, redevelopment on the horizon,” Larkin said.
Redevelopment of these sites could bring dramatic transformations to the respective neighborhoods, Hoffman said, especially since many of these facilities have been operational for generations.
“These communities have one shot to do this right,” Hoffman said.
