A new report found that suburban office markets were more resilient than those in or near downtown Milwaukee since the onset of the COVID-19 pandemic.
This finding is part of a quarterly office market report from commercial
real estate brokerage JLL. It found overall vacancy rates were flat quarter-over-quarter, at 22.6% in Milwaukee's central business district and 21.4% in the suburbs.
The report also found that, since the third quarter of 2019, first-ring suburban markets North Shore and West Allis saw declining vacancies of 2.7% and 2.1%, respectively. Brookfield, which JLL called "the premier suburban market," saw a slight increase of 2.2% during that period.
Downtown Milwaukee was a different story. The Downtown East submarket saw a 6.9% increase in vacancies over the same period.
The most dramatic increase was 11.8% in the Third Ward and Walker's Point submarket. Wauwatosa-based Wangard recently finished the
Eagleknit innovation hub earlier this quarter, JLL noted. This added 105,000 square feet of office space to Walker's Point.
But, there were signs that things were improving in the office market in the third quarter, according to JLL.
The market during much of the pandemic has been dominated by short-term lease renewals, due to uncertainty. Tenants were unsure of their future office space needs after many shifted to remote work.
That was no longer the case in recent months. While leasing activity remained below pre-pandemic levels, there was a drop in renewals as a portion of all leases signed for the quarter.
JLL also noted a shift to expansion and relocations into the CBD. They made up the highest volume of leased square footage. They're the first such occurrences in a long time but are indicative of pre-pandemic market dynamics, according to JLL.
"This is the first quarter since the onset of COVID-19 that we've seen solid activity indicative of pre-pandemic market dynamics," David Pudlosky, JLL Milwaukee managing director, said in a statement. "Many of the tenants we work with have robust re-entry strategies in place and we look forward to their return in Q4 and 2022. On the reverse, permanent work-from-home strategies make up a very small percentage of plans within the Milwaukee office community."
