Brokerage Outlook: Wisconsin


• Wisconsin Retail

• Milwaukee Industrial

Wisconsin Retail Osborne Submitted by Sean Osborne, senior vice president and sales manager with the Brookfield, Wisconsin, office of NAI MLG Commercial. Posted 3-2-06. What area is your expertise? • NAI MLG Commercial's retail brokers are experts in the factors that drive retail market decisions: properties, demographics, traffic, buying patterns, tenant mix, competition analysis, taxes, valuations and business climates. Our brokers serve local and national clients in Wisconsin. What trends do you see presently in retail development in your area? • The trend continues to be small, quick-serve, restaurant-anchored shopping centers. The majority are located on hard corners of major thoroughfares or on outlots of large, national retailers. What type of retail product is doing well in your area? • Quality, aesthetically pleasing shopping centers anchored by small shop tenants located in front of a large national retailer. What retailers are new to your area? • There are a number of retailers that are new to our market that are either in the planning stages or currently have operating stores. These include Crate & Barrel, Trader Joe's, Whole Foods Market, Jared The Galleria Of Jewelry, Costco, Bravo, Ruby Tuesday, Anna's Linens, Steak 'n Shake and Moe's Southwest Grill. Who are the active retail developers in your area? • A number of developers are active in our market including: Ryan Development, MLG Development, Oppidan, Tucker Development, General Capital, Spectrum Development, Continental Properties, Big Bend Development, Heartland Development Group, Zabest Commercial Group and Boulder Venture. Name two significant retail developments in your area. What impact will these projects have on the market? • Pabst Farms in Oconomowoc, Wisconsin, about 30 miles west of Milwaukee — This 1,500-acre mixed-use development will stretch the retail trade area to the western Waukesha County suburbs. This will provide an opportunity for retailers to position themselves in growth markets and capture the higher incomes of residents in Waukesha County. • Bayshore Mall in Glendale, Wisconsin — After years of planning and countless reiterations of site plans, Bayshore is finally under construction. Like Pabst Farms, Bayshore will give retailers the opportunity to capture the north shore market. This market is located about 5 miles north of downtown Milwaukee. • The combination of these two developments will allow retailers to finally have a north and west strategy, which they have been historically unable to penetrate due to unavailability of land. Where is the majority of development taking place? Why is this area doing well? • Much of the development taking place is in the Milwaukee suburbs (Grafton, Oak Creek, Franklin, Oconomowoc and Waukesha). These areas are attractive to retailers because the demographics support the investment necessary to operate in these markets. • We have seen a significant increase in urban development and redevelopment. Much of this is due to the explosion in condominium redevelopment in Milwaukee's Third Ward, Fifth Ward and East Side. The retail has been slow to follow due to an availability of property. However, there are a number of developments in the planning stages, which should increase the retail activity in our urban markets. What area do you expect to be the next big retail development market? Why? • The outlying markets, which are currently developing, will continue to be the focus of retailers. Markets such as Oconomowoc, Kenosha County, Racine County, Grafton and Franklin have proven to be successful for retailers, giving others the confidence to open additional stores in the market. In addition, these markets continue to add population, infrastructure and disposable income. Finally, many of the outlying markets are supportive of retailers and developers because they understand the value these retailers add to their tax base. Please describe the retail leasing activity in your area. • As with all real estate, quality, well-positioned product is in high demand. The overall occupancy rate continues to hover in the mid-90th percentile. What major leases have been closed recently? Best Buy, Marshalls and Sportmart signed leases at the Shoppes at Nagawaukee in Delafield, Wisconsin. T.J. Maxx and Linens 'n Things both signed leases in Phase II of a retail development in Menomonee Falls, Wisconsin. La-Z-Boy, World Market, Bed Bath & Beyond, Circuit City and Michaels signed leases in Fountain Square in Brookfield, Wisconsin. What types of retailers should look into your market in the coming year? What type of retail is needed? • Our market is dominated by one grocer, Pick'n Save. While they are a good operator and serve the general needs of the market, we are underserved by the specialty grocers (Whole Foods Market, Trader Joes, etc.). Even though southeastern Wisconsin has a large array of local restaurateurs, we are significantly underserved by national high-end chains. Would you like to make any additional observations about the retail market in your area? • Southeastern Wisconsin has always been a conservative-growth market. As such, we see limited speculative building, high occupancy rates, low turnover and solid economics making Wisconsin a great market to do business. We expect that the suburbs will continue to be the focus of retail expansion as the demographics move outward. However, with the renaissance of urban markets, the additional focus on condominium development and the recent political shift in urban markets, we expect that our underserved urban market will receive a significant amount of focus by retailers over the coming years.

Milwaukee Industrial Dickman Submitted by Samuel Dickman, president with the Milwaukee, Wisconsin office of The Dickman Company, Inc./CORFAC International. Posted 10/02/07. What area is your expertise? • I specialize in Southeast Wisconsin properties. What trends do you see presently in industrial development in your area? • Trends in industrial development in our area are toward larger planned developments fueled partly by corporate developers such as CenterPoint, Pabst Farms and First Industrial. What type of industrial product is doing well in your area? • The industrial product that does best in our area are 30,000 to 50,000-square-foot buildings which can be either one user or have the ability to be sectioned to accommodate several tenants. Who are the active industrial developers in your area? • The active industrial developers in our area are CenterPoint Properties, First Industrial, Pabst Farms, Opus Corporation and Wispark, the development arm of WE Energies. Please name one or two significant industrial developments in your area. What impact will these projects have on the market? • The significant industrial development is taking place at Pabst Farms in Oconomowoc. There are three elements to this development. The first being a 1.1 million-square-foot distribution center for Roundy’s, the dominant grocery chain in Wisconsin. The second element is a 100- acre site directly north of Roundy’s and along Interstate 94, which can accommodate a variety of sizes of improvements. The third is an area of approximately 200 acres along the north side of I-94, which is to be occupied by tech-related companies. This industrial development, coupled with an announced General Growth Mall and a new Aurora Hospital, will move all development west further into Waukesha County and towards Madison. Where is the majority of development taking place? Why is this area doing well? • The majority of development has taken place along the I-94 corridor, both west of Milwaukee and south, between Milwaukee and Chicago. The areas are doing well because of transportation, labor and the availability of land. What area do you expect to be the next big industrial development market? Why? We expect the next big industrial development market to be located west of Milwaukee in the Milwaukee/Madison corridor. This development is fueled by university activity as well as the population growth in Waukesha County. Please describe the industrial leasing activity in your area. • Industrial leasing activity in our area has started to pick up in the last 60 days. It is still relatively soft compared to sales activity. Please describe the industrial sales activity in your area. • Industrial sales have been very strong both to users and to investors. Relatively low interest rates have made owning more attractive to industrial users than leasing, while industrial real estate as an investment has proven to be very attractive with more money chasing deals than there are deals available. Please give a measure of industrial vacancy rates and give a measure of available sublease space. • Industrial vacancy rates are, depending upon the submarket in Southeast Wisconsin, between 6 percent and 8 percent. What impact do current interest rates have on the industrial market? What predictions do you have for interest rates and their effect on the industrial market in the next year? • Current interest rates have had a positive affect on the industrial market. We anticipate a rise in rates over the next year, which will be positive for the rental market and on the negative side for the user purchases. What industries do you expect to expand in the next year to absorb a great deal of industrial space? What areas will be affected? • Industrial expansion in Southeast Wisconsin will be due primarily to manufacturing, both heavy and light, as well as distribution companies. Would you like to make any additional observations about the industrial market in your area? • Southeast Wisconsin, while changing, is still heavily dependant upon manufacturing and distribution for high paying jobs. Those companies that have survived the shake out over the last several years are doing well and are expanding. We see the industrial market remaining strong, even though the net number of industrial jobs has been declining slightly.