In its 2009 forecast for the metro Milwaukee commercial real estate market, Brookfield-based NAI MLG Commercial says "continued positive absorption" is expected this year for the area's industrial space.

"Industrial activity in Milwaukee remains stable after a volatile economic year," the report states. "The 2008 industrial market experienced an increase in leasing compared to 2007. However, there were virtually no new 'spec' buildings built in 2008, which is why continued positive absorption is anticipated in 2009. Indications are that there are a number of companies waiting on the sidelines to pull the trigger on buying or leasing additional space. Due to the conservative nature of southeastern Wisconsin, there are a number of companies that are able to withstand and prosper during this economic downturn, which leads to an optimistic outlook for real estate in 2009."

However, the picture is not so bright for the area's office market, the NAI MLG report says. In 2008 net absorption was negative for every submarket in the area, except for downtown Milwaukee west, "and the expectation is that this situation will get worse," the report says.

The area's retail real estate market has slowed but, "remains relatively strong due to historically conservative practices," the NAI MLG report says. After years of inflation, retail land prices are coming down as developers are forced to charge lower rents as a result of the economic downturn. However, retail leasing activity in the Milwaukee area remains steady, the report says. "The retail market will experience a decline in 2009 in terms of lease rates," the report says. "However, absorption and vacancy rates should remain stable."

As the economy took a dive during the fourth quarter of 2008, more office space in the Milwaukee area was vacated, according to a pair of new office market reports

According to Boston-based Colliers International, whose local affiliate is Colliers Barry, the downtown Milwaukee office space vacancy rate rose from 15.9 percent in the third quarter to 17.5 percent in the fourth quarter. The class A office space vacancy rate downtown rose from 9.6 percent in the third quarter to 12.6 percent in the fourth quarter.

In the suburbs, the office space vacancy rate rose from 15.0 percent in the third quarter to 16.4 percent in the fourth quarter. The class A office space vacancy rate in the suburbs rose from 12.1 percent in the third quarter to 12.4 percent in the fourth quarter.

The newest office market report from Milwaukee-based Inland Companies shows even higher levels of office space vacancy in the region. The Milwaukee area's office space vacancy rate rose from 16.6 percent in the third quarter to 16.9 percent in the fourth quarter, according to Inland, and the class A vacancy rate rose from 12.0 percent in the third quarter to 12.4 percent in the fourth quarter. Downtown, the office space vacancy rate held steady at 19.5 percent in the third quarter, while the class A vacancy rate rose slightly from 11.7 percent in the third quarter to 11.8 percent in the fourth quarter.

The Milwaukee area's office market had a negative absorption of 84,354 square feet during the fourth quarter and had a negative absorption of 59,214 square feet for all of 2008, according to the Inland report.

The downtown office market had a better year than the suburban market, according to the Inland report. The downtown submarkets had positive absorption of 53,409 square feet of office space in 2008, while the suburbs had a negative absorption of 112,623 square feet of space.

The brightest spot for the office market in 2008 was the downtown west submarket, which had positive absorption of 97,316 square feet. Most of that can be attributed to leases at the Reuss Federal Plaza building and the Boiler House building at the former Pabst brewery complex, the Inland report said.

"With most of the local layoffs hitting in the fourth quarter of 2008 and continued instability on a national level, do not expect the Milwaukee office market to rebound quickly in 2009," the Inland report said. "However, with little construction underway and good activity in the first month of the year, the Milwaukee office market should begin to stabilize by the end of 2009."

Two recent reports offer different views of how the Milwaukee's area's housing values are holding up.

However, both reports demonstrate that the residential property values in the Milwaukee area are holding up better than the rest of the country.

The latest report by New York-based Radar Logic Inc. says that the Milwaukee area's residential property sold for $114.78 per square foot during November, up 2.4 percent compared to November of 2007. The Milwaukee area was the only major metro area in the U.S. that had a price increase for its residential real estate, according to the report.

But according to another report by Seattle-based Zillow, the value of residential real estate in the Milwaukee area fell 6.5 percent in 2008. However, that was still better than the United States as a whole, which had residential real estate values decrease by 11.6 percent during the year.

According to both the Radar Logic and the Zillow reports, the metro areas with the biggest decrease in residential real estate values are in California, Nevada, Arizona and Florida.

Wisconsin is still seeing its share of foreclosures, however. According to ForeclosureAlarm.com, a real-time notification system of new foreclosure filings in the state, foreclosures in January were the second-highest on record for the Wisconsin, far outpacing those in December. In addition, the January numbers continue a trend in foreclosure escalation over the last year with increases in the number of foreclosures in seven of the past eight months.

United Heartland, a workers compensation insurer, will occupy a 56,000-square-foot office building that Wauwatosa-based Irgens Development Partners LLC plans to build southeast of I-43 and Moorland Road in New Berlin. Irgens will own the building and United Heartland will lease the space.

United Heartland will move its corporate headquarters to the building from its current location in a 52,000-square-foot space at 12695 W. National Ave., New Berlin. Construction will begin in March and is expected to be complete in December. The facility will house up to 300 employees—200 are employed at United Heartland’s current New Berlin office, and the company expects to add another 100 positions over the next 15 years.

"They looked at (locations in) southeastern Wisconsin counties and (at) things like existing employees' commute times, ease of interstate access, rental rates, taxes and nearby amenities," said United Heartland spokesman Matthew Haran. "Waukesha County seemed to be the best fit overall. Within Waukesha County, there was limited existing office space that truly fit their needs, although they evaluated several existing buildings against two build-to-suit options in the I-43/Moorland Road area they were looking at. They chose the (Irgens) build-to-suit site because they felt the location and setting were optimal for their business."

Menomonee Falls-based Berghammer Construction Corp. recently completed construction on a 48,000-square-foot office tenant improvement for Froedtert and Community Health on Leatherwood Drive in the Woodland Prime Business Park in Menomonee Falls.

Milwaukee-based Inland Companies Inc. was recently awarded: a tenant remodeling project for the Foot Locker office at 7800 Brown Deer Road, Milwaukee; a tenant improvement/build-out project of a new office facility for Mutual Insurers Holding Company at N19 W24400 Riverwood Dr., Pewaukee; a 14,000-square-foot warehouse construction project for E.J. Welch Company on Westbrook Crossing Drive in Menomonee Falls; and a 3,000-square-foot tenant improvement for Centare Group at 125 N. Executive Dr., Brookfield. Inland Companies also recently completed a 4,000-square-foot remodelling project with Tek-Systems at 125 N. Executive Dr., Brookfield. 

Wauwatosa-based AG Architecture recently hired Jane Mottier to its engineering team. She has 16 years of electrical engineering experience.

Brookfield-based Shorewest Realtors recently added Margaret DeRocha Blank and Bill Rohner as sales associates in its Racine office, Bob Seager as a sales associate in its Burlington office, Karen Jensen as a sales associate in its downtown Milwaukee office, Christie Andrade as a sales associate in its Wauwatosa office, Kim FarnsworthDustin Rogalski as sales associates in its Oconomowoc office, Carol Wanner as a sales associate in its Menomonee Falls office, Melissa Beckman as a sales associate in its Shorewood office, and Jim Bodis as a sales associate in its Waukesha office.