When it comes to office space, the Green Bay and Fox Cities markets couldn’t be more different.
While consistent is the best word to describe vacancy rates in Green Bay, the Fox Cities’ vacancy rates continue to climb upward, according to a Grubb & Ellis |Pfefferle market report.
For the first quarter of 2011, according to Tom Scheuerman, a managing broker in the Appleton office of Grubb & Ellis | Pfefferle, office vacancy rates in Green Bay were 15.8 percent, up just a bit from 15.7 percent in the third quarter of 2010.
“There was very modest activity in the marketplace and no significant deals took place,” says Scheuerman before adding that while the overall vacancy rate held steady, several Green Bay markets did see fluctuations.
The submarket on Green Bay’s east side saw vacancy rates rise from 13.4 percent to 14.9 percent between the third quarter of 2010 and the first quarter of 2011. Scheuerman says that was caused in large part because 40,000 square feet not previously up for lease came on the market.
On Green Bay’s west side, the vacancy rate declined from 17.8 percent to 16.3 percent as 23,000-square-feet were absorbed by the market. In Green Bay’s outlying submarket, the vacancy rate fell from 21.6 percent to 18.8 percent.
With so little change in vacancies, Scheuerman says rental rates are remaining constant with $16.75 per square feet on the east side and $14.50 per square feet on the west side for Class A office space.
“With the slow recovery of the economy and the lack of any new speculative office buildings being constructed, steady vacancy rates are expected,” he says. “These vacancy rates are similar to the Fox Cities marketplace to the south. Absent any further consolidations by companies in the area, vacancy rates should remain steady for the remainder of 2011.”
For the coming months, Scheuerman anticipates no speculative office buildings will be built in Green Bay and the overall vacancy rates will remain steady for the rest of 2011.
The largest increase in the office vacancy market was in the Fox Cities’ east submarket where 30,000 square feet of space came on the market. But Scheuerman says this deal was primarily a relocation of a business on the east side into a “shadow space,” an office space under lease contract but actually vacant.
The Fox Cities’ central business district was steady while the Oshkosh submarket saw a boost with several small office spaces leased in the Universal Business Park. That area to the west of U.S. 41 now has an overall vacancy rate of just 7.4 percent.
“With continued slow job growth and planned consolidation of office space by some key area employers, it is expected that the overall vacancy rate will continue its upward trend during the remainder of 2011 as more office space is anticipated coming unto the market,” says Scheuerman, adding that asking lease rates are holding relatively steady at an average of $17.20 per square foot gross in the central business district and east submarkets and $14.83 on the west side of the Fox Cities.
Looking to the future, Scheuerman says many tenants are seeking concessions with their renewal terms and that predicts the overall vacancy rate will continue its upward trend through the end of the year.