Office vacancies were up slightly in the Northeast Wisconsin market during the middle two quarters of 2010, according to the most recent Grubb & Ellis | Pfefferle Office Market Trends Report. Grubb & Ellis | Pfefferle has offices in Appleton, Green Bay, Waupaca and Wausau. Grubb & Ellis is a national commercial real estate firm with offices throughout the U.S.
In the greater Appleton market, vacancy rates rose from 15 percent to 15.8 percent during the six months that ended Sept. 30, according to Tom Scheuerman, managing broker for Grubb & Ellis | Pfefferle in Appleton, who prepared the regional reports.
“This very nominal increase continues a trend in the Fox Cities where vacancies have remain virtually unchanged for 18 months,” he says.
In the same six-month period, the overall vacancy rate in the Green Bay market rose only slightly from 15.5 percent to 15.7 percent, according to the report.
In the greater Appleton market, which includes Oshkosh, there was a slight overall increase of 21,500 square feet in available office space, according to Grubb & Ellis | Pfefferle.
A small net absorption of 26,000 square feet occurred in the downtown and east market areas, while 47,500 square feet of space became available in the outlying and west areas of the Fox Cities. Absorption occurred on Enterprise and Marathon, while space availability increased on Lyndale, Tri-Park, Grande Market, American Drive and in Neenah.
Vacancy rates were 10.7 percent downtown and in the east market, 19.1 percent in the west market, 27. 2 percent in outlying areas, and 8.1 percent in Oshkosh.
In the Green Bay market, there was a modest absorption of office space, netting 33,600 square feet, according to the Grubb & Ellis | Pfefferle report.
“Virtually all of that activity was in Class A space on the east side of Green Bay, where there were approximately 10 lease transactions absorbing space and three transactions vacating space,” says Scheuerman.
Two areas with modest absorption of space were Voyager Drive in the I-43 Business Park and Riverside Drive. On the west side of Green Bay, there were approximately 10 transactions, resulting in a negligible increase in vacancy of approximately 4,000 square feet.
Vacancy rates were 13.4 percent in the east market of Green Bay, 17.8 percent in the west market and 21.6 percent in outlying areas.
The Appleton report found that Class A space accounts for 80 percent of the total space available in the Fox Cities and that the Class A vacancy rate overall was 16.9 percent. Class B and Class C space represent the remaining 20 percent of the total vacancy and had a combined vacancy rate of 12.2 percent.
In Green Bay, Class A space accounts for 75 percent of the total space available in Green Bay and the Class A vacancy rate overall was 11.2 percent. Class B and Class C space represent the remaining 25 percent of the total vacancy and had a combined vacancy rate of 29.85 percent In the Appleton market, asking rental rates for vacant space ranges from an average of approximately $17.15 per square foot gross in downtown to an average of approximately $15.40 per square foot gross on the west side.
In Green Bay, asking rental rates for vacant space ranges from an average of approximately $16.75 per square foot gross on the east side to an average of approximately $14.50 per square foot gross on the west side.
The Grubb & Ellis | Pfefferle report forecasts that tenants in both markets will continue seeking concessions with their renewal terms and that Class A properties will continue to see a softening in the market and a reduction in asking rents.
The Northeast Wisconsin markets are faring somewhat better than many other regions in office vacancies. Grubb & Ellis forecasts that the national office vacancy rate will end 2010 at 17.8 percent, reach 16.8 percent by the end of 2011 and improve to 15.4 percent by year-end 2012.
Office fundamentals appear to have stabilized, according to Grubb & Ellis’ national office vacancies report. The national office market has posted three consecutive quarters of fairly flat vacancies, while rents are at or near the bottom depending on the property type