Wauwatosa road work not a friend to leasing agents
Construction, other factors lead to office-space vacancies
Office-space vacancy in the Milwaukee area has started to inch down, but along Mayfair Road, from the corner of Watertown Plank south to Potter Road, seven of 10 buildings have posted space-for-lease signs. The other three are occupied by Froedtert and The Medical College and Aurora Health Care.
It may be no coincidence that this very stretch of road has been under construction in recent months as part of the vast Zoo Interchange project.
"Short term, the construction will cause the Mayfair corridor … to lose some deals to competitive markets such as Brookfield or downtown," Burton Metz, project manager for Wangard Partners, said in an email.
Wangard, a development and building management firm, has for-lease signs in front of two of the buildings - the High Pointe building on the northeast corner of Mayfair and Watertown Plank, and the Mayfair Crossing building across the street.
But long-term, Metz said, the road work will be an advantage.
"Once the construction is completed, it should benefit the entire Mayfair corridor by enhancing the visibility and accessibility."
Mike Mervis, vice president of Milwaukee-based developer Zilber Ltd., agrees.
"I would say that Mayfair Road, at this time, having gone through construction for, what? A year and a half? You know, that's an area that's challenged," he said.
But road work is both good news and bad news, Mervis said.
"It's bad news that you're going to be temporarily inconvenienced; it's good news that you're going to have a better and safer experience to get to your particular property."
Zilber, which has a for-lease sign in front the building it owns at 1033 N. Mayfair Road, is not really seeking tenants, Mervis said.
"We've probably got a 4 or 5 percent expansion space," Mervis said, "but if somebody came along and wanted some oddball small number, we might fill it up. You generally try not to run at 100 percent full because you don't have any growth for the people that are in there."
Various reasons for vacancies
Dennis Boschi, who owns Boschi & Associates, a property manager and leasing agency, said market conditions, not construction, led to vacancies.
"I think if somebody wanted to be there they know the construction's going to end," he said.
He added that half the building he's leasing at 1109 N. Mayfair Road is vacant.
New buildings from downtown Milwaukee to Brookfield, including, for example, the High Pointe building, have made for tough competition.
"They move out of our building to the nice building that other people vacated that they can get for the same price," he said. "Right now, for office space, you can get just about whatever you want, wherever you want, for how much you want."
The recession also motivated some tenants to re-think their business model.
"A lot of small office spaces, the guys are now working out of their house," he said. "Bigger companies are becoming smaller."
Similarly, Metz of Wangard Partners sees technology and adaptive work practices driving demand for space down.
"The market is trending toward a mobile, technologically driven, collaborative workforce," he said. "This saves companies money and is what is expected from the Generation X and Y workforce. As a result, the square feet of office space per person is dropping, which ultimately decreases the demand."
He sees demand throughout Wauwatosa, Milwaukee and the state continuing to be weak until the economy picks up and new jobs are created.
Metz said demand is strong in high-end, Class A office space "with convenient location, professional property management and prestige."
In the 3rd quarter of 2012, Class A and B office space in the Mayfair/Wauwatosa marketplace had a vacancy rate of approximately 10.6 percent and 26.1 percent respectively, he said.
Mervis said the entire market has been stressed.
"The economy's been bad for everybody, including commercial real estate."
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