Emerging from pandemic's remote work revolution, Milwaukee office market looks to 2023
The good news for the Milwaukee office market going into 2023 is that, after being forced to experiment with work from home through the Covid-19 pandemic, more companies have figured out what they'll need going forward and are back in the hunt for space.
Wisconsin, said he's seeing more companies commit to seven or 10-year leases for offices, rather than the two- and three-year deals they wanted back in 2020 and 2021. According to Colliers' data tracking activity in the local office market, there are more companies actively searching for space than the average for the past decade.
'Groups have figured out how much of (remote work) will work permanently, and how much of that has been a challenge to their businesses and want to change it,' Wanezek said.
That's encouraging for owners of office buildings that saw lower leasing activity through the pandemic and contended with the possibility employers would embrace remote work, downsize and leave behind empty space. Wanezek said more employers are adopting remote work for back-of-house functions like call centers or billing, but in general those on the market want Class A office space and aren't seeking to downsize their footprint significantly.
As we cover in our Jan. 6 weekly edition exploring office leasing activity, industrial development, interest rates and construction pricing, the real estate forecast for 2023 usually comes with a 'yeah, but' sort of qualifier. There's plenty of positives in the local market, but there's still risks and unknowns.
For office space, that could be a national economic slowdown that would take some of the gusto out of the local market's current activity. An overview of the 2023 office market in Wednesday's edition of the Wall Street Journal cited data from VTS showing a national decline in tenants seeking space. The report starts, 'Things look poised to get worse in 2023.'
Milwaukee's real estate market is famously less volatile than the industry's national trends, so the local picture could differ from a harsher national perspective. Announcements of thousands of layoffs by tech firms like Salesforce Inc. don't hit as hard in a market like Milwaukee that relies less on that industry to fill buildings.
'I haven't really seen a lot of those effects with larger tech groups in the Milwaukee market to date,' Wanezek said. 'That doesn't mean we won't still see it. Milwaukee didn't add a million square feet of tech space during the boom.'