The Southeast Wisconsin industrial sector has faced challenges, many of them stemming from higher interest rates. But the market has also been resilient. And at least one top CRE professional working this market told Midwest Real Estate News that even better days are ahead for this region’s industrial sector.

Todd Battle, director of industrial investments with Milwaukee’s Zilber, said that the Fed’s rate cut will provide a boost to the industrial sector in the Milwaukee market. But that boost won’t happen immediately, he said.

“The change in rates will take a little time to cycle through,” Battle said. “In terms of the cost of capital coming down, it definitely will provide some relief and help in terms of demand, transactions and activity level.”

Even with the higher interest rates of the last two-plus years, the Milwaukee-area industrial market has proven resilient, Battle said. That’s because while interest rates are one factor that influences industrial development and sales, the Milwaukee area boasts other positives that have helped this sector remain stable even during economically challenging times.

Battle points to the strong industrial base throughout the Midwest, Milwaukee’s location in the center of the country, its strong labor base and its proximity to Chicago as factors that have helped this market weather higher interest rates.

“This is a dynamic industrial market,” Battle said. “There have been factors that have been positive for domestic manufacturing and industry. Because of this, this sector has held up well when compared to other product types.”

This isn’t to say that activity isn’t down somewhat in the Milwaukee industrial sector. Battle said that leasing activity is below the peak levels that this sector saw in 2020, 2021 and much of 2022. New construction starts are also down.

But Battle says that there is still a reasonable amount of leasing activity throughout the market when you compare 2024 to pre-pandemic years.

Like other parts of the country, the Milwaukee area and Southeast Wisconsin saw a significant amount of new industrial construction in 2020, 2021 and 2022. Much of this new product rose along the Interstate-94 corridor in the Kenosha County area.

In good news, tenants filled most of this new product, Battle said. That high demand led to even more product. The more recent industrial deliveries in the market are still attracting leasing activity. But vacancy rates in these newest properties are slightly higher.

Read more at REJournals.com.