S U B M A R K E T R E P O R T

Waukesha County Submarket, Milwaukee MSA Fourth Quarter 2007

SUBMARKET MAP SUBMARKET FACTS



67 

164


41 Submarket Metro

Population 386,394 1,519,871

Avg. Annual Five-Year Chg.* 0.8% 0.3%



16

Total Households 149,476 611,551

Waukesha
Waukesha 

94 Avg. Annual Five-Year HH Chg.* 1.3% 0.7%


18

18
County
County 

59
Median Household Income $77,189 $56,066


894

Median Age 41.1 37.5



59

Employment 256,764 941,832



106 

43


45
Vacancy Rate (3Q 07) 8.3% 9.6%


83



59 Avg. Asking Rent (3Q 07) $17.02 $15.16
* 2006-2011 Forecast

SUBMARKET VACANCY RANKING SUBMARKET HIGHLIGHTS

3Q 07 3Q 07 Robust rental demand, coupled with strong demo-
Submarket Vacancy Asking Rents graphics, have provided owners in the Waukesha County
submarket with region-high rents over the last several
Waukesha County 8.3% $17.02 years. Occupancy levels within the county have steadily
outperformed all other submarkets for the past five years;
North Milwaukee/Ozaukee 9.9% $15.37 currently, occupancy is 91.7 percent, 130 basis points
above the metro average. The region is forecast to record
South Milwaukee County 12.6% $13.17 the sixth consecutive year of positive net absorption in
2007 as retailers continue to relocate to the area in order to
capitalize on increased disposable income. As such, third
quarter asking rents were over 12 percent higher than that
of the metro’s, though over the last four years, owners
have been hesitant to implement aggressive rent growth,
opting to maintain strong occupancy levels.
The Waukesha County submarket has a median
household income nearly 38 percent above that of the
metro, with earnings poised to expand by 9 percent over
the next five years. Compared with the entire MSA, near-
ly 10 percent more residents in the Waukesha County sub-
market have earned a bachelor’s degree or higher. These
demographics suggest a greater amount of disposable
income than in surrounding areas, which translates to rel-
atively higher levels of retail spending. Going forward,
over 72 percent of the county’s inhabitants are projected to
earn more than $50,000 annually, and 35 percent will earn
over $100,000 per year, further supporting retail spending.

Michael L. Brown © Marcus & Millichap 2007

Research Associate www.MarcusMillichap.com
Waukesha County Submarket, Milwaukee MSA Retail Submarket Report ◆ Fourth Quarter 2007

Construction Trends CONSTRUCTION TRENDS

Multi-tenant retail construction is forecast to slow by approxi-
Square Feet Completed (thsouands)

400 ◆
mately 6 percent in 2007, with 224,000 square feet projected to
300 come online for a 5.1 percent increase in submarket inventory.

200 ◆ There are currently four projects under construction, totaling

198,000 square feet. All four developments are due in the next six
100 months, and three are located less than two miles from Interstate 94.

0 ◆ Currently, developers have 176,000 square feet of retail space in the

03 04 05 06 07*
* Forecast various stages of the planning pipeline. If all of the projects come
Sources: Marcus & Millichap Research Services, Reis, TWR
to fruition, the submarket’s stock would increase by 3.8 percent.

RENT AND VACANCY TRENDS

◆ Over the last 12 months, multi-tenant vacancy has increased 190
basis points to 8.3 percent, due, in part, to the completion of the
Asking Rent and Vacancy Trends 150,000-square foot Village Square at 3100 Village Square Drive in
Average Asking Rent per Square Foot

$18
Average Asking Rent 10% Delafield. Construction activity is forecast to accelerate through
Vacancy
the fourth quarter of 2007, but the market is expected to record
$17 8% positive absorption, resulting in a vacancy improvement of 30
Vacancy Rate

basis points to 8 percent.

$16 6%
◆ During the past year, multi-tenant owners have opted to maintain
$15 4% solid occupancy levels rather than implement aggressive rent
growth. Asking and effective rents have increased 1.2 percent and
$14 2% 1.0 percent, reaching $17.02 per square foot and $15.31 per square
03 04 05 06 07* foot, respectively.
* 3Q 2007
Sources: Marcus & Millichap Research Services, PPR, Reis

◆ Year-end asking and effective rents are both forecast to increase 2

percent to a respective $17.08 per square foot and $15.37 per
square foot.

Retail Sales Growth

RETAIL SALES GROWTH
7% Milwaukee ◆ By year end, the Milwaukee MSA’s population is projected to
Year-over-Year Percent Change

United States
expand by 0.3 percent, the metro’s largest uptick since 2000, when
6% population growth was recorded at 0.4 percent.

5% ◆ Retail spending in the metro is forecast to grow by 4 percent in

2007, helping to support retail tenant demand.
4%
◆ Healthy fundamentals are projected to keep cap rates relatively
3% stable, compared with other submarkets in the metro. Over the
03 04 05 06 07*
next six to eight months, cap rates are expected to trend slightly
* Forecast
Sources: Marcus & Millichap Research Services, CoStar Group, Inc. higher to the mid-7 percent range.

Michael L. Brown © Marcus & Millichap 2007

Research Associate www.MarcusMillichap.com
Sources: Marcus & Millichap Research Services, BOC, CoStar Group Inc., RCA, Reis, SRC, TWR
The information contained herein was obtained from sources deemed reliable. Every effort was made to obtain complete and accurate information; however, no representation, warranty or guarantee to the accuracy, express or implied, is made.