Downtown Milwaukee Value-Add Opportunity

Transcription

1 OFFERING MEMORANDUM

2 CONFIDENTIALITY AND DISCLAIMER The information contained in the following Marketing Brochure is proprietary and strictly confidential. It is intended to be reviewed only by the party receiving it from Marcus & Millichap and should not be made available to any other person or entity without the written consent of Marcus & Millichap. This Marketing Brochure has been prepared to provide summary, unverified information to prospective purchasers, and to establish only a preliminary level of interest in the subject property. The information contained herein is not a substitute for a thorough due diligence investigation. Marcus & Millichap has not made any investigation, and makes no warranty or representation, with respect to the income or expenses for the subject property, the future projected financial performance of the property, the size and square footage of the property and improvements, the presence or absence of contaminating substances, PCB's or asbestos, the compliance with State and Federal regulations, the physical condition of the improvements thereon, or the financial condition or business prospects of any tenant, or any tenant s plans or intentions to continue its occupancy of the subject property. The information contained in this Marketing Brochure has been obtained from sources we believe to be reliable; however, Marcus & Millichap has not verified, and will not verify, any of the information contained herein, nor has Marcus & Millichap conducted any investigation regarding these matters and makes no warranty or representation whatsoever regarding the accuracy or completeness of the information provided. All potential buyers must take appropriate measures to verify all of the information set forth herein. NON-ENDORSEMENT NOTICE Marcus & Millichap is not affiliated with, sponsored by, or endorsed by any commercial tenant or lessee identified in this marketing package. The presence of any corporation s logo or name is not intended to indicate or imply affiliation with, or sponsorship or endorsement by, said corporation of Marcus & Millichap, its affiliates or subsidiaries, or any agent, product, service, or commercial listing of Marcus & Millichap, and is solely included for the purpose of providing tenant lessee information about this listing to prospective customers. ALL PROPERTY SHOWINGS ARE BY APPOINTMENT ONLY. PLEASE CONSULT YOUR MARCUS & MILLICHAP AGENT FOR MORE DETAILS.

3 TABLE OF CONTENTS Section 1 PRICING AND FINANCIAL ANALYSIS Section 2 PROPERTY DESCRIPTION Section 3 RECENT SALES Section 4 LEASE COMPARABLES Section 5 MARKET OVERVIEW Section 6 DEMOGRAPHIC ANALYSIS

4 PRICING AND FINANCIAL ANALYSIS Downtown Milwaukee Value- Add Opportunity

5 PRICING AND FINANCIAL ANALYSIS FINANCIAL OVERVIEW Location 804 North Milwaukee Street Milwaukee, WI Price $1,700,000 Down Payment 100% / $1,700,000 Rentable Square Feet 48,886 Price/Rentable SF $34.77 Parcel Size 0.33 Acres Year Built 1984 Type of Ownership Fee Simple Current AT&T tenant pays their pro-rata rata of all CAM, Taxes and Insurance costs. Annualized Operating Data Expenses Budget Current Per SF Real Estate Taxes $59,560 $1.22 Insurance $10,745 $0.22 Management Fee $9,000 $0.18 Maint. Payroll $6,000 $0.12 Electrical $1,300 $0.03 HVAC $1,100 $0.02 Elevator $3,320 $0.07 Fire Protection $4,290 $0.09 Services $912 $0.02 Cleaning Exp $1,430 $0.03 Parking & Roads Snow $4,140 $0.08 Utilities $65,770 $1.35 Plumbing $250 $0.01 TOTAL EXPENSES $167,817 $ **AT&T 2, % 11/22/ /31/2018 $60,000 $22.00 NNN 1-3 Yr. 100 Vacant 5, % $75,964 $ Vacant 1, % $22,498 $ Vacant 12, % $171,584 $ Vacant 13, % $187,208 $ Vacant 13, % $188,972 $ TOTAL Expenses Real Insurance Management Maint. Electrical $59,560 HVAC $10,745 $9,000 $6,000 $1,300 $1,100 Estate ElevatorAVAILABLE 46,159 94% $646,226 Fire$3,320 $4,290 Fee Services $912 Payroll Cleaning Parking Utilities Plumbing $1,430 $4,140 $65,770 $250 Taxes Protection Exp & Roads TOTAL EXPENSES/SF $167,817 $3.43 Snow EXPENSES TOTAL OCCUPIED 2,727 6% $60,000 Comments **Landlord and tenant each shall have the right to terminate the lease at any time during the extended term by providing written notice of such termination to the other party. The lease shall terminate one (1) year after the date landlord or tenant sends such notice to the other party. 1

6 PROPERTY DESCRIPTION Downtown Milwaukee Value- Add Opportunity

7 PROPERTY DESCRIPTION INVESTMENT OVERVIEW Investment Highlights Value-Add Opportunity Four Story Office Building Located in the Center of Downtown Milwaukee Potential Redevelopment - Zoning C9F(A) Provides some Flexibility of Uses The Sole Tenant Recently Extended Another Three Years with a Mutual Termination Right, Has Occupied Since 1995 Almost 1,500 parking spaces within a two block radius - Including 749 spaces across the street at Plaza East Pavilion Located on the Vibrant Milwaukee Street Entertainment District, One Block from Cathedral Square Park Marcus & Millichap is pleased to present 804 North Milwaukee Street - a 48,886 square foot, four story office building in Downtown Milwaukee, Wisconsin. Subject property is a four story, office building built in 1984 located on the northeast corner of Milwaukee Street and Wells Street. Currently the building is occupied by one tenant on the first floor (5.58% of GLA) presenting a tremendous value-add or redevelopment opportunity to an investor. The property is zoned C9F which may allow a wide range of uses including Commercial, Residential, Hospitality and Education. Within a two block radius there are approximately 1,500 parking spaces including the Plaza East Pavilion directly across the street which holds 749 parking spaces. ( The immediate area consists of dense retail, office, residential and hospitality uses along the vibrant Milwaukee Street entertainment districts. 840 North Milwaukee Street is walking distance to many shops, restaurants, bars, hotels, athletic clubs, parks, the Lake Michigan lakefront and many other Downtown amenities. This area of town is host to many street and outdoor festivals with Cathedral Square Park just one block to the east. Milwaukee Downtown: Downtown Milwaukee is the economic hub of Southeastern Wisconsin. Since 2005, over $2.6 billion in private and public projects have been completed, over $1 billion more of investment is currently under construction and over $1.3 billion is proposed, spurring a dramatic turnaround that has re-established downtown as a vibrant center of commerce. Most notably the proposed $123.9 Million street car project would run past 804 North Milwaukee Street providing great access from anywhere in Downtown Milwaukee. ( 3

8 PROPERTY DESCRIPTION SCONSIN Milwaukee is the largest city in the State of Wisconsin, the 31st most populous city in the United States, and anchors the 39th most populous Metropolitan Statistical Area in the United States. It is the county seat of Milwaukee County and is located on the southwestern shore of Lake Michigan. According to 2010 census data, the City of Milwaukee has a population of 594,833. Milwaukee is the main cultural and economic center of the Milwaukee-Racine-Waukesha Metropolitan Area with a population of 2,040,498 as of an official 2013 estimate. This ranks the region as the 29th most populous Combined Statistical Area of the United States. Known for its brewing traditions, major new additions to the city include the Milwaukee Riverwalk, the Wisconsin Center, Miller Park, an internationally renowned addition to the Milwaukee Art Museum, Milwaukee Repertory Theater, and Pier Wisconsin, as well as major renovations to the UW-Milwaukee Panther Arena. In addition, many new skyscrapers, condos, lofts and apartments have been constructed in neighborhoods on and near the lakefront and Major Milwaukee Employers Aurora Health Care 22,000 Wheaton Franciscan Healthcare 12,000 Froedtert & Community Health 8,900 Roundy's 8,400 Kohl's Corp 7,800 GE Healthcare Technologies 6,000 Quad Graphics Inc. 5,600 Northwestern Mutual 5,400 ProHealth Care, Inc. 4,900 Wisconsin Energies Corp. 4,700 Columbia St. Mary's Health 4,500 AT&T Wisconsin 3,700 BMO Harris 3,500 Wells Fargo 3,500 Children's Hospital & Health System 4,400 US Bank 3,300 Johnson Controls 3,200 Rockwell Automation 3,000 Harley-Davidson Inc. 2,700 4

9 PROPERTY DESCRIPTION PROPERTY SUMMARY The Offering Property Property Address Property Type Assessor's Parcel Number Downtown Milwaukee Value-Add Opportunity 804 North Milwaukee Street Milwaukee, WI Multi-Tenant Office X Site Description Parcel Size 0.33 Acres Type of Ownership Fee Simple Rentable Square Feet 48,886 Floor Area Ratio (FAR) 3.20 Zoning C9F(A) Parking 1,500 Parking Spaces within Two City Blocks Parking Ratio N/A Landscaping N/A Topography Flat Street Frontage Milwaukee Street Cross Street Wells Street Construction Year Built 1984 Construction Type Steel Frame Number of Floors 4 Number of Suites 6 Floor Plate Size 1-2: 12,256sf, 3-4: 12,372 Exterior Walls Brick Veneer Roof Flat Foundation 12' Slab to Slab Parking Surface None Mechanical Elevator 2 Fire Protection Sprinklers Utilities WE Energies 5

10 PROPERTY DESCRIPTION DOWNTOWN MAP 6

11 PROPERTY DESCRIPTION EXTERIOR PHOTOS 7

12 PROPERTY DESCRIPTION EXTERIOR PHOTOS 8

13 PROPERTY DESCRIPTION INTERIOR PHOTOS 9

14 PROPERTY DESCRIPTION INTERIOR PHOTOS 10

15 PROPERTY DESCRIPTION AREA MAPS Local Map Regional Map 11

16 PROPERTY DESCRIPTION AERIAL OUTLINE the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any 12

17 PROPERTY DESCRIPTION AERIAL OUTLINE the accuracy of the information. References to square footage or age are approximate. Buyer must verify the information and bears all risk for any 13

18 RECENT SALES Downtown Milwaukee Value- Add Opportunity

19 RECENT SALES RECENT SALES MAP 1) 2) 3) 4) 5) Downtown Milwaukee Value-Add Opportunity 401 E Kilbourn Ave Button Block Building First Financial Centre Two-Fifty Wisconsin Building 15

20 RECENT SALES PRICE PER RENTABLE SF Average Price Per Rentable SF Subject 401 E Kilbourn Ave Button Block Building First Financial Centre Two-Fifty Wisconsin Building 16

21 RECENT SALES RECENT SALES Downtown Milwaukee Value-Add Opportunity 804 North Milwaukee Street Milwaukee, WI Offering Price: $1,700,000 Rentable SF: 48,886 Percent Down: 100% Year Built: 1984 Subject Property Occupancy: 6% Price/Rentable SF: $ E Kilbourn Ave 401 E Kilbourn Ave Milwaukee, WI Close of Escrow: 9/28/2015 Sales Price: $2,350,000 Rentable SF: 41,019 Percent Down: 100% Year Built: 1996 CAP Rate: N/A Occupancy: 49% Price/Rentable SF: $57.29 Comments On 09/28/2015, the 41,019 square foot office building located at 401 E Kilbourn Ave in Milwaukee, Wisconsin was sold for $2,350,000, or $57.29 per square foot. The buyer is a local real estate investment firm who moved their headquarters to the building. 2 Button Block Building 500 N Water St Milwaukee, WI Close of Escrow: 3/21/2014 Sales Price: $1,550,000 Rentable SF: 66,913 Percent Down: N/A Year Built: 1892 CAP Rate: N/A Occupancy: 28% Price/Rentable SF: $23.16 Comments The 67,200 Square Foot Office Building at 500 N Water Street in Milwaukee, WI sold on March 21, The property was acquired by a development firm out of Kenosha who plans to convert the building to a hotel. 17

22 RECENT SALES RECENT SALES 3 First Financial Centre 700 N Water St Milwaukee,, WI Close of Escrow: 10/17/2014 Sales Price: $3,125,000 Rentable SF: 154,111 Percent Down: N/A Year Built/Renovated: 1928 / 1997 CAP Rate: N/A Occupancy: 79% Price/Rentable SF: $20.27 Comments 700 N. Water Street is under contract to be sold and converted into a hotel use. 4 Two-Fifty 250 E Wisconsin Ave Milwaukee, WI Close of Escrow: 7/29/2015 Sales Price: $9,750,000 Rentable SF: 200,039 Percent Down: N/A Year Built: 1973 CAP Rate: N/A Occupancy: 44% Price/Rentable SF: $48.74 Comments 250 Plaza was acquired by an investment firm out of Chicago who plans to update the building and add value through leasing up the property to office users. 5 Wisconsin Building 312 E Wisconsin Ave Milwaukee, WI Close of Escrow: 2/19/2016 Sales Price: $2,000,000 Rentable SF: 68,355 Percent Down: N/A Year Built/Renovated: 1926 / 1998 CAP Rate: N/A Occupancy: 25% Price/Rentable SF: $29.26 Comments The Wisconsin Building was sold to an investor out of Chicago who intends on updating the property and leasing the whole building to a single tenant. 18

23 LEASE COMPARABLES Downtown Milwaukee Value- Add Opportunity

24 LEASE COMPARABLES RENT COMPARABLES MAP 1) 2) 3) 4) 5) 6) 7) 8) Downtown Milwaukee Value-Add Opportunity 757 N Broadway Universal Building Adams Building 788 N Jefferson St 401 E Kilbourn Ave Sentinel Building Kennedy II Building Wells Building 20

25 LEASE COMPARABLES OCCUPANCY AND AVERAGE RENT PER SF Average Occupancy Subject 757 N Broadway Universal Building Adams Building 788 N Jefferson St 401 E Kilbourn Ave Sentinel Building Kennedy II Building Wells Building Average Rent per SF Subject 757 N Broadway Universal Building Adams Building 788 N Jefferson St 401 E Kilbourn Ave Sentinel Building Kennedy II Building Wells Building 21

26 LEASE COMPARABLES LEASE COMPARABLES Downtown Milwaukee Value-Add Opportunity 804 North Milwaukee Street Milwaukee, WI Subject Property Date Surveyed: 4/11/216 Rentable SF: 48,886 Occupancy: 6% Year Built: 1984 Rent/SF Available SF Lease Type $ ,159 MG N Broadway Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 67,200 Occupancy: 90% Year Built: 1910 Rent/SF Available SF Lease Type $ ,003 MG 2 Universal Building 731 N Jackson St Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 117,000 Occupancy: 83% Year Built: 1962 Rent/SF Available SF Lease Type $ ,279 MG 22

27 LEASE COMPARABLES LEASE COMPARABLES 3 Adams Building 790 N Jackson St Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 48,000 Occupancy: 27% Year 1920/1988 Rent/SF Available Lease Type $ ,000 MG N Jefferson St Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 108,000 Occupancy: 99% Year 1969/2001 Rent/SF Available SF Lease Type $ ,670 MG E Kilbourn Ave 401 E Kilbourn Ave Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 41,019 Occupancy: 100% Year Built: 1996 Rent/SF Available SF Lease Type $ MG Comments On 09/28/2015, the 41,019 square foot office building located at 401 E Kilbourn Ave in Milwaukee, Wisconsin was sold for $2,350,000, or $57.29 per square foot. The buyer is a local real estate investment who will be moving their headquarters to the building. 23

28 LEASE COMPARABLES LEASE COMPARABLES 6 Sentinel Building 225 E Mason St Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 30,000 Rent/SF Available SF Lease Type $ ,150 MG Occupancy: 50% Year Built: Kennedy II Building 790 N Milwaukee St Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 70,000 Rent/SF Available SF Lease Type $ ,290 MG Occupancy: 46% Year Built: Wells Building 324 E Wisconsin Ave Milwaukee, WI Date Surveyed: 4/11/2016 Rentable SF: 117,094 Rent/SF Available SF Lease Type $ ,513 MG Occupancy: 54% Year 1901/

29 MARKET OVERVIEW Downtown Milwaukee Value- Add Opportunity

30 MARKET OVERVIEW MILWAUKEE Market Highlights Diversifying economy The region supports an increasing number of healthcare and technology companies. Healthy presence of large-scale firms There are six Fortune 500 firms located in the Milwaukee metro. Educated labor pool Nearly 62 percent of residents age 25 and older have some college education, and approximately 32 percent have earned a bachelor s degree or higher. Geography Located in the southeastern portion of Wisconsin, the Greater Milwaukee area is positioned on the shore of Lake Michigan at the confluence of the Menomonee, Kinnickinnic and Milwaukee rivers. The area s topography consists of gently rolling terrain and fertile soil, which has historically supported a significant agricultural base. While Lake Michigan serves as a natural barrier to the east, the region s supply of land is plentiful, and barriers to entry are few. As a result, commercial and residential development will continue to expand. Milwaukee-Waukesha-West Allis Metro 26

31 MARKET OVERVIEW MILWAUKEE Metro The Milwaukee metro encompasses Milwaukee, Ozaukee, Washington and Waukesha counties and spans 1,500 square miles. The metro is home to nearly 1.6 million residents, with around 603,700 living in the city of Milwaukee. Waukesha and West Allis are the most populated suburban cities. Infrastructure Milwaukee is served by Interstate 94, which links the city with Chicago, and Interstate 43, which leads north to Green Bay. In addition, Interstate 794 and Interstate 894 circle the city. General Mitchell International Airport, south of downtown Milwaukee, provides air service to more than 50 cities and handles 6 million passengers per year. Largest Cities in Metro by Population Milwaukee 603,400 Waukesha 71,500 West Allis 61,400 Wauwatosa 46,800 New Berlin 40,300 Brookfield 38,400 Airports General Mitchell International Airport Timmerman Field The Port of Milwaukee is joined to the Great Lakes-St. Lawrence Seaway System for ocean shipping and to New Orleans via the Mississippi River for inland barge service. The port is serviced by the Union Pacific and Canadian Pacific railroads and has easy interstate access. The Milwaukee Intermodal Station connects the region to Amtrak, Greyhound Lines and Jefferson Lines, while the Milwaukee County Transit System accommodates commuters with bus service. Major Roadways I-94, I-43, I-794, I-894 U.S. 18, U.S. 41, U.S. 45 Rail Freight - Union Pacific, Canadian Pacific railroads Passenger - Amtrak Proposed high-speed rail line Port Port of Milwaukee The Milwaukee Metro is: 75 miles from Madison 85 miles from Chicago 250 miles from Detroit 295 miles from Minneapolis * Forecast Sources: Marcus & Millichap Research Services, U.S. Census Bureau, Experian 27

32 MARKET OVERVIEW MILWAUKEE Economy Private business underpins Milwaukee s economy, with manufacturing at its core. This year, the metro s GMP is expected to increase more than 2.8 percent, with retail sales also rising. Local policymakers and public institutions are pulling away from old-line manufacturing industries and placing greater importance on high-growth technical industries by providing incentives to attract and retain these businesses. Milwaukee companies on the Fortune 500 list now range from manufacturing to insurance and retail. The local economy has diversified into other critical industries such as data processing, insurance, mutual funds and printing. Manufacturing, which accounts for 14 percent of the region's employment, produces an annual output in excess of $20 billion. The diversification from traditional old-line manufacturing into health services and technology has placed a greater emphasis on skill sets in the health sciences, high-tech research and biotech components of the region s economy. GE Healthcare, Aurora Health Care and Wheaton Franciscan Healthcare, the area s top three healthcare businesses, will be a driving force in this industry and provide more high-tech jobs in the coming years. * Forecast Sources: Marcus & Millichap Research Services, Bureau of Economic Analysis, Moody s Analytics, U.S. Census Bureau, Fortune 28

33 MARKET OVERVIEW MILWAUKEE Labor The local economy has nearly 860,000 jobs, employed by more than 60,000 establishments throughout the fourcounty region. While manufacturing has been the historical pillar of the local economy, Milwaukee s constant quest for diversification continues to redefine the skills and makeup of its labor pool. Manufacturing is now the fourth-largest employment sector in the metro, with just under 120,000 positions, or 14 percent of total jobs. The largest percentage of area jobs is now provided by the education and health services sector. Employment in this industry has reached a level of 163,700 positions, or 19 percent of total employment. As the population ages and demand for health services increases, employment growth in this sector is expected to average 0.9 percent annually through With 17 percent of metro employment, the trade, transportation and utilities segment is the second-largest local provider of jobs. Growth in this sector is forecast to average 0.7 percent annually through Aside from education and health services, the most significant employment gains during this period are projected to be in the other services and construction sectors, which are expected to grow by an annualized rate of 3.2 percent and 3.1 percent, respectively. * Forecast Sources: Marcus & Millichap Research Services, BLS, Moody s Analytics 29

34 MARKET OVERVIEW MILWAUKEE Employers Milwaukee employers benefit from access to a welleducated labor pool and supportive public policies. Wisconsin s business taxes are lower than the regional average, and the state s capital gains exclusion significantly helps small businesses. Led by Harley-Davidson, Rockwell Automation and GE Healthcare, thousands of manufacturers have operations in the Greater Milwaukee area. The region s finance and insurance industry consists of thousands of firms that employ nearly 53,000 people. Northwestern Mutual houses corporate headquarters in the area. Education and health services, which has become the largest provider of jobs in the Milwaukee metro, employs more than 163,700 residents. Large employers in this sector include Aurora Health Care, Wheaton Franciscan Healthcare and the Medical College of Wisconsin. Technology firms have also been a growth driver. Companies such as Fiserv, a world leader in the facilitation of electronic transactions and online banking, have been well supported by the Wisconsin Information Technology Leadership Association. Major Employers Aurora Health Care Inc. Wheaton Franciscan Healthcare Quad/Graphics Inc. Medical College of Wisconsin GE Healthcare Columbia St. Mary s We Energies Kohl s Department Stores Northwestern Mutual Rockwell Automation Some of Milwaukee s major employers in the trade, transportation and utilities sector are WEC Energy Group, Kohl s, AT&T and SC Johnson. * Forecast Sources: Marcus & Millichap Research Services, BLS, Moody s Analytics, Experian 30

35 MARKET OVERVIEW MILWAUKEE Demographics The Greater Milwaukee area is home to nearly 1.6 million people. As in many other Midwestern and Northeastern metropolitan areas, the ongoing population shifts from north to south continue to challenge the Milwaukee region. Since the mid-1990s, population growth has lagged the national average due in large part to outmigration. Recent capital investment in the city of Milwaukee s infrastructure, however, has spurred significant development of condos, lofts and apartments downtown, which is attracting more residents to the city. The area s median household income, at approximately $55,800 per year, is slightly below the national level. The wealthiest communities are found in Ozaukee County, located along the Lake Michigan shoreline in the northern portion of the metro. The region s population is aging: 13 percent of the population is age 65 or older and the median age is 37.3 years, near that of 37.5 years for the nation. Many residents have lived in the area for a long time, and 60.7 percent of residents own their homes. More than 32 percent of people over the age of 25 have obtained at least a bachelor s degree. This well-educated workforce helps draw businesses to the area. * Forecast Sources: Marcus & Millichap Research Services, AGS, Experian, Moody s Analytics, U.S. Census Bureau 31

36 MARKET OVERVIEW MILWAUKEE Quality of Life Milwaukee has a history steeped in middle-class values and ethnic diversity. The region s favorable quality of life is underpinned by its access to a number of cultural, entertainment, and outdoor recreational activities, and its location along the shores of Lake Michigan. Milwaukee s tourism and cultural infrastructure includes the Milwaukee Brewers (MLB), Milwaukee Bucks (NBA), River Walk, Miller Park, the Wisconsin Center and the Milwaukee Art Museum s Calatravadesigned addition. Tourism now contributes more than $4.9 billion annually to the local economy, highlighted by the world s largest outdoor music festival, Summerfest, which draws nearly 1 million people to the lakefront each year. Furthermore, Milwaukee supports performing arts groups; it has a symphony orchestra, ballet company, opera company, dance troupes and theaters. Visitors and locals alike enjoy the Milwaukee Public Museum, Milwaukee Art Museum, Discovery World at Pier Wisconsin and the Milwaukee Zoo. Opportunities for advanced education in the Milwaukee metropolitan area are available at numerous colleges, universities and technical schools, including Marquette University and the University of Wisconsin-Milwaukee. * Forecast Sources: Marcus & Millichap Research Services, Experian, National Association of Realtors, Moody s Analytics The information contained in the market overview comes from sources deemed to be reliable, however, no representation, warranty or guarantee, express or implied, may be made as to the accuracy or reliability of the information contained herein. The most timely data available at time of production, including estimates and forecasts, were used and may be subject to revision. 32

37 MARKET OVERVIEW MILWAUKEE Investors Searching for Higher Yields and Stability Find Milwaukee Office Investment Opportunities Milwaukee s office market made positive strides in the last three years as rising tenant demand surpassed the slow pace of construction. Development activity has begun to escalate with deliveries doubling in each of the last two years. This trend will continue into next year when Northwestern Mutual occupies its 1.1 million-square-foot headquarters in downtown Milwaukee. The lack of available large floor plates in the most desired employment hubs has incited multi-tenant construction. More than 500,000 square feet of space will be completed this year, contributing to higher metrowide vacancy. In downtown Milwaukee, the 360,000-square-foot 833 East building is the largest multi-tenant office building to debut in more than six years. Multi-tenant construction is not confined to the core; the 155,000-square-foot Meadowlands Research & Technology Center will be added in Wauwatosa this year. As tenants vacate existing space for these new buildings, operators will renovate and adjust rents to market rate, a factor leading to the first annual rent growth in six years. The relative stability of Milwaukee s office market attracts investors, boosting transaction volume. More out-ofstate and exchange buyers have joined a growing number of local investors focusing on Class B office properties in Milwaukee and Waukesha County where cap rates generally start above 8 percent for multi-tenant assets. Older office properties, especially in downtown Milwaukee, will be targeted for repurposing to residential or hotel uses, further spurring the area s renaissance. New multi-tenant office construction here could provide some additional investment opportunities as developers sell buildings to fund future endeavors. Interest in medical office assets remains strong throughout the metro at initial yields that typically start in the 7 percent span, although a lack of available listings will stifle transaction activity this year. * Estimate ** Forecast Source: CoStar Group, Inc. 33

38 MARKET OVERVIEW MILWAUKEE 2016 Market Outlook NOPI Rank 45, down 1 place Employment up 0.8% Construction 600,000 sq. ft. Vacancy up 20 bps Rent up 0.9% Investment Milwaukee slipped one place due to a rise in inventory and remained near the bottom of the NOPI ranking. Office-using employment will account for more than half of the 7,000 total jobs generated in 2016, increasing payrolls 0.8 percent. Last year, staffing levels posted a 1.2 percent gain. Developers will complete 600,000 square feet of office space during 2016, expanding inventory 1 percent and doubling last year s deliveries. Downtown Milwaukee and Wauwatosa will receive the majority of the projects. New inventory will contribute to office vacancy advancing 20 basis points to 15.3 percent in 2016, erasing last year s 20-basis-point decline. Asking rents will rise an average of 0.9 percent to $16.40 per square foot this year, the first annual growth since During 2015, rents dipped 0.2 percent. Revitalization efforts in downtown Milwaukee and the trendy Historic Third Ward neighborhood provide investors with value-add and redevelopment opportunities. * Estimate ** Forecast Sources: CoStar Group, Inc.; Real Capital Analytics 34

39 DEMOGRAPHIC ANALYSIS Downtown Milwaukee Value- Add Opportunity

40 DEMOGRAPHIC ANALYSIS DEMOGRAPHIC REPORT 1 Mile 3 Miles 5 Miles 2000 Population 19, , , Population 24, , , Population 25, , , Population 26, , , Households 10,540 75, , Households 13,444 76, , Households 13,825 78, , Households 14,897 79, , Average Household Size Daytime Population 66, , , Owner Occupied Housing Units 10.98% 22.02% 37.70% 2000 Renter Occupied Housing Units 80.92% 67.61% 54.61% 2000 Vacant 8.10% 10.38% 7.69% 2014 Owner Occupied Housing Units 20.08% 24.32% 38.42% 2014 Renter Occupied Housing Units 79.92% 75.68% 61.58% 2014 Vacant 10.81% 11.54% 9.13% 2019 Owner Occupied Housing Units 20.95% 24.37% 38.24% 2019 Renter Occupied Housing Units 79.05% 75.63% 61.76% 2019 Vacant 11.31% 11.77% 9.36% $ 0 - $14, % 29.8% 22.9% $ 15,000 - $24, % 18.3% 15.6% $ 25,000 - $34, % 12.5% 12.7% $ 35,000 - $49, % 13.2% 14.3% $ 50,000 - $74, % 12.5% 16.0% $ 75,000 - $99, % 5.3% 7.9% $100,000 - $124, % 3.4% 4.6% $125,000 - $149, % 1.7% 2.4% $150,000 - $199, % 1.5% 1.9% $200,000 - $249, % 0.7% 0.7% $250, % 1.1% 1.1% 2014 Median Household Income $41,526 $26,366 $34, Per Capita Income $38,985 $17,891 $20, Average Household Income $66,904 $43,779 $50,853 Demographic data 2012 by Experian. 36

41 DEMOGRAPHIC ANALYSIS SUMMARY REPORT Geography: 5 miles Population In 2014, the population in your selected geography is 431,685. The population has changed by 0.54% since It is estimated that the population in your area will be 432,579 five years from now, which represents a change of 0.20% from the current year. The current population is 49.20% male and 50.79% female. The median age of the population in your area is 30.0, compare this to the Entire US average which is The population density in your area is 5, people per square mile. Households There are currently 169,579 households in your selected geography. The number of households has changed by 1.73% since It is estimated that the number of households in your area will be 171,218 five years from now, which represents a change of 0.96% from the current year. The average household size in your area is 2.44 persons. Income In 2014, the median household income for your selected geography is $34,116, compare this to the Entire US average which is currently $51,972. The median household income for your area has changed by 9.32% since It is estimated that the median household income in your area will be $39,896 five years from now, which represents a change of 16.94% from the current year. The current year per capita income in your area is $20,442, compare this to the Entire US average, which is $28,599. The current year average household income in your area is $50,853, compare this to the Entire US average which is $74,533. Race & Ethnicity The current year racial makeup of your selected area is as follows: 49.38% White, 33.22% Black, 0.03% Native American and 3.00% Asian/Pacific Islander. Compare these to Entire US averages which are: 71.60% White, 12.70% Black, 0.18% Native American and 5.02% Asian/Pacific Islander. People of Hispanic origin are counted independently of race. People of Hispanic origin make up 22.37% of the current year population in your selected area. Compare this to the Entire US average of 17.13%. Housing In 2000, there were 68,083 owner occupied housing units in your area and there were 98,612 renter occupied housing units in your area. The median rent at the time was $438. Employment In 2014, there are 195,761 employees in your selected area, this is also known as the daytime population. The 2000 Census revealed that 56.64% of employees are employed in white-collar occupations in this geography, and 43.33% are employed in blue-collar occupations. In 2014, unemployment in this area is 9.96%. In 2000, the average time traveled to work was 23.3 minutes. Demographic data 2012 by Experian. 37

42 DEMOGRAPHIC ANALYSIS POPULATION DENSITY Demographic data 2012 by Experian. Number of people living in a given area per square mile. 38

43 DEMOGRAPHIC ANALYSIS EMPLOYMENT DENSITY Demographic data 2012 by Experian. The number of people employed in a given area per square mile. 39

44 DEMOGRAPHIC ANALYSIS AVERAGE HOUSEHOLD INCOME Demographic data 2012 by Experian. Average income of all the people 15 years and older occupying a single housing unit. 40

45 DEMOGRAPHIC ANALYSIS TRAFFIC COUNTS Traffic Count data 2012 by TrafficMetrix. All rights reserved. Two-way, average daily traffic volumes. * Traffic Count Estimate 41

46 Downtown Milwaukee Value- Add Opportunity OFFERING MEMORANDUM Offices Throughout the U.S. and Canada