The Market in the Rearview Mears: The Spec Wave, Looking Back and Looking Ahead

Coldwell Banker Commercial recently published As the Industrial Supply Wave Slows, the Conversation Is Shifting to Operational Utility, which says tenants now care less about square footage and more about what a building can do for their operation. We're seeing the same thing in Rock County.

• A long drought. In the mid-'90s, Forward Janesville and local banks built a 30,000 SF spec building. It would be 21 years before the next one.
• Then a wave. That next building, 150,000 SF in Janesville, leased before it was finished, and so did its 100,000 SF sister building. Over the following decade, more than 10 spec buildings went up, totaling about 2.3 million SF.
• Where we are today. Vacancy across that spec inventory is about 27%, and that includes the original '90s building. Like the national market, we delivered a lot of space in a short window, and absorption hasn't caught up. That isn't weak demand. It's something tenants here haven't had in a generation: real choice in modern space.
• The questions have changed. Tenants are asking about power, labor, trailer parking, and flexible layouts before they ask about square feet.
• The data center effect. Meta's project in Beaver Dam and Microsoft's in Mount Pleasant are driving new inquiries from contractors, subcontractors, and suppliers. They need warehouse, fabrication, and yard space within a reasonable drive of the work, and our interstate access and available buildings make us a natural regional base.
• Looking ahead. I don't expect new spec construction until more space is absorbed. When it is, the buildings with power, docks, and trailer parking will lease first.

Questions about the industrial market or a specific building? Call me at (608) 359-3031.

Bill Mears, CCIM, SIOR — Coldwell Banker Commercial McGuire Mears & Associates