Industrial Midwest

The key to attracting development? Communities need to tackle the labor problem

The key to attracting companies? Communities have to solve the labor proble,ph01
Zilber Property Group is developing a new facility for Briggs & Stratton in Germanton, Wisconsin.

Developers face a common problem: It’s a challenge to find enough skilled labor to build industrial facilities, office towers and medical office buildings. And when that labor is available? It’s expensive.

That’s why commercial developers say it’s so important for municipal governments and economic development corporations to work together to find solutions to labor solutions.

Consider Zilber Property Group. The real estate company has been particularly busy in the Milwaukee and Southeast Wisconsin regions today.

Zilber is now developing a build-to-suit 706,000-square-foot industrial facility for Briggs & Stratton in Germantown, Wisconsin, about 20 miles from Milwaukee. Zilber also built a 162,000-square-foot light industrial building in the Franklin Business Park in Franklin, Wisconsin. That space, located about 16 miles southwest of Milwaukee, has since been filled by Quad/Graphics.

Zilber is taking on spec industrial work, too. The company is developing three spec industrial projects in Southeastern Wisconsin totaling about 850,000 square feet. One of the spec buildings will be 72,000 square feet, one 250,00 and the third 525,000.

“We are consistent developers in this market,” said Chad Navis, director of industrial investments for Zilber Property Group. “We continue to see a lot of user activity today. Leasing activity here is robust. There is a heavy concentration in this market of 50,000- to 100,000-squae-foot tenants. But we are also seeing a handful of larger users in the market in the 250,000- to 500,000-square-foot range.”

The biggest positive? As Navis looks to the near future, he doesn’t see anything hinting that a slowdown in activity is on the horizon anytime soon.

“If you look at Southeastern Wisconsin, you have an environment where we have a stable government and stable finances,” Navis said. “We have a pro-business climate, a pro-business tax environment. We have active economic development corporations. Then you marry that with the private sector doing its best to provide well-built buildings. If you marry those two things together – the pro-business nature of the area with quality product – that is why you see so much transaction activity today.”

That bit about quality product is important. Users today are looking for a higher standard of amenities in their buildings. This holds true in Milwaukee, of course, but it’s also a fact across the Midwest.

Navis said that tenants in industrial properties today want increasing clear heights in their facilities. They want more parking. And they are increasingly focused on proximity to major highways.

But labor, too, has become increasingly important during the last several years, Navis said. Tenants today want to operate from industrial parks in areas that have access to plentiful skilled labor. They want to move to communities that are taking steps to address the challenges companies face because of labor shortages, Navis said.

“Labor is tight,” Navis said. “It can slow down business growth and is an issue that needs to be addressed. Companies, then, are looking for communities that are trying to get ahead of this issue.”

What can communities do to proactively deal with a tight labor market? Navis said that it is important for communities to have economic development corporations that work directly with companies that are considering a move. These corporations can then match their communities’ labor supply to the new positions that a company will need to fill should it make a move.

Workforce development is key, too, Navis said. Communities that want to attract the top companies need to work closely with technical schools to make sure there are programs in place to train workers for the new jobs that might be coming to an area.

“We need an attractive place for people to live. We need to make sure the people who live there have the right skills they need for today’s jobs. And we need to match them directly with companies that have specific growth needs,” Navis said.

What does the future hold for Milwaukee? How long can the city retain its blistering pace of development, sales and leases? Navis doesn’t have a crystal ball. But he did say that the signs are pointing to steady activity in the near future.

“We do not see any indicators that activity is heading for a slowdown in the next one to two years,” he said. “Our prospect list and user activity is strong. We do have the issue with labor tightness. We do have rising interest rates. We, like all markets, are susceptible to any large economic shock, global or nationally. But unless we see a general slowdown as part of the natural cycle, I think this pace will continue for the immediate future.”