MadREP Report: March 22 2018
Madison Region New Real Estate Dilemma:
Tenant Demand Exceeds Supply for Large Buildings

As access to talent ascends to the top criteria nationally for business attraction projects, the Madison Region continues to shine in front of site selectors. Our workforce, particularly in hi-tech and manufacturing industries, competes pound for pound with the largest metros in the United States. But a new revelation is that the supply of functional office and industrial real estate for large us e rs is limiting our region's growth opportunities. Simply put, our mid-sized real estate market is showing signs of not being robust enough to compete for new opportunities. MadREP has experienced this first-hand, with significant site selection opportunities for our region being met with scarcity of space.  
Several searches for both Class A office prospects (40,000 square feet and above) and Industrial/warehouse prospects (100,000 SF and above) have left interested parties with only a handful of options throughout the region. While 5% vacancies are great for landlords and their investors, this is beginning to prove difficult for communities and economic development professionals.
Our regional economy is now competing with much larger real estate markets for attraction of talent, entrepreneurs, companies, and investment. The larger "com panies" are looking for existing buildings with shortened decision timelines. Build-to suit developments are rarely an option. We have begun to address the shortage in the large industrial space by encouraging developers, many from outside the region, to build large speculative structures here. As we continue to make the lists for top targets outside of the coasts for regional ICT (Information Communication Technology) headquarters, MadREP is now encouraging developers, investors, and communities to look creatively for financing solutions to add speculative Class A office stock to the market for larger office users as well.

Areas in Several MadREP Communities Awarded New Opportunity Zone Status

The recently enacted federal tax reform legislation from last December permits the US Treasury to designate up to 25% of each state's low wealth census tracts to be designated with Opportunity Zones status.   Governors of each state were put in charge of submitting their own state's Opportunity Zone district recommendations to the US Treasury.  On March, 21 st , Governor Walker announced the 120 census tracts that he had picked in the State of Wisconsin for this Opportunity Zones status.

Kudos to Baraboo, Beaver Dam, Beloit, Fitchburg, Janesville, Jefferson, the City and Town of Madison, Monona, Monroe, Portage, Sun Prairie, Watertown, and Whitewater for receiving Governor designation of 24 districts, and potentially bringing this new finance and redevelopment tool to their communities.

See today's story in the Wisconsin State Journal for additional information. 


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Industrial Site Redevelopment:  
Former GM site listed by local broker for $7.45 million 
The bricks haven't begun flying yet at the former General Motors assembly plant, but the new owners already are listing the site for sale as a redevelopment property. The empty 4.8 million-square-foot facility and its nearly 300-acre site are listed for sale for $7.45 million, according to a listing on Janesville commercial real estate broker Coldwell Banker Commercial McGuire Mears & Associates' website. The property is billed as the "General Motors Plant Redevelopment Campus." 
The former plant's new owner, Commercial Development Company of St. Louis, has enlisted Coldwell Banker Commercial McGuire Mears & Associates as local boots on the ground to market the site for industrial redevelopment.

Industry Development    
Research aimed at helping cranberry industry

Cranberries are so entrenched in Wisconsin that there are significant research efforts under way in the state to support the industry. Last year, the Wisconsin Cranberry Research & Education Foundation, founded in 1999, purchased about 155 acres of land near Black River Falls in Jackson County to create a $1.5 million cranberry research station supported by the U.S. Department of Agriculture. The facility, scheduled to be completed later this year, will include about 30 acres of cranberry beds where researchers can develop and refine growing practices. Meanwhile, at UW-Madison, research is happening on multiple fronts.

Industry Focus: 
Cheese industry perseveres through dairy downturn
Cornfields surround Decatur Dairy's tiny cafĂ© in every direction, but the stream of customers filing in and out on a recent afternoon made it look like a downtown lunch counter. Some came in to buy a bag of cheese curds or try toothpick-skewered samples before leaving. Others hunkered over a few small tables to eat grilled cheese and other snacks. The storefront is a public showcase for the cheese manufacturer, but it's only a slice of Decatur's overall revenue. Behind the register, a flourishing production plant churns out 300,000 pounds of cheese per week-more than 15 million pounds annually. Located just outside Brodhead, Decatur is the destination point for some milk produced in Rock County. That milk is converted into 70 varieties of cheese and then shipped to retailers across the country.

New Development:
Waupun truck stop open for business
At least a portion of Heritage Ridge Travel Plaza, along Highway 151 at Highway 26, is now open. The CITGO station and convenience mart opened Monday, although the adjacent Wild Goose Cafe is still being completed.  Bachmann Construction of Madison broke ground June 13 and projected a Jan. 1 completion date. The city acquired land at the site and established a tax increment financing district. The rationale for the move was that the economic benefits of the development translate into jobs and gains in property value that will offset the costs of the development.

Workforce Housing: 
Tight inventories continue to drive up prices in hot home market in Dane County, across state 
Tight inventories and strong demand fueled by a healthy economy and rising interest rates kept home sales in Dane County in a strong seller's market through the first two months of this year, according to an economy professor who provides data for a state Realtors group. Although Dane County has the second tightest inventory of homes for sale in the state, home sales jumped 6.6 percent through February compared to the same period in 2017, data from the Wisconsin Realtors Association show. They also show that the median sales price in the county jumped 8.9 percent to $268,000, which was the second highest among the state's 72 counties.   


Innovation & Entrepreneurship: 
Doyenne Group debuts startup accelerator
There's a new business accelerator in town, and it takes a more long-term approach toward mentoring entrepreneurs. The Doyenne Group , formed in 2012 to help women start businesses, has stitched together several of its programs to create an accelerator designed to build skills over a full year.  That's different from the main accelerators in Madison: gener8tor, with programs that run from seven to 12 weeks, and Madworks, a 10-week business booster. "We wanted to do a different model. Ours unfolds over the course of 12 months," said Amy Gannon, who co-founded Doyenne with serial entrepreneur Heather Wentler and serves as director of entrepreneur development.

Workforce Housing: 
Apartments envisioned at Horicon school site

School officials here have given some thought to the future of Van Brunt Elementary School if voters on April 3 approve a referendum authorizing the district to build a new elementary school. The school was originally constructed in 1921, with additions in 1954, 1966 and 1992. Renovations to the building occurred in 2004. District Administrator Rich Appel said the district would have options for Van Brunt if it no longer needed the building for educational purposes. "We have had multiple companies contact us, tour, and express interest in repurposing the school into one and two-bedroom studio apartments," Appel said. "The property to the east of the school can be potentially developed into single-family homes."

Business Expansion:
Daybreak Foods seeks to expand egg operation

The Jefferson County Planning and Zoning Committee heard input Thursday on a request by Daybreak Foods Inc. for a conditional-use permit to expand to 2.75 million chickens. Present to speak on behalf of Daybreak Foods along with Harris were Rick Roedl,Daybreak Foods capital projects manager."Just as a point of interest, we've done some economic impacts as far as what it means to our neighbors, to the local communities and to the county," Roedl noted. "In the last year, we contributed approximately $5.9 million to the local economies. That's through working with local businesses with payroll, with taxes."With the proposed expansion, that number will exceed $12 million," he continued. "So we think it also brings the economic impact that's valuable to the community and to the county, as well."  

Transcend Madison

April 4-5

The third annual  Transcend Madison  startup competition fo r University of Wisconsin students will be held at the Wisconsin Institutes for Discovery.  The university's first student-led innovation competition includes the new Early Stage Competition (April 4) and the original Main Stage Competition (April 4-5), with prizes of $5,000 and $50,000, respectively.

Edgewood College Accepting Applications For Pre-Engineering Program Coordinator

Edgewood College is looking for a person with engineering experience/familiarity who will oversee the fab lab and student projects, teach an introductory course in engineering, assist with the teaching of introductory physics when needed,  and generally oversee the pre-engineering program 

3-Session Training 
April 10, May 8, June 12

Forward- thinking Wisconsin companies are taking advantage of the explosive growth seen in other parts of the world. Today, 95% of consumers are outside the United States.  Develop a customized, action-oriented export expansion strategy with ExporTech. Graduates have achieved sales increases averaging $900k in 6-9 months after completing the program.


Small Scale Development Workshop 
April 12

The Incremental Development Alliance one-day workshop on small scale real estate development is all about project formation. They take a big picture view of neighborhood-based development to help attendees analyze what makes a good project, how a building makes money, and how small developers interact with the broader ecosystem of professionals in the built environment. 

Local Food Promotion Program
Grant Opportunity
Deadline: May 7

Farmer-to-Consumer Direct Marketing Act of 1946, as amended (7 U.S.C. 3005). LFPP offers grant funds with a 25% match to increase domestic consumption of and access to locally and regionally produced agricultural products, and to develop new market opportunities for farm and ranch operations serving local markets, by: developing, improving, expanding, and providing outreach, training, and technical assistance to Local and Regional Food Business Enterprises, or assisting in the development, improvement, and expansion of Local and Regional Food Business Enterprises.  .

Farmers Market Promotion Grant Opportunity
Deadline: May 7

The goals of FMPP grants are to increase domestic consumption of and access to locally and regionally produced agricultural products, and to develop new market opportunities for farm and ranch operations serving local markets by developing, improving, expanding, and providing outreach, training, and technical assistance to, or assisting in the development, improvement, and expansion of domestic farmers' markets, roadside stands, community-supported agriculture programs, agritourism activities, and other direct producer-to-consumer market opportunities.


Thank you to Wisconsin Economic Development Corporation and to all of our investors.

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