Wisconsin’s commercial real estate market is showing signs of stabilizing after several years of volatility, according to professionals active in the state’s key growth regions. Recent data and broker perspectives point to a measured recovery, with improving fundamentals and emerging patterns among investors and tenants.
Devan Dorzok, a licensed real estate salesperson with NAI Pfefferle, brings a practical perspective to the state’s commercial sector. He entered brokerage after serving in the Marine Corps, where he began studying real estate investing. His early experience buying a triplex and managing property challenges shaped his approach as a broker. Today, he focuses on multifamily and industrial properties, drawing on his experience as both investor and advisor.
Fundamentals Improve Across Wisconsin
Wisconsin’s appeal to outside investors is growing as the state leverages its geographic and economic strengths. Proximity to the Great Lakes, access to major transportation corridors, and a concentration of mid-size cities have supported steady growth in commerce and trade. Dorzok points out that investors continue to find attractive returns in Wisconsin, especially compared to overheated coastal markets.
Recent figures show that vacancy rates in the Wausau market have declined from 16–17% two years ago to about 14% today. Lease values have climbed by roughly 2% annually, indicating a market that is gradually regaining balance. Dorzok sees these figures as evidence that Wisconsin is returning to a more typical real estate cycle after pandemic disruptions. “We’re starting to get back into that recovery phase,” he says.
Tenants Favor Shorter Lease Terms
Despite improving fundamentals, tenant behavior suggests ongoing caution about long-term commitments. Many tenants are deciding faster but are less willing to sign long-term leases. Dorzok reports a clear shift away from traditional seven- and ten-year agreements in favor of one- to five-year terms. This shift reflects a desire for flexibility as tenants anticipate needing more space or different layouts in the near term.
A recent hotel and restaurant development illustrates how lease structures are adapting. The project includes a 20-year lease with five-year option periods. The hotel secures long-term stability while the restaurant operator can reassess its commitment every five years. This structure gives both parties flexibility to respond to changing business needs without a decade-long commitment.
Industrial Properties Lead Recovery
The industrial and manufacturing segment remains the standout performer in Wisconsin’s commercial market. Over the past seven years, industrial property values have nearly doubled. From 2015 to 2017, industrial and manufacturing space typically traded for $15 to $30 per square foot. Today, comparable facilities in favorable locations command $50 to $80 per square foot. Demand from logistics, manufacturing, and distribution companies seeking space near major transportation corridors has driven this surge.
However, the sector is now absorbing a backlog of new construction that peaked during the recent building boom. Last year, new industrial construction in Wisconsin rose 25.2%. Projections for this year point to a slowdown, with growth falling to about 19.6%. Dorzok expects this slowdown to continue as the market absorbs existing inventory. He anticipates a return to equilibrium within three to four years.
Office Sector Adjusts to Hybrid Work
Wisconsin’s office sector continues to adjust in the wake of pandemic-driven changes in workplace habits. Many office properties are being repurposed, including conversions to mixed-use or flex industrial spaces. Dorzok notes that office leasing recovery has been slow, with demand now coming mainly from smaller tenants rather than large corporate users.
The sweet spot for office and flex space has shifted toward units in the 3,000- to 10,000-square-foot range, catering to small businesses and startups. Demand for large blocks of 30,000 square feet or more has weakened. Landlords are increasingly targeting local and regional tenants with modest space requirements. This trend is expected to persist as hybrid work and changing business models reduce the need for expansive office footprints.
Local Retailers Fill Vacancy Gaps
One of the most notable trends in Wisconsin’s retail sector is the growing presence of local and regional businesses in smaller commercial spaces. National chains and big-box retailers have slowed their expansion, creating opportunities for independent operators. Dorzok observes that businesses with one to ten locations are now dominating leasing activity in many Wisconsin markets.
This shift is partly due to the personal connection and local support these businesses can cultivate. Customers tend to favor local retailers that offer tailored service and community engagement, advantages that national brands struggle to replicate at scale. As larger retail tenants retrench, these smaller operators are filling the gap, helping to stabilize occupancy rates and revitalize neighborhood retail corridors.
Preparation Drives Successful Transactions
From Dorzok’s perspective as a broker, successful transactions increasingly depend on buyer preparation and realistic expectations. Deals often falter due to missteps such as underestimating financing requirements, overlooking property management challenges, or misjudging renovation costs and timelines.
Many buyers, particularly those new to commercial real estate, underestimate the capital and expertise needed to close a deal. Dorzok emphasizes that working with an experienced broker can help investors avoid costly errors and better assess opportunity costs. “Paying a sophisticated, educated broker saves you a lot more money,” he says, noting that professional guidance can be the difference between a profitable deal and a missed opportunity.
Wisconsin Market Outlook Through 2026
Through 2026, Wisconsin’s commercial market is likely to keep cooling from recent highs. Signs point to steady, sustainable growth rather than a sharp downturn. The retail sector is positioned for gains as incomes rise and new businesses enter the market. Dorzok believes operators who secure prime locations early can benefit from increased consumer spending.
He also cautions out-of-state investors not to overlook Wisconsin’s smaller markets. While these markets may lack the $100 million-plus transactions seen in larger cities, they offer smaller deals with strong returns. Dorzok argues that assembling a portfolio of high-performing, modestly sized properties can match or exceed the returns of larger, riskier investments.
Challenges remain, particularly in absorbing surplus office space and managing the inventory of new industrial construction. However, with declining vacancy rates, rising lease values, and resilient demand from local businesses, Wisconsin’s commercial real estate market rewards investors who bring diligence, flexibility, and a long-term perspective.
About the Expert: Devan Dorzok is a licensed real estate salesperson at NAI Pfefferle, specializing in multifamily and industrial properties across Wisconsin. A Marine Corps veteran, he draws on his firsthand experience as a real estate investor to guide clients through commercial acquisitions and brokerage decisions.
This article is based on information provided by the expert source cited above. It is intended for general informational purposes only and does not constitute legal, financial, or real estate advice. Readers should conduct their own research and consult qualified professionals before making any real estate or financial decisions.
