The Commercial Association of REALTORS® Wisconsin (CARW) hosted an in-depth economic and commercial real estate (CRE) outlook focused on both national trends and their implications for Wisconsin. The featured economist Thomas LaSalvia from Moody’s delivered a data-rich presentation that moved from macroeconomic forces down to property-level dynamics, with a special emphasis on the Milwaukee and broader Wisconsin markets.

National Economic Backdrop

The presentation outlined a U.S. economy characterized by labor market stagnation alongside strong wealth appreciation:

• Consumer sentiment is trending downward due to policy uncertainty, tariffs, and inflation pressures.
• Businesses are increasingly focused on cost cutting and adoption of artificial intelligence (AI), contributing to slower job growth.
• A significant share of recent wealth gains is concentrated in the top 10% of income earners, raising concerns about economic fragility if equity markets falter.

Despite these headwinds, the baseline Moody’s forecast calls for continued GDP growth through 2026, supported by productivity gains, AI-driven efficiencies, and fiscal stimulus, albeit without robust job creation.

Wisconsin’s Competitive Position

In contrast to some national challenges, Wisconsin is positioned to outperform in the near to mid-term:

• The state has recorded three consecutive years of positive net domestic migration, a notable shift after decades of outflows.
• Net international migration remains a crucial driver of population and labor supply, though subject to policy risk.
• Wisconsin’s economy has diversified significantly since 1990, now balancing employment across manufacturing, trade/transportation/utilities, education and health, and office-using sectors.
• Major metros, including Madison and Milwaukee, are seeing renewed population and employment momentum.

This diversification and quality of life advantage are expected to help Wisconsin weather national macroeconomic turbulence better than many peer states.

CRE Sector Insights

Nationally and within Wisconsin, CRE fundamentals are showing resilience:

• Apartments: Solid demand and tight conditions in many markets are supporting above-average rent growth.
• Industrial / Warehouse: After a wave of speculative supply in select U.S. markets, new deliveries are slowing, setting the stage for vacancy stabilization and renewed growth, especially in inland and cost-effective locations.
• Office: The sector is past the “apocalypse” narrative, entering a gradual recovery phase with demand returning, though performance will be highly flight-to-quality and location selective.
• Retail: Contrary to past “retail apocalypse” fears, better-located and experience-oriented retail centers are holding steady or improving.

A key theme was that decelerating new supply across most property types, paired with generally stable or improving demand, should support falling vacancy rates and stronger rent growth from 2026 onward.

Takeaways for Wisconsin CRE Professionals

For CARW members, the message was optimistic:

• Macro risks—AI-driven labor disruption, deglobalization, and cost pressures—are real and ongoing.
• Wisconsin’s fundamentals—population trends, economic diversification, and relative affordability—position the state favorably within this challenging backdrop.
• CRE opportunities will increasingly depend on granular, property-level analysis, with an emphasis on quality locations, adaptable buildings, and mixed-use environments.

The session underscored that, while the national economy faces meaningful headwinds, Wisconsin’s commercial real estate market is poised to remain comparatively strong, creating strategic opportunities for investors, owners, and occupiers across the state.