MIDDLE MARKET HIGHLIGHT, AUGUST 2007

Madison Developing Plans to Meet Milwaukee Halfway

Though separated by a stretch of Interstate 94 of approximately 75 miles, the cities of Madison and Milwaukee, Wisconsin, are growing closer by the day. The perceived distance between the sprawling suburbs of these two communities has been shortened to a mere 26 miles when you consider the drive from the intersection of Highway 73 and I-94, the intersection at which the Madison suburb of Deerfield is located, and the intersection of Highway 67 and I-94, where the Milwaukee suburb of Oconomowoc is located. The two cities began growing towards one another though suburban residential growth, but the commercial development that has followed the residential boom has inched the cities ever closer.

From the intersection of Highway 73 and I-94, a commuter can reach the Milwaukee suburbs in a mere 22 minutes. For shoppers in either market, there is the Johnson Creek Outlet Mall, which is located strategically between these two communities on Highway 26 along the interstate. The cities’ suburban populations can now convene for shopping at a moments notice.  The constant movement of these two communities toward one another is a shopper’s dream come true, though it may be a nightmare for those that wish to live downtown and walk to the corner store for their groceries. The proliferation of suburban retail could draw momentum away from the push to develop downtown neighborhoods featuring a comprehensive mix of goods and services, including grocery stores, which are often scarce in under-retailed downtown markets like Milwaukee.

There has been a continuing loss of population in the city of Milwaukee, while Madison experiences continued population growth. We expect the Milwaukee suburbs of Brookfield, Delafield and Elm Grove, and the Madison suburbs of Deerfield, Sun Prairie and Cottage Grove, to continue to grow at the expense of the inner city markets. Despite the recent decline in the housing market, many of these communities have seen and will continue to see double-digit population growth. It may be that very few fields, prairies and groves will exist between Milwaukee and Madison as the aforementioned suburbs and neighboring towns continue to expand. 

Is the meeting of these two communities by design or a date with destiny? The answer is that major companies have and will continue to take control of their own destiny and move out of the Madison and Milwaukee commercial markets in pursuit of the lower taxes, larger land parcels and simpler bureaucracy found in the suburbs. Recently, some Madison-based companies — Shared Medical Services and Matrix/Horizon Fitness — made the move out of the city, relocating to the eastern edge of Dane County, in which Madison is situated, to the new Cottage Grove Business Park. Similar movements by Milwaukee-area companies to the far west suburb of Oconomowoc have lead to new suburban development, such as a new 110-bed hospital from Aurora Health Care; the 81,000-square-foot Ace Precision headquarters; the 51,100-square-foot Sentry Equipment Corporation manufacturing facility; and the 1.1 million-square-foot Roundy’s distribution center.

It is and will continue to be very difficult for long-established, inner-city companies to compete with suburban counterparts, where there is more room for expansion, less complicated dealings with municipalities over permitting, and the availability of modern industrial product. It is an easy decision for many companies to move to a community outside of the inner-city that offers the opportunity to relocate in a business park with proper zoning, new infrastructure and better access to major transportation options. Unfortunately for the urban core in Madison and Milwaukee, the jobs move with the companies to these new areas, and residential retail development follows. At the expense of the inner cities, most of the townships, villages, and cities within Dane and Walworth counties have experienced double-digit population growth during the last 20 years, and the census projections for the next 10 years predict that the trend will continue.

With all this growth between Madison and Milwaukee, it is no wonder that construction of one of the largest retail malls to be built in Wisconsin is on the drawing board in the Pabst Farms development in Oconomowoc. General Growth Properties has announced plans for a regional mall and entertainment complex on 110 acres within the expansive mixed-use community.

One could argue that the two communities are presently kept apart only by the width of Jefferson County, a mere 12 miles. It looks as if Madison and Milwaukee have a date with destiny to meet at a yet-to-be-built location somewhere around the intersection of Highway 26 and I-94 in the next decade.

— Blake George is managing principal of the Madison, Wisconsin, office of Lee & Associates.


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