HEARTLAND SNAPSHOT, JULY 2007

Milwaukee Retail Market

As the first half of the year comes to a close, the Milwaukee retail market continues to experience a tremendous amount of activity. New developments are providing the right opportunities for restaurants and retailers to expand into the market.

Downtown continues to see major residential development, paving the way for major retail. Big box retail is expected to enter the downtown market, the only questions being when and where. The Park East Freeway has been torn down and is ready for redevelopment. The Bradley Center, home to the Milwaukee Bucks and Marquette Golden Eagles, is looking for complementary entertainment and retail offerings, and The Shops of Grand Avenue, originally developed in 1982, is ready for renovation. A major retail/hotel project is also being planned for an area just west of The Shops of Grand Avenue.

Milwaukee’s regional malls, including Bayshore Town Center, Brookfield Square Mall, Mayfair Mall and Southridge Mall, continue to remain vibrant anchors for the market’s regional shopping areas. At Brookfield Square, The Fresh Market will be joining a lineup of new restaurants opening this summer that includes Abuelo’s, Claim Jumper, Fleming’s Prime Steakhouse & Wine Bar and Cameron Mitchell’s. The new openings mark the entrance into southeastern Wisconsin for all of these concepts.

At the end of 2006, Bayshore Mall reopened as the new Bayshore Town Center in Milwaukee’s North Shore submarket. With both interior mall and exterior main street components, the new 1.2 million-square-foot Bayshore Town Center is Milwaukee’s premier lifestyle center.  This development has given national restaurants such as Bar Louie, Bravo! Cucina Italiana, California Pizza Kitchen, Cameron’s Steakhouse, The Cheesecake Factory and Devon’s Seafood Grill an opportunity to expand into this market. Other developments at the site include a two-story Barnes & Noble, along with Trader Joe’s and LA Fitness, both of which established their first locations in the market at Bayshore.

General Growth Properties has announced plans for a new 1.5 million-square-foot regional mall/ lifestyle center development at the Pabst Farms site, located in the northeast quadrant of  the Interstate 94 and Highway 67 interchange in Oconomowoc, Wis.

In 2006, Best Buy opened a 50,000-square-foot store directly across from Mayfair Mall on a site that was formerly occupied by three office buildings.  Also across from the mall, at the northwest corner of Mayfair Road and Center Street, a local developer recently assembled and consolidated three office properties totaling more than 4 acres for a new 47,000 square foot retail/office development that is scheduled to open in the third quarter.

Construction on the approximately 74,000-square-foot final phase of Midtown Center began earlier this year, with the center scheduled to open this fall.  Office Depot and Fashion Bug are the lead tenants in this new phase, and will add to the existing lineup that includes Wal-Mart, Lowe’s Home Improvement Warehouse, Pick ‘n Save, AJ Wright, Barefeet Shoes and Anna’s Linens. Completion of this phase will bring the center to approximately 560,000 square feet.

Redevelopment of the former General Electric Hot Point facility along Miller Parkway has been completed, with a new Pick ‘n Save grocery store opening earlier this year. A new 200,000-square-foot Menards department store is scheduled to open this summer adjacent to Pick ‘n Save and construction recently started on a new 7-acre development across from this site. 

Active suburban submarkets include Appleton Avenue and County Line Road in Menomonee Falls/Germantown; the Howell Avenue corridor in Oak Creek; Interstate 43 and Highway 60 in Grafton; the Highway 50 corridor in Kenosha; Highway 67 in Oconomowoc; and the Moorland Road corridor in Muskego/New Berlin. 

During the past year, Wal-Mart has repositioned its existing store in the Menomonee Falls/ Germantown market and moved into a new supercenter location. JC Penney will be backfilling the former Wal-Mart store. TJ Maxx, Linens ‘N Things and World Market have also entered the area recently. Additional development in Grafton started this year, with the first Costco in Wisconsin currently under construction.  In addition to the existing Target and Home Depot, the development of Costco is drawing other big retailers to the area, including Menards. This area should continue to develop into a suburban retail hub.

The city of Franklin, Wisconsin, is a prime example of the development trends in metro Milwaukee. Arguably the fastest growing community in the area, Franklin has two retail developments, one under construction and one in the planning stages, and both include a 60,000-square-foot Sendik’s grocery store. This is Sendik’s first venture into the metro area and is a clear signal that the exit of national names has created opportunities in the market for strong local names to expand.

The grocery store segment is continuing to experience change.  In March of this year, Jewel-Osco closed all 15 of its Wisconsin stores.  Pick ‘n Save (Roundy’s) continued to expand its market share through the purchase of five of these sites.  Local operator Lena’s purchased two of the sites, while Sentry operators have opened in four of the other former locations.  CVS/pharmacy entered the market through its acquisition of the freestanding Osco Drug stores and is looking to expand its presence.

Growth in the specialty grocery category continues with the entrance of Trader Joe’s, The Fresh Market and Whole Foods, as well as with the expansion of Sendik’s.

As 2007 continues, we should see continued active urban redevelopment and additional suburban development to complement the large format retailers that established these markets. Retailers that have entered the market in recent years will start to look beyond the primary regional areas for expansion opportunities. The market will also remain stable and active as demand for retail sites continues to be strong.

— Pete Glaser is a vice president of the retail group in the Milwaukee office of CB Richard Ellis.


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