HEARTLAND SNAPSHOT, MARCH 2006

Milwaukee Multifamily Market

The Milwaukee multifamily market is getting exciting again, with renters shopping for services and amenities instead of just rental specials. Properties have once again been able to budget a rental increase, and high-end units are again seeing traffic. “For the past 4 years, we had been running our properties by just maintaining,” says Susan Fellows, director of multifamily management at Milwaukee-based Ogden & Company. “Expenses were going up, but not income. The market was weak and competition was fierce. [But since] mid-January, properties have seen traffic as if it was June. [Prospective renters are asking] ‘What does your community have to offer?' rather than ‘What are the specials?'”

Condominiums in the downtown area continue to be built and sold. The Milwaukee suburbs have seen growth with the addition of many condominium-style apartments and senior housing communities. In downtown Milwaukee, the renovation of the former Wisconsin Hotel into a high-end apartment community is underway. The historical renovation will convert the hotel into 100 luxury units that will then be converted to condominiums during the next 5 to 7 years. The Third and Fifth ward areas have also been active. “Distressed areas have investors [that are] taking advantage of tax credits and developing wonderful affordable housing,” Fellows says. St. Paul, Minnesota-based developer CommonBond Communities recently entered the Milwaukee market with the rehab and development of Teweles Seed Tower in the Fifth Ward. The development will comprise 115 residential rental units, of which half are market rate and half tax-credit units. CommonBond is also working on the Schuster Building on Mitchell Street, which will be converted into a tax-credit apartment community as well.

New apartments are being developed with the concept of being sold as condominiums within the next few years. “[The idea is to] try to attract young individuals as renters and then convert them into owners,” Fellows explains. Another development trend is apartments that are designed for a specific use, such as artist lofts, units designed specifically for handicapped residents and “time share” units.

Recent residential developments include the previously mentioned Teweles Seed Tower and Gorman & Company's recent historic rehab of the Woodworth Building on Grand Avenue into a tax credit apartment community now known as The Majestic.

Current rental rates in Milwaukee range from as low as $350 per month to $2,700 for a one- or two-bedroom unit. Occupancy rates have reached the 91 to 94 percent range. “The market will continue to grow strongly and aggressively,” Fellows predicts. “Milwaukee is still a market where you can develop or purchase multifamily properties and make them cash flow almost immediately.” Investors outside of the Milwaukee market have taken notice and are focusing on investments in the market.

“Competition is always good,” Fellows says. “As development continues, it forces the already-developed communities to step up their services and allows the rents of current properties to grow.”

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