HEARTLAND SNAPSHOT, SEPTEMBER 2006

Milwaukee Retail Market

Milwaukee’s retail sector is responding to demand for an increase in retail through the redevelopment of malls and the new construction of many retail businesses. Unique and national retailers have flocked to the downtown area to offset and absorb the residents’ demand for commercial businesses and activities.

“The development is spread out over metro Milwaukee and Waukesha County, with no real quiet areas,” says Kevin Riodran, a principal with The Boerke Company in Milwaukee.

The redevelopment trend has first been seen at the Bayshore Mall, which underwent a complete renovation and is scheduled to reopen with an almost entirely new cast of retailers. Miller Park Way in West Milwaukee is adding a Target, a home improvement retailer and a grocery store in 2007. A proposed development in Oconomowoc, Wisconsin, is looking to bring 600,000 to 800,000 square feet of retail to the area. The addition of that development will drastically affect the major retail in Waukesha County. With the combination of proposed developments and the possible addition of an IKEA store, retail space in Waukesha County will increase by 8 percent.

Riodran explains that this increase in retail development is seen as an effort to balance the residential and industrial growth that has occurred during the past 20 years.

Some of the more active retail developers in the area include Menomonee Falls, Wisconsin-based Continental Properties Co.; Boulder Development; General Capital Group of Fox Point, Wisconsin; and Waukesha, Wisconsin-based Redmond Commercial Development Corp. New retailers that have broken into the Milwaukee market include Ashley Furniture Industries, Crate & Barrel, Trader Joe’s, PETCO, Costco, Cabela’s, Babies “R” Us and CVS/pharmacy through its acquisition of OscoDrug.

Recent sales and leases in the area reinforce retailers’ attraction to the metropolitan area. Lowe’s Home Improvement Warehouse has acquired four sites in the area, while Menards has acquired two sites. Aldi and Best Buy have purchased various sites in the market as well. Babies “R” Us has leased 45,000 square feet at the intersection of Bluemound Road and South 76th Street for $14 per square foot. World Market and Circuit City have leased spaces priced at $20 and $19 per square foot, respectively. PETCO and Best Buy have also recently struck deals in the area.

With the vacancy rate at approximately 5 percent , Riodran notes that, “[Metro Milwaukee] is a dynamic market and it is very difficult to find affordable sites — land costs are very high for a market of our size.”

With proposed developments spanning the metro area, Riodran suggests keeping a close eye on a mixture of submarkets and corridors. General Growth Properties is developing a 700,000-square-foot open-air center at Pabst Farms in the Oconomowoc/Delafield area, while the explosion of residential development in downtown Milwaukee is attracting retailers to the area. Miller Park Way, in West Milwaukee, has plans for a Target, Menards and Pick ‘N Save, and the opening of a Costco is set to spur further development in the Grafton area. Also a 200,000-square-foot Woodmen’s Food Market is slated to open in for Oak Creek, Wisconsin.

— Kevin Riodran is a principal with The Boerke Company in Milwaukee


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