Baby Boomers looking to downsize are helping to fuel the activity in Milwaukee’s multifamily market, according to the latest research from Marcus & Millichap.
Marcus & Millichap’s first quarter multifamily report for the Milwaukee area says that a growing number of Baby Boomers are selling their single-family homes and searching for rental properties in and around the center of Milwaukee. That’s a bit of a surprise: Millennials are usually credited with spurring an area’s rental market.
It’s true, of course, that Millennials and other young adults are also playing a big role in the increasing demand for multifamily units in downtown Milwaukee. This combination of older and younger adults searching for rentals has led to what Marcus & Millichap calls a period of revitalization in Milwaukee’s downtown area.
Marcus & Millichap reports that developers will complete 3,000 apartment units in the Milwaukee market in 2016. That’s a big increase from the 1,530 new units that developers completed a year earlier. The new units will boost the Milwaukee market’s apartment stock by 2.1 percent.
Even with the increase in new units, vacancy rates in the area’s multifamily sector will remain low. Marcus & Mililchap predicts that the multifamily vacancy rate here will drop to 2.7 percent by the end of the year. That’s a predicted drop of 10 basis points.
With low vacancy rates comes an increase in effective multifamily rents. Marcus & Millichap says that effective apartment rents in the Milwaukee market will rise 3.6 percent to $1,000 a month by the end of 2016. In 2015, the area saw effective multifamily rents rise 3 percent to $965 a month.
Of course, not all parts of the Milwaukee market are equal when it comes to multifamily activity. Marcus & Millichap reported that apartment construction today is focused on Milwaukee’s downtown/Shorewood area and the Near North/West Side/Waukesha submarkets.
One area of potential concern? Marcus & Millichap said that vacancy rates might start to rise in the outlying areas of the Milwaukee market. The prices of single-family homes in these submarkets are at affordable levels today. This might convince consumers interested in these areas to buy instead of rent.