It’s not just downtown Milwaukee that’s seeing a boom in commercial real estate leases, sales and development, it’s all of the city and suburbs. Not only that, all of Southeastern Wisconsin is firmly in boom mode today when it comes to commercial real estate activity.
That’s the good news from Deborah Tomczyk, shareholder and chair of the real estate department with the Milwaukee office of law firm Reinhart Boerner Van Deuren. And she’s not the only real estate pro in the region who feels this way. The brokers doing business here agree: Milwaukee and its surrounding communities are in the middle of a commercial real estate expansion.
And it’s an expansion not set to slow anytime soon, they said.
While the suburbs and all of the region are seeing plenty of commercial real estate activity, much of it does start in downtown Milwaukee. This is highlighted by the Fiserv Forum, a 730,000-square-foot, 17,500-seat, multi-purpose arena now under construction in the city’s downtown.
This arena, which will serve as the new home of the NBA’s Milwaukee Bucks, is the centerpiece of a new sports and entertainment district in downtown Milwaukee. A public-private partnership, this is the first new sports and entertainment arena in Wisconsin since 2002.
Northwestern Mutual has also provided a boost to downtown Milwaukee, with the recently completed 7Seventy7, a 35-story luxury apartment building. The $100 million complex includes a golf simulator, outdoor swimming pool and high-end penthouse suite.
Adding to the buzz in downtown is the Milwaukee Symphony Orchestra, which, late last year, announced plans to renovate the historic Warner Grand Theatre in downtown to serve as its new home. That’s another bit of good news; the Warner Grand, which opened in 1931, has been closed since 1995.
“The economy is good. You have these catalytic projects going on in downtown Milwaukee. Then there’s the Foxconn project in Racine County. That has set everything on fire,” Tomczyk said. “I’d say that all of Southeastern Wisconsin is seeing great activity today.”
Foxconn, of course, has the potential to be a game-changer in Southeast Wiscosnin. The Taiwnese manufacturing company is building a $10 billion facility in Racine County’s Mount Pleasant, promising to employ 13,000 people.
To land those jobs, the state of Wisconsin provided $3 billion in tax breaks. Racine County and Mount Pleasant ponied up an additional $764 million in breaks for Foxconn.
Milwaukee and Southeast Wisconsin, then, appear poised for a real estate boost that will be a long-lasting one.
“We have always had a very strong workforce and work ethic here,” Tomczyk said. “We have a lot to offer businesses. The cost of doing business here is lower historically than it is in many other parts of the country. The opportunities are greater. We’ve never seen the big booms or busts that the coasts have seen, or even that Chicago has seen. We are more in the middle of the road. There is a lot of opportunity for a lot of people to come in from outside our market.”
The multifamily sector is performing especially well in Milwaukee, Tomczyk said. And it’s not just young people who are seeking apartment living in the city. Tomczyk said that Baby Boomers, too, are moving into apartments in downtown Milwaukee after they shed their single-family homes.
Tomcyzk said that the industrial market is soaring here, too, while retailers in Milwaukee are facing the same challenges as brick-and-mortar stores across the country. Retailers here are figuring out new ways to compete with online shopping and the direct-delivery model, she said.
“Retail continues to be a huge challenge,” Tomczyk said. “The direct warehouse-to-doorstep delivery system has been a shock to the retail world. The retail world is still trying to figure out how to respond to that. There’s also the shopping habits of the Millennials. They, by and large, have everything delivered to them. They do not go into brick-and-mortar stores so much.”
And the office market? That sector remains soft in the Milwaukee region, Tomczyk said. Much of this has to do with the way companies are looking at office space today.
“The way companies use their offices is so different than it was 20 or even 10 years ago,” Tomczyk said. “Companies need less space for the same number of workers today. It’s so easy for employees to work from anywhere. There isn’t the same need for large office floorplates today.”
A good example is the way in which law offices in Milwaukee are using less space today. Historically, law firms gobbled up huge swaths of office space. That is changing today as more of firms’ lawyers and staffers work remotely and as files become digital instead of paper.
Tomczyk said that Reinhart is going through this same process, rehabbing its existing offices and shedding space as it does so. Michael Best & Freidrich plans to move out of its current downtown Milwaukee location and is building a new office. The total footprint that the law firm occupies will be far less in its new office space.
Jim Cope, executive vice president and managing director with the Milwaukee office of Walker & Dunlop, said that Milwaukee historically has not been a high-growth market. That, though, is changing today.
“It’s refreshing to see what is happening in downtown,” Cope said. “It all starts with the Foxconn project and the jobs that are coming with that. That is having a big impact on the market.”
Jenna Maguire, office property specialist with Milwaukee’s Founders 3, agreed that this is an exciting time in Milwaukee.
“We are seeing construction sites, cranes in the air,” Maguire said. “Northwestern Mutual, Foxconn, the new Bucks Arena, all of these projects have provided a boost to the city. The excitement is coming from everywhere. We are seeing an increase in new leases, new ground-up development and in sales. There is a lot going on. It’s been a good year so far.”
And like other brokers in this market, Maguire is particularly excited about what is happening in downtown Milwaukee.
“There is a vibrancy downtown,” Maguire said. “Young professionals want to move downtown. Empty nesters want to live there. People are coming downtown and staying there longer into their careers. Companies want to capitalize on the young, talented workforce that prefers an urban environment, so they are moving downtown or opening offices there. It really is an exciting time for downtown Milwaukee.”