Could market support 3 luxury apartment towers planned in downtown area?

Don’t look now, but developers are working on plans for three upscale apartment towers in downtown Milwaukee and the Lower East Side, just outside of downtown.

Chicago-based Carroll Properties Inc. is working on plans to build a 32- to 33-story luxury apartment building, with up to 270 units, at a site northeast of Van Buren Street and Kilbourn Avenue downtown.

Milwaukee-based developer Rick Barrett, owner of Barrett Visionary Development, continues to work on plans for The Couture, a 44-story building with 294 upscale apartments, that would be built on the site of Milwaukee County Downtown Transit Center, a bus transfer and storage facility located southwest of Lincoln Memorial Drive and East Michigan Street.

Also, Milwaukee-based Mandel Group Inc. is working on plans for an upscale apartment tower on a vacant lot it owns east of Prospect Avenue at the street’s intersection with Ogden Avenue. No details about the project have been disclosed publicly.

The Carroll Properties project and The Couture would add a combined 564 upscale apartments to the downtown market.

The number of units in the Mandel Group project is unknown.

“We’re still working on it on a regular basis,” said Mandel Group Chief Operating Officer Robert Monnat, who declined to provide further details.

Comparing the three projects begs the question: Can the apartment market in and near downtown Milwaukee support three additional luxury apartment towers that would likely add somewhere between 600 and 900 high-priced units in supply if they were all built?

“I don’t think there is that much demand,” said Bob King, president of Carroll Properties. “We’d flood the market (if all three of these projects were built.)”

“If history is any indication, they don’t all get done,” Monnat said. “There are lots of good ideas out there but not every project is feasible or financeable.”

Barrett, on the other hand, believes high quality projects create their own demand and says all of the planned luxury apartment towers could succeed.

“I look at development as creating demand, if the project is alluring, if the project can bring people from all over to want to live in it,” he said. “We need to continue to attract young professionals and empty nesters to the downtown area.”

More development is good for everyone downtown because it adds to the vitality of the city, increases the tax base, creates jobs, and supports retail, restaurants and cultural and entertainment venues, Barrett said.

“It’s not one or the other (project that will succeed),” he said. “We need them all.”

Barrett points to his The Moderne development, a 30-story tower at the southeast corner of Old World Third Street and Juneau Avenue. The project, completed in 2012, has 203 apartments which are 98.5 percent leased, he said. Some were skeptical that a luxury apartment project could work at the Moderne site on downtown’s west side, but the building offers expansive views of the downtown skyline, the Milwaukee River and some units can see Lake Michigan in the distance.

Despite The Moderne’s lease-up, Monnat said residential developments that are located right on the lake or the river have a major advantage over other projects, even those with views of the water from farther away. That would give The Couture and the Mandel Group projects an advantage over the Carroll Properties project, which would have views of the lake but is two blocks west of Juneau Park, which overlooks the lake.

“Our strategy has been and it continues to be when it comes to housing in downtown Milwaukee, there are two critical resources or amenities. One is the river and the other is the lake,” Monnat said. “There’s nothing like being right there on the water. There’s a huge difference (compared to just seeing the water from a distance). You experience the (water) in a very intimate way every day of your life. You don’t get that when you are three blocks over.”

However, The Couture’s location is too close to Lake Michigan in the eyes of parks advocacy group Preserve Our Parks, which says the site was originally in the lakebed and therefore the state’s public trust doctrine forbids private development there. Earlier this year, the state Legislature passed, and Gov. Scott Walker signed, a bill that formally recognizes the Milwaukee shoreline boundary established in 1913, which would allow The Couture to proceed. But Preserve Our Parks has threatened to sue to block the project and Barrett is still working to obtain title insurance for the site.

The Couture’s prime location near the lake ensures there will be demand for apartments there, Barrett said.

“The Couture is a little bit of a different animal (than other projects),” he said. “Its location is just unbelievable.”

To compete with other upscale apartment projects in the city, Carroll Properties plans to provide a long list of amenities in its development including bike storage, a dog wash, a business center, a business incubator, a barber and beauty salon, a theater, a fitness center, a sport court, a computer gaming center and a shared patio on one of the upper floors.

“Everything you can think of we are trying to put into this building,” King said. “We’re trying to give, in effect, hotel-type convenience and amenities to our tenants.”

In addition, the location at Van Buren and Kilbourn is close to numerous major downtown amenities and employers, he said.

Carroll Properties hopes to break ground on the project during the first quarter of 2015. It will take 12 to 18 months to build, King said.

The apartment market is strong in Milwaukee and King said he is confident that there is demand for his firm’s project.

Barrett is even more bullish on the downtown Milwaukee apartment market.

“There is plenty of demand for downtown housing for the next 10 years,” he said. “I definitely think there is demand until we prove there is no demand. Let’s work together, do amazing projects and create demand.”

Monnat agrees that downtown Milwaukee’s apartment market is strong, but he says it is not “frothy,” as it is in some other markets such as Minneapolis, Denver and San Francisco.

“The reason it’s not frothy is there’s not enough employment growth in metro Milwaukee,” Monnat said.

To achieve the vibrancy that downtown boosters would like to see, the community’s goal should be to grow the downtown population from about 21,000 (as of 2010) to 40,000 in 10 years, Barrett said.

“We need more vitality, more opportunities downtown and more increases to the tax base,” he said. “If the city is not aggressive, there are other cities that will take your residents, your jobs, your tax base and your vitality.”

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