Despite a major national housing slump, a rise in foreclosures locally and nationally, a large Milwaukee condominium development in receivership and analysis by some real estate observers that the downtown condo market has excess supply, some condo developers say the high-end luxury market remains strong.
Two proposed condo developments at the intersection of Juneau Avenue and Old World Third Street in downtown Milwaukee are having early success in attracting buyers for high-end units.
The Moderne, a 30-story mixed-use building proposed for the southwest corner of Juneau Avenue and Old World Third Street, has obtained reservation contracts for 11 of the project’s 81 condos. Each buyer who has made a reservation has made a 5-percent deposit, said Rick Barrett, managing partner for The Moderne LLC. The sales will close when the buyers move in, he said. The condos in the project that are reserved are worth a total of $8.5 million, and four of the reserved units cost more than $1 million each.
At the northwest corner of the intersection, Dallas-based Gatehouse Capital Corp. and Milwaukee-based Ruvin Development are planning a mixed-use development with a 176-room Palomar luxury boutique hotel, 63 condos and 20,000 square feet of retail space.
The project also will feature a restaurant managed by a Food Network celebrity chef, a night club and a spa.
A sales center will open on May 19 for the condos in the project, called The Residences at Hotel Palomar Milwaukee, which will cost between $575,000 and $2.7 million. That will officially kick off the condo sales, but several buyers already have expressed interest, said project sales director Mary Beth Gaspar-Waite.
“I already have six people that are ready to come on board. They just love the floor plans,” she said. “We’ve got ‘em racked and stacked, just like at LaGuardia, ready to get into this building.”
The Residences at Hotel Palomar is not taking reservations, Gaspar-Waite said.
“We’re going straight to contracts,” she said.
Gaspar-Waite expressed confidence that construction for the Palomar project will begin later this year.
“We’re putting a hole in the ground this fall,” she said.
Considering The Moderne’s condos have only been on the market since Dec. 1, and considering the slumping housing market and overall economy, Barrett says he is pleased with the number of buyers that have made reservations so far. He recently bumped up prices for the condos, $10,000 for each unit priced $350,000 or less and $15,000 for each unit priced more than $350,000.
“Our city marketplace is buying condominiums in a recession,” Barrett said.
The Residences at Hotel Palomar will have a children’s playroom with babysitting services, concierge services, pet care, a garden and a fitness center. Residences also will be able to share a luxury box at the Bradley Center. The Moderne also will have a spa, restaurant and concierge services.
Both projects have high-end appliances, cabinets, floors and other finishes.
Those amenities are attracting buyers willing to pay more than $1 million for a downtown condo, the developers say.
“There is tremendous activity in the upper end of the market,” Gaspar-Waite said. “Everything in this building is crafted to take the burdens of everyday life off of the residents so they can spend more time with the people they love.”
Barrett and Gaspar-White say buyers also are attracted to the entertainment venues nearby and the emergence of the Park East corridor.
The two developments are within a short walk of the Bradley Center and the Marcus Center for the Performing Arts. Few other downtown condo developments enjoy similar proximity to major entertainment venues, Gaspar-White said.
The revitalization of Old World Third Street, which is attracting several new bars and restaurants, also is attracting buyers, Barrett said. Bars and restaurants that have opened recently on the street, or will be opening soon, include Tutto, Milwaukee Brat House, Bootleggers and Kincaid’s.
“Old World Third Street has the potential to become a new entertainment district,” Barrett said. “(Condo buyers) are excited about becoming pioneers in that area.”
If the pace of reservations keeps up, construction on The Moderne could begin in October, Barrett said. Otherwise, the project may start in early spring of 2009, he said. It will take about 22 months to build the building. The general contractor will be Brookfield-based Hunzinger Construction Co., Barrett said. The architect for the project is Milwaukee-based Rinka|Chung Architecture Inc.
Barrett is negotiating financing for the project with a bank. The early reservations, especially for the units priced at more than $1 million, are helping that process, he said.
“From my point of view, we are definitely going to be building this building, and we are definitely going to be getting our financing,” Barrett said.
However, the national housing market slump, which has resulted in a major credit crunch, has made it difficult for developers to obtain financing for large real estate projects. Several banks have absorbed major losses from issuing large numbers of sub-prime loans, and lenders have gone from being aggressive in providing financing to being overly cautious.
“Obviously, on the national level, the credit markets are under enormous stress,” Barrett said. “Financing now is a very difficult thing. (But) we are fulfilling the terms we need to accomplish to get a financing package.”
The developers for The Moderne and The Residences at Hotel Palomar, while competing for condo buyers, also want to see each other’s projects succeed because both will enhance the neighborhood and make it a more attractive place for condo residents.
“It’s like a good pair of shoes,” Gaspar-Waite said. “You have to have more than one.”
Germantown
JK Lee Black Belt Academy plans to build a 12,285-square-foot multi-tenant commercial building on a vacant lot on Maple Commerce Circle. JK Lee will move from N112 W15800 W. Mequon Road, Germantown, to occupy part of the new building. The rest of the building will be leased to other tenants. JK Lee has additional locations in Brookfield, Waukesha, Pewaukee and Fox Point.
Milwaukee
Bouraxis Layton LLC plans to build a 6,981-square-foot, multi-tenant retail building, with a drive-through lane on a vacant site at 938-1010 W. Layton Ave., on Milwaukee’s south side, next to another multi-tenant retail building.
Kenosha
Oconomowoc-based Brookstone Homes plans to build a 110-lot subdivision on the 320-acre former Kenosha Auto Transport site, located northeast of 45th Street and 35th Avenue.
Franklin
Waukesha Home Design Center LLC plans to open a store occupying a portion of the vacant former Jewel-Osco building at 6525 S. 27th St. Despite the national housing market slump there are 33 residential developments in various stages of development in Franklin, said Director of City Development Doug Wheaton, which likely explains Waukesha Home Design Center’s interest in opening a store there.
Cedar Grove
Menomonee Falls-based Cousins Subs Systems Inc. announced that franchisees Vijay and Theresa Sehgal recently opened a Cousins Subs restaurant at 117 S. Main St., Cedar Grove. The small community in southern Sheboygan County only has about 2,000 residents, according to the latest estimate by the U.S. Census Bureau. “People are already talking about having a Cousins in Cedar Grove,” said Vijay Sehgal. “We are a small community, and I am glad to bring another dining option to the area.” The Sehgals also own the gas station next to the Cousins restaurant.
Delafield
Shannon Brazeau plans to open a Farmers Insurance agency in a multi-tenant building owned by Tom Kelly at 615 Milwaukee St. in downtown Delafield.
Glendale
The Chocolate Factory, a local chain of sub sandwich and ice cream restaurants, plans to open a corporate headquarters and internet sales office in a 2,500-square-foot space at 6045 N. Green Bay Ave. The chain’s current headquarters is located in its Bayshore Town Center location.
Leases
Dickman Company
Milwaukee Ironworks LLC leased 17,683 square feet of space at 1200 Davis Ave., Suite B, South Milwaukee, from Innovations Park LLC.
MeVis Medical Solutions Inc. leased 4,403 square feet of office space at N27 W24075 Paul Ct., Suite 200, Pewaukee, from Paul Court Office LLC.
Gerald Nell Inc.
Chicago Fluid System Technologies Inc. leased 6,900 square feet of industrial space at 3225 Gateway Road, Suite 550, Brookfield, from Sunset Investment Co.
Wheelchair Recycling Program Inc. leased 2,400 square feet of industrial space at 3540 N. 126th St., Unit F, Brookfield, from G&N Investment Company.
First Choice Mortgage Inc. leased 1,100 square feet of office space at W229 N1433 Westwood Dr., Suite 207, Waukesha, from Sunset Investment Co.
Lucent Technologies leased, 1,600 square feet of industrial space at 3540 N. 126th St., Unit C, Brookfield, from G&N Investment Company.
Inland Companies
All States Trucking leased 48,498 square feet of industrial space in Capstone Business Center at 9875 S. Stern St., Oak Creek.
Clearly Lasik leased 4,046 square feet of office space in Pinnacle I at 13890 Bishops Dr., Brookfield.
Spectrum Communications leased 4,598 square feet of office space in Executive Center III at 125 N. Executive Dr., Brookfield.
The U.S. Government leased 3,720 square feet of retail space in Six Points East at Greenfield Avenue and 63rd Street in West Allis.
NAI MLG Commercial
Payne & Dolan Inc. leased 1,396 square feet of space in Hales Corners Plaza at 5301-21 S. 108th St., Hales Corners.
WomenCare leased 8,632 square feet of office space at 20611 W. Watertown Road, Brookfield, from Garber Properties Inc.
Weidmann Diagnostics Solutions Inc. leased 1,800 square feet of industrial space at 402 Travis Lane, Waukesha, from Milwaukee Street Partners LLC and Waucom Partners LLC.
Cricket Communications Inc. leased 2,520 square feet of retail space at 8311 W. Brown Deer Road, Milwaukee, from OTRE Investments LLC.
The Oneida Tribe of Indians of Wisconsin leased 7,091 square feet of space at 6801-17 W. Morgan Ave., Milwaukee, from JMC Properties.
L&M Healthcare Communications leased 640 square feet of space at 11422 N. Port Washington Road, Mequon, from Stephen Lauenstein and Robert Korslin.
Schmidlkofer & Toth LLC leased 2,108 square feet of space at 1011 N. Mayfair Road, Wauwatosa, from 1011 Mayfair Road Limited Partnership.
American Apparel leased 3,731 square feet of space in the Kenilworth building at 2615 N. Prospect Ave., Milwaukee, from Kenilworth Retail LLC.
Milwaukee Pizza LLC d.b.a. Topper’s Pizza leased 1,500 square feet of space at 2810-40 W. Rawson Ave., Franklin, from Landmark Rawson LLC.
Humana Marketpoint Inc. leased 3,200 square feet of space at 2223-71 S. 108th St., West Allis, from Mount Pleasant Manor Company.
Siegel-Gallagher
Insurance Strategies Inc. leased 1,596 square feet of office space in The Tradesman at 500 Elm Grove Road, Elm Grove, from Building Trades United.
SALES
Dickman Company
Bau Pro LLC purchased 10,000 square feet of industrial space at 2200 S. Calhoun Road, New Berlin, from Tybecca LLC.
Judson & Associates
Wisconsin Mold Builders purchased the 16,500-square-foot former W-Steel facility at 16135 W. Ryerson Road, New Berlin. Wisconsin Mold will occupy half of the building and lease out the other half.
Dream Works Karting purchased a 12,000-square-foot facility at 2785 S. 167th St., New Berlin.
Siegel-Gallagher
Glen Oaks Partners LLC purchased 10,028 square feet of office space at 1251 W. Glen Oaks Lane, Mequon, from PEP Properties LLC.
NEW CONSTRUCTION
Oconomowoc-based MSI General Corp. recently broke ground on a 14,000-square-foot addition to Franksville United Methodist Church at 10402 Northwestern Ave., Caledonia. MSI General was also selected by Trinity-Freistadt Lutheran Church and School to design and build a 1,600-square-foot addition to the gymnasium and to renovate the existing building.
MEDC LOANS
Dominion Medical Management LLC received a $500,000 MEDC loan and $1.8 million in additional financing to purchase and renovate the 5,450-square-foot building at 105 N. Water St. in Milwaukee’s Historic Third Ward. The company plans to move its headquarters to the building from Mequon.
