The number of condominium sales in downtown Milwaukee exceeded 500 for the first time since 2007, indicating that demand has returned since the condo boom and bust of the mid-2000s, according to a new report by Mandel Group.
However, the sales price for downtown condos have not returned to pre-recession levels. The lower prices are helping sales.
“Favorable pricing and low interest rates contributed to the volume seen in 2016,” said Robert Monnat, chief operating officer of Mandel Group, Inc.
Sales in the five zip code downtown market totaled 543 transactions in 2016.
In the $100,000 to $250,000 range, 315 sales averaged $179,094; in the $250,000 to $ 500,000 range, 168 sales averaged $334,546, according to the Mandel Group report.
Sales below $500,000 represent 89 percent of downtown market activity.
Condos over $500,000 have been the slowest to recover and have yet to match average sales prices from the mid‐2000s, according to the report. Of the 60 total transactions, the average sales price was $840,461.
The highest priced downtown Milwaukee condo sale recorded in 2016 was a $4 million condo on the 26th floor of University Club Tower, 825 N. Prospect Ave., purchased by Greg Bultman, the president of Sheboygan-based Quality State Oil Co. Inc.
In total, nine transactions of $1 million or more were recorded last year for downtown Milwaukee condos.
Mandel Group looked at condominium sales data available on MLS in the downtown market and nearby neighborhoods including Walker’s Point, the Historic Third Ward, Brady Street, the East Side/Lower East Side, the Beerline corridor and Brewer’s Hill neighborhoods.
The number of days of downtown condos on the market has also decreased from 89 days in 2015, to 74 days in 2016.
“Overall, you look at the data and see a market that is strengthening in all respects except for valuations below the $500,000 price point,” Monnat said. “Those values need to firm up to return more confidence to the market.”
Like the area’s single-family housing market, the inventory (the time it would take to sell all of the units on the market at a given time) of downtown condos currently on the market is tight with only two to four months of inventory available.
“Clearly, there’s a lot of room for more inventory,” Monnat said. “We’ll have to wait until the spring selling season comes more into focus to see if there will be supply constraints.”
Mandel Group, which has been developing several downtown apartment projects over the last decade including the North End on North Water Street, DoMUS in the Third Ward and the upcoming Portfolio on the East Side, does not plan on re-entering the condo market anytime soon.
“We’re satisfied with our business platform currently which focuses on multifamily rental development, along with select commercial developments that we see as catalytic/transformational to their urban settings – such as the West Allis project and the proposed office development in Walker’s Point,” Monnat said.
The first new downtown area condo building proposal in 10 years was proposed in December by Milwaukee architect and developer Peter Renner who wants to build a 10-unit development on vacant land in the Third Ward.
The development is planned on a strip of land Renner owns at 610-628 E. Summerfest Place, near the South Gate to the festival grounds. It would include three-story 1,400-square-foot townhouses with two-car garages on the first floor.
The project has received conditional approval from the Third Ward Architectural Review Board and the final details are being worked on.
Chris Corley, who specializes in selling luxury condominiums, will be the broker for the Renner project. Corley has been an advocate for building more condominiums in Milwaukee for several years. He said there has been a lot of demand for certain types of buildings, including Renner’s other Third Ward project, Harbor Front, where Corley sold a condo for $1 million in 2016.
“There are a lot of people leaving their McMansions and they want three bedrooms,” Corley said. “There is a lack of inventory and I think the trend to move downtown will continue. From my gut, I think people will use apartments as a test drive, but in the end, they want to buy a condo. The response we have gotten from the townhome project has already been huge.”