Experts see choppy, yet manageable waters ahead for Milwaukee’s CRE market

Learn more about:

As the dust of the past couple of years settles on a post-pandemic commercial real estate market, industry leaders face ongoing uncertainty due to macroeconomic headwinds heading into 2023. 

In September, the Federal Reserve again increased the federal funds rate, to the 3.0%-3.25% range, in an effort to combat rising inflation, as prices increased 6.2% year-over-year in September. Those factors have stoked fears about the economy being in, or heading into, a recession. Meanwhile, disruptions to the global supply chain continue to persist, and workforce expectations continue to evolve. 

“In 2023 and 2024, and perhaps longer, there will be choppy economic waters rather than the smooth sailing we’ve recently been accustomed to, but the waters will still be navigable for the most part,” said Geoffrey Kasselman, partner and senior vice president of workplace strategy for St. Louis-based commercial real estate development and investment firm CRG. 

- Advertisement -

Kasselman, who works in the firm’s Chicago office, will deliver the keynote address at the annual BizTimes Media Commercial Real Estate and Development Conference, set for Thursday, Nov. 17, from 7 a.m. to 9:45 a.m. at the Italian Community Center in Milwaukee’s Historic Third Ward. 

Kasselman provides clients “future-proofing” strategies for their real estate holdings and workplaces. An innovation-minded business futurist, his remarks will focus on how the big trends in the U.S. and global economies will shape the commercial real estate market in Milwaukee and the Upper Midwest.

“There are some indications the supply/demand equation is coming back into balance while interest rates are on the rapid rise to help tame inflation. Yet employment metrics remain strong, and consumer spending, the most critical component of our domestic GDP, remains defiantly buoyant even as it tails off a bit,” Kasselman said. 

- Advertisement -

He argues that a possible recession will be different than others in the past: “Choppy but manageable.” 

Kasselman is one of a few speakers from outside of the southeast Wisconsin region who will provide an outsiders’ perspective on how macroeconomic headwinds will impact commercial real estate in the Milwaukee area – thus the title of the conference, “From the Outside Looking In.” 

A panel discussion – moderated by Andy Hunt, Vieth director for the Marquette University Center for Real Estate – will feature Thomas D’Arcy, senior managing director at Houston-based Hines, which is building a 31-story apartment tower in Milwaukee’s Historic Third Ward. D’Arcy predicts the uncertainty of 2023 will see commercial real estate leaders delaying long-term decisions and major capital investments, especially in the office market. 

- Advertisement -

“Office users are trying to sort out inflationary pressures on cost of goods and services, escalating wages, higher interest expense and what the hybrid office looks like,” said D’Arcy. 

He expects the rising cost of goods to level out but not go down and warns that high interest rates and a conservative lending environment will “make starting all but the very best projects very difficult.” 

Despite broad-scope challenges, D’Arcy and Hines are bullish on Milwaukee, calling it a “stable and attractive Midwest market.” 

Joining D’Arcy on panel will be Tony Lindsay, principal of asset management at Chicago-based North Wells Capital LLC, which owns the HUB640 building in downtown Milwaukee.

In the past six months, that building at 640 Vel R. Phillips Ave. has added the names of two local Fortune 500 companies to its tenant roster. Most notably, Fiserv Inc. recently announced plans to move its corporate headquarters there from Brookfield. As part of its new headquarters project the company plans to add 250 jobs there over five years, and a $40 million investment will be made in the building. In July, Menomonee Falls-based Kohl’s Corp. announced plans to open a 40,000-square-foot store on the ground floor of the HUB640 building, which was formerly occupied by Boston Store and the corporate headquarters for its parent company The Bon-Ton Stores Inc., which went out of business in 2018.

The Kohl’s and Fiserv lease deals along with the Hines development are just a few of the many projects moving forward in downtown Milwaukee despite macroeconomic uncertainty. And that’s part of the reason why civic leaders remain confident in the city’s ability to attract investment. 

“Milwaukee is the economic engine of the state, boasting an active manufacturing sector and innovative colleges and universities that are producing diverse, talented graduates. We are home to an extraordinary amount of legacy and developing capital,” said Lafayette Crump, commissioner for the Milwaukee Department of City Development and the event’s third panelist. 

“There is more work to do to navigate the effects of the pandemic and DCD stands ready to advance development,” said Crump, noting initiatives like the affordable housing portion of the Iron District, a proposed $160 million mixed-use development northeast of the Marquette Interchange downtown that includes a soccer stadium, a hotel, 140 apartments and a concert venue. 

Marquette and the Commercial Association of Realtors Wisconsin are partners with the annual event, and the conference is sponsored by Building Advantage, CliftonLarsonAllen, Husch Blackwell and Johnson Financial Group. Innovative Signs is an exhibit sponsor.

What's New


Sponsored Content