The apartment market in downtown Milwaukee, and in areas near downtown including the Third Ward and the East Side, appears healthy as new apartment developments are filling up.
Latitude Apartments, a 90-unit apartment complex built at 1857 E. Kenilworth Place on Milwaukee’s East Side, is now 100 percent leased, said property manager Sara Lovy. The building was developed by Dermond Property Investments. It has 71 one-bedroom apartments, with 633-849 square feet of space and rents at $1,125 to $1,450, and 19 studio units, with 561 square feet of space each and rents at $950 to $1,095.
The building was completed in August and fully leased by the end of May, Lovy said. Dermond now has a waiting list of 30 to 35 people for the one-bedroom apartments and 15 people for the studios, Lovy said.
“I think the apartment market is pretty strong right now,” Lovy said.
Mandel Property Services Inc., a division of Milwaukee-based Mandel Group, announced that it has now leased 90 percent of the apartments at Park Lafayette Towers.
The 280-unit, twin 20-story towers were built at 1918 E. Lafayette Place, on a bluff overlooking Lake Michigan on Milwaukee’s East Side. The property, originally built by Oak Brook, Ill.-based Renaissant Development Group LLC as condominiums, was sold last year to Park Lafayette Holdings LLC last year in a bankruptcy sale. Mandel Property Services was hired to manage and lease the property for Park Lafayette Holdings.
Only eight of the units were sold to condo buyers. Those units are still owned by the original buyers. The other 272 units are being leased as apartments. The project added significantly to the inventory of apartments in the area in and near downtown Milwaukee. However, approximately 245 of the apartment units at Park Lafayette Towers have been leased and only about 27 are still available.
“The property’s location has really resonated with the downtown and East Side audience for apartments,” said Katrina Lipman, property manager for Mandel Property Services. “People love how close everything is along the lakefront.”
Park Lafayette Towers’ one-bedroom units are 100 percent leased, and Mandel Property Services is creating a waiting list. Some two- and three-bedroom units are still available.
In the Historic Third Ward, just south of downtown, apartments are leasing quickly in Jackson Square, a new 85-unit apartment building at the northwest corner of East Menomonee and North Jackson streets. The building opened in April and so far 50 units have been leased. The units range from 900 to 1,700 square feet in size and are priced from $1,450 to $2,700 a month.
“We’re renting about a unit a day,” said developer Robert Joseph. “We’re ahead of schedule.”
The collapse of the downtown condo market has bolstered the apartment market, Joseph said. It is much harder to get financing to purchase a condo today than before the Great Recession, he said, and consumer interest in apartments has increased.
“Right now things are trending toward apartments,” Joseph said. “(The apartment market) is very strong.”
Joseph and Dermond are both planning to build more apartments, but have not decided where.
The strength of the downtown apartment market follows the improving condition of the national apartment market. Nationally, apartment occupancy rose from 93.3 percent in April to 93.96 percent in May and effective rents (rents net of concessions), increased 0.7 percent in May, according to Dallas-based Axiometrics Inc., a provider of data and analysis on the multi-family housing sector.
The success in leasing apartments at Latitude, Park Lafayette and Jackson Square is good news for developers that are building additional apartment buildings in the downtown area. It’s also good news for taxpayers that are providing loan guarantees or other subsidies for downtown apartment developments, although it also calls into question why taxpayer subsidies for apartment developments are needed.
Wauwatosa-based Wangard Partners recently received approval from the U.S. Department of Housing and Urban Development (HUD) for a loan guarantee for $9.6 million in financing for a 68-unit apartment building it will build at 1910 N. Water St. in downtown Milwaukee. The financing will be provided by St. Paul, Minn.-based Oak Grove Capital.
“The Water Street neighborhood in Milwaukee has an unprecedented demand for apartments in the downtown area,” said Stewart Wangard, president of Wangard Partners. “Occupancy rates are at historically high levels.”
Last year the city of Milwaukee loaned $9.3 million for the 30-story Moderne apartment and condominium building now under construction southwest of Old World Third Street and Juneau Avenue downtown. HUD provided a loan guarantee for a $42.4 million loan provided for the project by the AFL-CIO Housing Investment Trust. The Moderne will have 203 apartments, 14 condominiums and 7,000 square feet of retail space. The project is expected to be completed in late 2012.
City officials recently reached an agreement to provide a $4.6 million loan to Mandel Group for the second phase of the North End project. The deal is subject to approval by the Common Council and Mayor Tom Barrett. Other financing will include $26.185 million in tax exempt bonds issued by the Wisconsin Housing and Economic Development Authority (WHEDA).The second phase of the North End is a $36.7 million project that will consist of two buildings with 155 apartments. It will be built next to the 83-unit first phase of the North End project, which is located southwest of Water Street and Pleasant Street downtown. For the second phase of the North End project, 80 percent of the units will be available for market-rate rents and 20 percent of the units will be at lower rents available to households earning no more than 60 percent of the county median income.
The first phase of the North End leased up quickly. It was completed in 2009 and fully leased in less than a year.