Milwaukee real estate developer Tim Gokhman and his firm New Land Enterprises certainly have their hands full these days, with new apartment buildings coming online, a food hall on Milwaukee’s East Side to manage and construction of a new mass-timber apartment tower nearly underway.
The global COVID-19 pandemic has certainly complicated matters for Gokhman and his firm.
Gokhman shared what those challenges were, and how the Milwaukee-based firm has handled everything over the last several weeks, in a recent interview with BizTimes.
New Land owns a variety of property types, and each type faces its own unique challenges due to the outbreak, Gokhman said.
The firm has both newly built luxury units as well as what he called “vintage” units. Another way to describe that second group is naturally occurring affordable housing (NOAH), or residential units that maintain low rents without federal subsidy.
It also owns commercial properties, such as office, retail and entertainment including movie theaters and bowling alleys.
Gokhman said New Land’s residential side may be better off than what’s been reported on a national level. He said the percentage of tenants struggling to pay their rent this month was in the “low single digits.”
However, May will likely be a worse month on that front, he said.
“It’s hard to gauge what May will look like based on April because people may have dipped into savings, or if they lost their jobs, they may still have had it into late March,” Gokhman said. “So, I think there will be more stress on the multi-family market in May than in April. I don’t think anybody would disagree with that; the big question would be, how much?’”
Ascent project on track
While the outbreak has certainly impacted certain aspects of New Land’s Ascent development, the apartment tower project is still moving forward, Gokhman said.
In fact, just yesterday the Milwaukee Common Council’s Zoning, Neighborhoods & Development Committee endorsed some changes to the project. New Land is proposing to add 25 units for a total of 264 and increase the number of stories from 23 to 25.
It would be built at 700 E. Kilbourn Ave., at the northeast corner of East Kilbourn Avenue and North Van Buren Street.
Deconstruction and engineering work at the site have essentially finished. New Land is also working to finish project financing, Gokhman said.
He said New Land has a term sheet in hand from a lender and is working with real estate firm JLL to bring the project to market. Gokhman said New Land is about 70% finished with raising equity.
“The current situation doesn’t help, but we’ve made significant progress and I think there’s so much inertia, so much progress, we’ll have no issue getting to the finish line,” he said.
And even though the outbreak has made investors and lenders skittish, Gokhman said he assumes the financial markets will settle in as officials continue to combat the virus.
New Land is aiming for a July groundbreaking on the project. Gokhman said that even if the outbreak is still a threat then, the nature of the beginning work to Ascent, such as pouring concrete, would allow workers to easily practice social distancing requirements.
“With the proper gear, I think we can still do the work and do it safely,” he said.
Crossroads Collective adjustments
New Land is also handling challenges with its Crossroads Collective food hall at 2238 N. Farwell Ave. on Milwaukee’s East Side. Gokhman said gross revenues dropped by almost 50% in March.
“When I look at April, it’s nerve-wracking,” he said. “I would think that if Crossroads were not supported by New Land, if it were a standalone business, I don’t think it would survive.”
Restaurant tenants in the food hall were forced to close or severely limit operations due to state and local stay-at-home orders. But some are still operating with limited curbside pickup or delivery services.
Crossroads’ vendors were able to quickly adjust to curbside because of technology they had. One vendor, Juana Taco, is providing take-home kits for customers to build their own taco. SmallPie came back online just on Thursday after stabilizing production.
Crossroads will also soon be offering coffee.
“I think we’ve done a good job adapting to the situation, but the situation is pretty terrible nonetheless,” Gokhman said.
Biggest worry and source of hope
Gokhman said what perhaps worries him most about this outbreak is its potential lasting impact on local and small businesses. But he finds solace in that, unlike the Great Recession, lenders are still relatively stable.
“The biggest thing that concerns me is how the smaller businesses, whether it’s office or retail or service, make it out of this, and how do we support them in doing that,” he said.
Gokhman is particularly worried about “Main Street retail,” which he said gives a city its identity. He noted that famous restauranteur David Chang said in a recent interview he was worried the outbreak will destroy mom-and-pop restaurants and that only large restaurant chains will survive.
“And so that component worries me a lot,” Gokhman said. “Anything that we as a city and business improvement districts can do to help, we’re doing.”
He continued, “But, on the other hand, what’s good, if you can call it that, about the current situation is so far the financial institutions are healthy. So once things settle down, the ability to lend is going to be super critical to getting things back. And so far, I don’t see a problem with that, which gives me hope.”
