When Northwestern Mutual Life Insurance Co. begins construction on a 33-story high-rise apartment building in downtown Milwaukee in March, it won’t be the company’s first foray into the residential real estate business.
Northwestern Mutual Real Estate, the Milwaukee-based company’s real estate arm, is one of the largest investors in real estate in the country, with investments in commercial mortgages and equity investments across all major property types, including apartments, office, retail and industrial.
The $30 billion to $35 billion real estate investment portfolio is composed of 85 percent fixed income and 15 percent equity investments.
“We have a strong bias towards needs-based real estate; we’re not risk takers,” said Tom Zale, vice president of real estate investment for Northwestern Mutual. “We love grocery-anchored retail and we love apartments. We don’t do a lot of hotels.”
Zale spoke at the Commercial Association of Realtors Wisconsin monthly meeting Oct. 19. Registration for the program was so popular, the event had to be moved to accommodate the crowd.
As far as the Northwestern Mutual real estate group’s equity investment, 46 percent is apartments; 22 percent is industrial; 21 percent is office; 4 percent is retail, although Zale said the company would love to do more retail; and the remaining 7 percent is “other,” such as manufactured housing and storage.
Northwestern Mutual will add to its apartment portfolio next year when it constructs its new tower on the block bounded by North Van Buren, North Jackson, East Mason and East Wells streets.
“Milwaukee is not a 24/7 city yet, but in its own right, it may be,” Zale said. “There is no reason why Milwaukee can’t continue to be a growing, vibrant second-tier city. That’s one of the things that really excited me about this new project. And we know what we’re doing in apartments.”
Northwestern Mutual Real Estate has 16,000 units in its apartment portfolio, including 11,500 units in 36 projects over the past five years. The average age of the portfolio is eight years.
That portfolio includes several high-rise apartment complexes, including:
- 77 12th Street: Located in Midtown Atlanta, the 23-story, 330-unit apartment building boasts a sports lounge, outdoor sky deck, saline swimming pool with waterfall and in-water tanning ledges.
- 1225 Old Town: A 250-unit apartment building in Old Town Chicago that includes an 11th floor rooftop patio with a heated pool and fire pit.
- E2 Apartments: Located just north of Chicago in Evanston, Ill., the 16-story, 368-unit apartment tower includes a full-size basketball court and a party room with a chef’s kitchen.
- The Modern: The 47-story, 450-unit apartment tower in Fort Lee, N.J., offers residents an outdoor movie theater, covered dog run and pet spa, separate “tween” and children’s areas, and a karaoke lounge.
“We have two architects on site and we’ve had an opportunity to see what works and what doesn’t work,” Zale said.
The $100 million Milwaukee apartment tower development will be adjacent to Northwestern Mutual’s Milwaukee headquarters campus and will feature high-end residential apartments and retail space, while also addressing the company’s workforce parking needs.
The high-rise will feature 154 one-bedroom apartments, 66 junior one-bedroom apartments, 88 two-bedroom apartments, four penthouses with two bedrooms and 12 penthouses with three bedrooms.
The units will have 22 design types to optimize the lake views and range in size from 570 square feet to 1,485 square feet, Zale said.
The tower will have several common areas, including the pool, a barbecue deck and a golf simulator, which is something unique to the market that Zale believes is going to be attractive for prospective residents.
In addition to the residential units, ground floor retail space is planned along Jackson, Mason and Van Buren Streets, and an eight-story, 1,100-space parking structure will sit below the residential stories.
As far as rent, Zale said Northwestern Mutual will test the market; however, the company is creating a project that will be deserving of a rent that supports the development.
“We want to showcase what we’re capable of doing and what we are doing across the country,” Zale said. “This is a best-in-class opportunity. We have a much broader vision of not just what’s best for this site, but what’s best for the neighborhood and what’s best for the company.”