If you’ve spent any time in downtown Milwaukee lately, you’ve likely noticed the bevy of new high-end apartment towers, and several cranes building more of them.
Projects likes the 35-story, 310-unit 7Seventy7, which opened to tenants in 2018, and the 25-story, 259-unit, mass timber Ascent at 700 E. Kilbourn Ave., which began welcoming residents this past summer, were some of the most recent developments to quench local professionals’ thirst for luxury downtown apartment living.
Since then, developers have pitched, or are in the process of constructing six more high-end apartment towers in or near downtown. The 44-story, 322-unit Couture at 909 E. Michigan St., and the 31-story, 333-unit Hines apartment tower at 333 N. Water St. are under construction and will together provide well-heeled Milwaukeeans with 655 new luxury units to choose from by mid-2024. Add the less soaring – but still impressive – nine-story, 251-unit Nova development that New Land Enterprises expects to complete this summer at 1237 N. Van Buren St., and that number climbs to 906 units.
Then there are the projects that have yet to break ground – the 192-unit, 25-story Goll Mansion apartment tower slated to begin construction this summer at 1550 N. Prospect Ave.; the 25-story, 310-unit Renaissance Place apartment tower planned for 1451 N. Prospect Ave.; and the 28-story, 296-unit mass timber apartment tower, dubbed The Edison, planned along the Milwaukee River at West State and North Edison streets – that could deliver another 798 units between early 2025 and early 2026.
The development boom has some real estate experts wondering if Milwaukee is close to oversupplying the luxury apartment market downtown.
Discussing the issue this month, Gard Pecor, a senior market analyst with CoStar Group, pointed to a recent report by the company showing record multifamily construction across the Milwaukee market, including in the typically underserved luxury sector.
Despite the slow growth in workforce or “three-star” market-rate rental units, which have hovered between 1,000 and 1,500 new units per year since 2016, the report found that close to 3,900 four-and-five-star units were under construction at the end of 2022. That’s the highest quarterly figure on record in Milwaukee.
The good news: In addition to the property tax revenue these developments will create, Milwaukee still has a vacancy rate of only 3.6% for such high-end units. That means there’s still room for inventory growth.
“There may be a short-term supply shock, but it’s not anything that is overly concerning. I think there is demand for it, it will just take a bit longer to lease up,” Pecor said. “Overall, I think this is really positive development for Milwaukee. We have more apartment towers under construction than Indianapolis, which is growing faster than us.”
But could the spike in development jar investors?
Andy Hunt, Vieth director of the Center for Real Estate at Marquette University, said that’s unlikely.
“These are all top-tier developers. They know what they are doing. Luxury takes more risk, but the money behind these deals is probably pretty smart money,” Hunt said.
With that said, if all the projects that are either currently underway or in the planning stage end up coming to market, downtown Milwaukee could be at a tipping point for luxury high rises, Hunt noted.
Looking at The Edison, the latest high rise to be proposed, Hunt said the development is an example of a project that “could be pushing the limit” in the downtown market.
“It is coming up at a really interesting time,” he said. “It’s a great location. It will probably be successful, but there is that question of, ‘What is going to happen to the development that comes after it?’”
Tim Gokhman, managing director of New Land Enterprises, said the surge in apartment tower proposals doesn’t really impact his development decisions, especially since many of those projects – including New Land’s own Renaissance Place project – have yet to start the permitting phase.
Regardless of that, Gokhman said the time has come for Milwaukeeans to stop fretting about whether the city can handle such new developments.
“I think it is time to move past that mentality,” he said. “Milwaukee has grown significantly. Ten years ago, it was a different story, but we have become a different city. One project more does not change the ability of the city to absorb these units.”