Real estate execs predict strong year for downtown condo market

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Real estate execs predict strong year for downtown condo market

Demand also will grow for retail businesses

By TOM DAYKIN
tdaykin@journalsentinel.com

Posted: Jan. 12, 2006

Downtown Milwaukee's condominium market is expected to remain strong in 2006, and that will help strengthen demand for additional retail businesses there, according to presentations made Thursday by local real estate executives.

"Downtown is going to continue to grow," said Craig Raddatz, vice president at Fiduciary Real Estate Development Inc., which owns apartment and condo buildings throughout the Milwaukee area.

Raddatz was among those speaking at the annual real estate forecast, sponsored by the Institute of Real Management Milwaukee Chapter. The event, at the Italian Community Center, drew an audience of around 500 area real estate and financing professionals.

There are 28 active condo projects in and around downtown, totaling 1,687 units, Raddatz said. That includes developments that are new with at least 20% of their units remaining for sale, those developments under construction and projects that are about to begin construction.

Of the almost 1,700 condos in those projects, around 1,000 units already have been sold, he said, including some that have been sold before construction began. He said around 1,000 to 1,100 new and existing condos annually are sold throughout the downtown area.

Also, downtown condos are getting bigger and more expensive, Raddatz said.

Excluding the city's two most expensive projects - University Club Tower and Kilbourn Tower - the average condo sold in 2005 was 1,441 square feet, with a price of $312,000, Raddatz said. That's an 11% increase over the average sale price in 2004, he said.

The continued demand of empty nesters, who are seeking roomier, more expensive units, as well as young professionals, looking for less costly but stylish condos, is fueling the boom, Raddatz said. He said downtown has a wide range of housing choices, with condos carrying sale prices ranging from $225,000 to $1.3 million.

The continued growth of downtown housing will help stimulate more demand for restaurants, shops and other retailers, said Max Rasansky, president of The Polacheck Co. commercial real estate brokerage.

New office buildings, including Manpower Co.'s planned corporate headquarters, also will drive demand for increased downtown retail, Rasansky said.

"For retail, you've got to have people, people, people," Rasansky said.

Downtown could eventually see the development of two-story "big box" stores, Rasansky said. National retailers that have largely focused on suburban sites, including Menomonee Falls-based Kohl's Corp., are experimenting more with urban formats.

Retailers will continue to look for development sites near freeway interchanges, Rasansky said.

But Milwaukee's neighborhoods also are drawing national chains, he said, including the Whole Foods Market under development at the northwest corner of N. Prospect and E. North avenues.

"The entire east side of Milwaukee is going to be redeveloped," Rasansky said.

Ned Purtell, a partner and broker at RFP Commercial Inc., and James T. Barry III, president of Colliers Barry commercial real estate brokerage, said demand should increase for both office and industrial space in the Milwaukee area.

"We are much better off in the office market here than we think," Purtell said.