Downtown Condo Demand Grows
The downtown condominium craze, driven by empty nesters and others who want to live downtown, shows few signs of slowing down - despite the recession, according to a recent presentation made to a meeting of real estate professionals.
More downtown condos were sold in 2001 than in either of the previous two years, said Robert Monnat, chief operating officer at Mandel Group Inc.
And that amount will increase in 2002, Monnat said during the annual real estate forecast breakfast of the Institute of Real Estate Management Milwaukee Chapter No. 13.
"The downtown phenomena is a bona fide trend that continues to grow," Monnat said during his presentation, which drew about 400 people to the Italian Community Center.
The increased demand is tied to the increased number of empty nesters, and childless professionals in their 20s and early 30s, Monnat said. Both demographic groups are embracing urban living, he said.
Also, the steep decline in interest rates over the past year has made condos more affordable, Monnat said.
From 1998 through 2001, Monnat said, 399 condos were built in and around downtown, an area that includes the Historic Third Ward, Walker's Point and Brewers Hill neighborhoods. He said new condo sales have averaged around 100 units per year, with 150 units purchased in 2001.
At the beginning of 2002, Monnat said, 382 downtown condo units were under construction or were recently completed. Of that amount, 179 have been sold or have pending sales contracts - leaving 203 unsold units.
With downtown condo sales expected to total around 200 units in 2002, the current supply of 203 unsold units that are new or under construction equals the expected demand, Monnat said.
"Even if every single unit on that list is built or finished this year . . . it'll likely all sell," he said.
Another 482 new condos are planned for downtown, he said. Construction has not yet started on those projects, although some could begin building in 2002.
Of that amount, 236 condos would be in three planned high-rise towers: the 25-story River Tower, 1027 N. Edison St; the 30-story Kilbourn Tower, at E. Kilbourn and N. Prospect avenues, and the 32-story Lafayette Place, at N. Prospect Ave. and E. Lafayette Place.
Another 96 units would be in future phases of existing developments, with another 150 condos scattered in various smaller projects, Monnat said.
Of those planned projects, the high-rise towers would be the most difficult to develop, he said.
"You can develop a high-rise tower in this city," Monnat said. "But you need an incredible amount of equity (investors), and incredible amounts of pre-sales."
Most downtown condos sell at much higher prices than new condos built in the suburbs, according to Multiple Listing Service information compiled by Monnat.
In 2001, 44% of condos sold downtown had prices ranging from $250,000 to $400,000, Monnat said. Just 7% of the suburban condos sold in that price range, he said.
Meanwhile, the construction of new downtown apartments has slowed somewhat, Monnat said.
From 1998 through 2001, 782 apartments were built downtown, he said, an average of 196 units annually.
Currently under construction are two apartment projects totaling 175 units: the 99-unit Trostel Square development, which Mandel Group is building overlooking the Milwaukee River in the 1700 and 1800 blocks of N. Commerce St., and the 76-unit Jefferson Block, which New Land Enterprises is building on a Historic Third Ward block bordered by N. Jefferson St., N. Jackson St., E. Menomonee St. and E. Corcoran Ave.
Apartment projects planned for the future would bring 496 new apartments to downtown, he said. But those units won't be available for occupancy until at least the summer of 2003.
Those projects include a 138-unit development that Mandel Group plans to begin construction in July on land just west of the Jefferson Block.
By TOM DAYKIN
of the Journal Sentinel staff
Appeared in the Milwaukee Journal Sentinel on Jan. 20, 2002.
