In the Milwaukee area, Next Realty currently owns four retail centers totaling more than 150,000 square feet of space and nearly 300 apartment units including a 12-building portfolio near Marquette University.
The Next Perspective recently had a conversation about the state of the retail market in Milwaukee with Kevin Schmoldt who, along with Brian Vanevenhoven, both of Newmark, are responsible for leasing Next’s retail centers in the Milwaukee area.
“The state of the retail market in Milwaukee is strong, even stronger than it was prior to COVID,” Schmoldt said.
He noted that the robust performance of Next’s portfolio in Milwaukee mirrors that of the broader, overall market where vacancies that occurred were likely accelerated due to the pandemic. But as a sign of the strength of the market, the available space was leased quickly, often at higher lease rates than those prior to COVID.
One of the notable characteristics of the Milwaukee market, and in many markets across the U.S., is the lack of development of new centers.
Schmoldt attributes that phenomena to numerous factors that he expects will continue, including increasing interest rates and the overall rise in development costs, from land prices to construction materials.
“Given the lack of new product availability, tenants in the market must look at and consider existing centers to satisfy their space needs,” Schmoldt said. “It’s a good time to be an investor/owner of retail property right now as seen by the solid leasing in Next’s four Milwaukee area retail properties.”
For the long term, Schmoldt is optimistic about the regional market particularly due to Milwaukee’s steadily performing economy and a diverse workforce. “We’re a solid Midwest market, one that doesn’t experience the extreme highs and lows that coastal markets are likely to experience,” he said. Schmoldt believes that trends that emerged and evolved during the pandemic will remain. Specifically, he believes that the increased levels of outdoor dining arrangements will continue as will the level of carry out and delivery service from restaurants. He added that with increasing labor shortages and higher employment costs, delivery and carry out is beneficial to the establishments.
Another interesting trend Schmoldt sees, and one that has occurred at one of Next’s Milwaukee properties, is how tenant mixes can evolve over time. For example, moving from general retail and services to medtail (medical retail) and wellness.
The immediate outlook for Milwaukee retail is strong, especially for property owners who, according to Schmoldt, are consistent in their management approach and are good communicators with their tenants.