Apartment supply raising concerns
Lower rents, more vacancies feared
The large number of new apartments being developed in the Milwaukee area has increased the overall supply to the point where rents are beginning to drop and vacancy rates are rising.
That’s the view of Ian Martin, vice president of development at Mandel Group Inc., one of Milwaukee’s most active apartment development firms. He was one of the speakers at Thursday’s annual
real estate forecast breakfast, sponsored by the Institute of Real Estate Management’s Milwaukee Chapter.
Both overall vacancy rates and rents are historically strong, but those new trends are worrisome, Martin told around 300 people at the breakfast held at the Italian Community Center in downtown Milwaukee.
Increased job growth is needed to help bring more people, particularly younger adults, to rent apartments, he said. However, the Milwaukee metro area has been losing jobs since October 2015, Martin said.
Meanwhile, an estimated 4,300 new apartments are scheduled to be completed throughout the Milwaukee area this year, and again in 2018, he said. That compares to around 7,000 units completed from 2010 through 2016.
“Everybody’s building,” Martin said. “That supply is already starting to impact the local fundamentals.”
However, there are some positive signs.
Long-term pent-up demand for apartments, created during a dearth of development prior to the current boom, will help reduce the supply, Martin said.
Also, empty nesters will help fill the new developments, he said. They often want to downsize from houses to apartments and are less affected by reduced job growth, he said.
Mandel’s developments that are focused on baby boomers include the 132-unit DoMus, which is under construction at 401 E. Erie St.; Portfolio, a 235-unit high-rise that the firm plans to begin building this summer at 1350 N. Prospect Ave.; and The Farm at River Hills, which would have around 400 housing units between W. Brown Deer and W. Greenbrook roads, west of N. Spruce Road, but is facing opposition from River Hills residents.