The economic downturn has hit the builders of homes and condominiums hard. Unemployment in the construction trades tops 25 percent. Still, one sector is hot. Large apartment complexes are taking shape, including on the metro Milwaukee landscape.
There are several factors fueling the activity.
In the Milwaukee area, more than 1,000 apartments have opened or are planned. Projects range from a 30-story high-rise called the Moderne in downtown Milwaukee, to a low rise, mixed used complex for Shorewood.
Mike Fabishak of the Associated General Contractors, a trade group for local builders, says the market for multi-family rental housing in the last five years has been remarkable.
"Some of the construction however was built as condominiums. And, because of the mortgage crisis we had a few years ago, the capacity for people to want to buy them changed. As a result, many of those condominiums are now apartments," Fabishak says.
One developer that has sought to capitalize on the rental trend is the Mandel Group. Spokesman Dick Lincoln says it’s going full blast with apartment construction, including on Milwaukee’s east side and in the third ward.
"At the North End, the first phase, over three-quarters of our residents were new to living in the downtown. They moved here, not only from different parts of the metropolitan area, but from out of state –people moving into the city who want to live downtown," Lincoln says.
Location is also a key ingredient for the “ Enclave”, a four-story apartment under construction in Wauwatosa. Ryan Schulz of HSI Development says it selected 62nd and State because it’s in the center of Milwaukee’s employment sector.
"We’re within a close proximity to the Research Park, the medical campus, we’ll be able to draw professional employees from the Brookfield market, the downtown market. So, although it’s a different community, we really consider ourselves the “suburban urban” alternative to downtown living," Schulz says.
Much of the apartment construction locally has caught the eye of young professionals. In fact, people age 40 and under comprise the majority of tenants in several new buildings.
Ryan Wimer moved from West Bend to an apartment complex at Pleasant and Water in Milwaukee a couple of months ago. We caught up with him during a lunch hour break from work. He loves the location of his new place.
"I work at Northwestern Mutual downtown, it’s like a15, 20 minute walk. My girlfriend is right by her school, pretty close to where she works as well so we’re pretty centrally located and a lot of friends are in this area as well," Wimur says.
Developers say home ownership is not as attractive to many younger people as was the norm a generation ago.
Another group of new renters are lifelong home owners, according to Jon Stibal, community development director in West Allis.
"West Allis being an older community has a large number of seniors that live here. And, fortunately the people that live in West Allis want to stay in West Allis. The market studies indicated a huge demand for senior housing and we’re just trying to help the people that built this city, stay in this city. until their golden years," Stibal says.
Stibal says the community has sited hundreds of senior living apartments on old, remediated industrial land. Increased demand is not the sole reason why apartment construction here is booming.
Another driver is financing. Rose Oswald Poels of the Wisconsin Bankers Association says lenders are demanding that developers meet stringent new requirements such as higher down payments and more pre-lease contracts. So lately apartments can be an easier sell.
"That’s certainly in part because of the regulatory scrutiny that financial institutions are under as a result of the housing crisis and economic recession that we’ve all just experienced. So, we are being more cautious in making loans to make sure that it’s a project that has strong potential," Poels says.
In addition, there’s a lack of funds available for many would-be home buyers, according to Ryan Schulz of HSI Development. And he says factors such as career demands – relocations, will likely continue making apartment living an attractive housing option.
"What we have discovered and I think other developers within the community would agree with is, there’s been a philosophical change in how people view the investment of their home and their living situation," Schulz says.
So where is the current apartment boom headed? Schulz and the other developers we spoke with don’t foresee the supply of apartments here outpacing demand anytime soon.