Creativity, Flexibility Are Paramount in Milwaukee’s Retail Market
Milwaukee, a city known for beer, motorcycles and baseball, is currently in a position of shifting from what was once perceived as the normal retail marketplace into the new age of retail. This type of retail is ever-changing and has a deeper focus on experiential activities and artisanal food. These two words, “experiential” and “artisanal,” are frequently being used to describe where the retail landscape is heading.
Online competitors, as well as changing consumer preferences, are driving out the traditional department store models and forcing retailers to adapt to this way of life or suffer struggling sales and inevitable store closures.
The story of traditional retail being dead due to online retailers’ entrances into different market segments continues to invade publications throughout the country. While there may be some truth to that for certain retailers such as Toys ‘R’ Us, Babies ‘R’ Us, Shopko, Bon-Ton and Payless ShoeSource, an argument can be made that it was also their inability to adapt in the marketplace that led to their demise.
These store closures affected numerous markets throughout the country and Milwaukee was no different in seeing several of these retailers close multiple locations across the metro area, leaving landlords with large holes in their developments to fill. The question they are left asking is, “How do I fill this vacancy?”
From a big-box standpoint, there is not a plethora of retailers actively doing multiple deals in our market, short of TJX Cos., Ross Dress for Less, Hobby Lobby, Planet Fitness, and Xperience Fitness. It is forcing landlords to find other creative ways to fill these vacancies and help keep their centers relevant. This has led them to turn to the very popular entertainment sector. One of the hottest groups in this sector right now is trampoline parks. Sky Zone has two area locations (Waukesha and Greenfield), and Altitude and Urban Air are in the market looking, along with a couple of others.
At Brookfield Square Mall, a CBL-owned property, the Sears store closed on the south end of the mall. CBL is in the process of redeveloping the former Sears, turning the eastern-facing portion into small-shop space with entrances to the street, a 40,000-square-foot Marcus Theatres concept called Movie Tavern, and a first-to-market 45,000-square-foot WhirlyBall. Both of these concepts are slated to open in 2019 and are focused around providing consumers with a more experiential atmosphere that is being demanded more and more in the retail landscape.
Introduction to food halls
Perhaps perceived by some as being a “glorified food court,” food halls are increasingly growing in popularity here in Milwaukee. The food hall concept allows customers access to more offerings, all of which are local chefs with their own concepts focusing on fresh ingredients.
Most notably in Milwaukee, there is the Sherman Phoenix food hall on the northwest part of town started by JoAnne Johnson-Sabir and Juli Kaufman. There’s also Crossroads Collective on North Avenue owned by New Land Enterprises and the soon-to-be 3rd Street Market Hall as part of the Grand Avenue Mall redevelopment owned by Interstate Development Partners and Hempel.
Bucks Entertainment Block
The newly constructed Fiserv Forum opened in late 2018 and has led to a flurry of development in the surrounding area, offering several exciting options before and after Bucks games, Marquette games, or one of the many marquee concerts and shows at the new arena. This up-and-coming area is known as the Bucks Entertainment Block.
Both Milwaukee staples and new-to-market tenants make up the offerings at the Entertainment Block. Good City, a local brewery established in 2016, opened a 14,000-square-foot second location. Drink Wisconsibly, a pub engulfed with anything and everything Wisconsin, opened a 3,500-square-foot second location. The MECCA Sports Bar and Grill (operated by the Milwaukee Bucks) recently opened 11,000 square feet, and the first-to-market Punch Bowl Social occupying 24,500 square feet opened in March of this year.
With more of the big boxes being turned back over to their landlords, the vacancy rate has experienced a slight uptick now sitting at 4.7 percent, up from 4.2 percent this time last year, according to CoStar. This is still a healthy rate for the Milwaukee market.
Green Bay-based Shopko will be closing all of its locations by June of this year. While only a few of these boxes are in the Milwaukee metro area, this closure brings 60+ vacancies back to the Wisconsin landscape. It will be interesting to see how these boxes are filled over the next 12 to 18 months.
One thing is for certain, the retail landscape continues to change as years go on. If landlords and tenants do not want to get left behind, they will need to continue to adapt with the shifting environment in order to stay relevant with today’s consumer.
— By Matthew Beadle, Retail Broker, Founders 3 Real Estate Services. This article originally appeared in the May 2019 issue of Heartland Real Estate Business magazine.