Milwaukee Market Is Ripe for Out-of-State Investment

by Kristin Harlow

By Adam Connor, Colliers

When the pandemic hit in 2020, most of the media jumped to write articles about the downfall of retail properties and how shoppers were going to get all their goods flown from drones from their Amazon overlords. The reality is that every day, normal people shop at grocery stores, go work out at the gym, and buy lunch or dinner somewhere. Now that 2020 is far behind us, the 2023 retail landscape in the Milwaukee region looks much different.

Most of the retail space, including the mid-box and big-box vacancies, have been backfilled and, as a result, owners saw healthy rent growth in their assets. 

Adam Connor, Colliers

With the lack of construction over the past five to seven years, retailers are now competing for high quality space and paying a premium in rent to be located there. With only 134,000 square feet under construction and a 12-month absorption of 660,000 square feet, quality space is in high demand. Asking rents are up 7 percent to $14.80 since the second quarter of 2020 and vacancy is down to 5 percent.


The Milwaukee area has some large development projects that are underway, including Fiserv moving its corporate headquarters back to the historic downtown Westown neighborhood located along West Wisconsin Avenue. As part of a $40 million investment, Fiserv will occupy 140,000 square feet with the company expecting up to 750 employees to work out of this location. Westown has seen a large resurgence in the last few years with the new 3rd Street Market Hall and the future addition of a new Kohl’s store that is backfilling a former Boston Store.

The Milwaukee Bucks organization continues to make investments into its Deer District area and is under construction on its new “Trade” hotel, a 205-room Marriott Autograph Collection. In addition, Live Nation and the Milwaukee Bucks have proposed a two-hall live music venue with an 800- and 4,000-person venue.

The Iron District, a $160 million new soccer stadium mixed-use development, is slated for construction in downtown. The 8,000-seat stadium is expected to be completed in early 2025.  

Bayshore, an open-air mixed-use development in Glendale, is going through redevelopment with the addition of apartments and new retail tenants like ACX Cinemas, Target, Nike, Sur La Table, Total Wine & More, Chipotle and Culver’s (a Wisconsin favorite).

Brookfield Square Mall, which had gone through tough times, has almost fully recovered with new stores and the future redevelopment of the former Boston Store to become apartments and medical office. Bluemound Road in Brookfield, which is highly sought after by retailers, welcomed Wisconsin’s first PGA Superstore, which backfilled a former Babies “R” Us space totaling 44,000 square feet.

Greenfield, a southern suburb of Milwaukee, has also seen new development with 84 South, a large retail power center. Locally based Lowlands Group will be adding two new restaurant concepts to the area, including its popular Café Hollander concept.

Capital markets update

On the tails of a record year in 2021 (at the time), 2022 set a record for sales volume and transactions totaling $305 million in sales. 

Large transactions included the sale of Mills Fleet Farm in Germantown for $26 million. Brookfield Marketplace anchored by Pick ‘n Save (Kroger) sold to a Florida-based investor for $17 million. Shoppers World in Brookfield sold for $24 million to a Utah-based investor group. Festival Foods, a Wisconsin-based grocery store that has seen significant growth, executed a sale-leaseback in Greenfield for $22 million. Russ Darrow car dealerships were sold in a large portfolio sale-leaseback for $95 million.

Out-of-state investors continue to eye the Milwaukee area for new investments, as competing cities in the Midwest like Minneapolis and Chicago have seen political turmoil in the last few years pushing investors to look elsewhere to communities that are more pro-development. In addition, investors can usually see slightly higher returns in the Milwaukee area than competing markets. We have already seen significant investments from Minneapolis- and Chicago-based companies in Milwaukee.

However, sales volume dipped in the fourth quarter of 2022 and continued its slide in 2023 as interest rates climbed 240 basis points in 200 days from March to October. Investors pushed back on pricing as sellers were chasing cap rates from early 2022. Transaction volume in the seven-county region was down 30 percent to start 2023 as the buyers and sellers continue to battle over pricing expectations. 

Contributing to the sales volume dip is the record number of transactions that had occurred in the previous two years, therefore the amount of quality inventory for investors to pursue is down significantly.

Some Milwaukee-area based funds are targeting significant new acquisitions moving forward. For example, Marquee Capital just launched another $100 million retail acquisition fund. Hammes Partners, a primarily medical office owner, closed a $740 million fund. Brookfield-based MLG Capital, primarily a multifamily investor, launched a $400 million fund and Menomonee Falls-based Continental Properties secured its latest $350 million fund.

Moving forward in 2023, we think transaction volume will be down when compared with 2022. Sale-leaseback transactions will continue to increase as new REITs and funds have plenty of dry powder looking for quality deals. Cap rates are typically a lagging indicator of pricing and transaction volume will only increase when buyers and sellers can get closer on bid-ask spread. 

Investors continue to target high-quality retail properties in the Milwaukee area and the best assets will see significant interest…it just depends on pricing now.

Adam Connor is a senior vice president of investment services with Colliers. This article originally appeared in the May 2023 issue of Heartland Real Estate Business magazine.

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