by Dan Rafter
Multi-family investors and developers both like Milwaukee. That’s the message in the fourth quarter Milwaukee apartment report released earlier this week by Marcus & Millichap.
According to Marcus, developers in 2013 will complete 1,526 units of market-rate, student, affordable and senior apartments in the Milwaukee area. That is nearly identical to the 1,575 new units that developers brought to the Milwaukee market last year.
This is good news in the sense that developers view Milwaukee as an attractive market. The new inventory, though, will result in short-term vacancy increases in the multi-family market. Marcus predicts that the new supply of units, along with sluggish job growth in the area, will push the multi-family vacancy rate in Milwaukee up by 30 basis points.
Still, even with that increase, the multi-family vacancy rate in the market should only hit 3.4 percent by the end of the year. That’s still pretty low vacancy.
This low vacancy is giving apartment operators the freedom to push rents. According to the report, the average asking rent in the Milwaukee area should rise 4.5 percent to $938 a month in 2013. In 2012, the average asking rent jumped a smaller 0.3 percent.
The third quarter of the year was a particularly busy one for apartment developers in the Milwaukee area. Marcus & Millichap reported that developers completed more than 515 rent units in the quarter. That number includes 160 units of seniors housing and 128 units of student housing.
There are also 765 rental units in the middle of construction. These units should be ready for tenants in 2015. Another 1,900 apartments units are waiting in the development pipeline, Marcus reports.
During the past three months, effective rents in the Milwaukee market jumped 1.1 percent to $932 a month.