by Dan Rafter
Rents will rise and vacancies should drop throughout the rest of the year in Milwaukee’s retail sector, according to the latest research from Marcus & Millichap.
The reason for the strong numbers? Marcus & Millichap points to job growth. The company reports that job growth in the first quarter of 2017 was the strongest that Milwaukee had seen in the current cycle, and that this good news was providing a boost to local retailers.
Marcus & Millichap predicts that retail sales should rise 5.5 percent in the Milwaukee area during 2017, a rate of growth that would outpace the rest of the country’s.
Not surprisingly, mixed-use developments are fueling the area’s retail sector. The Corners of Brookfield, 84South and Drexel Town Square are all developments that include apartments, restaurants and entertainment venues. Tenants are attracted to these projects, Marcus & Millichap said. And that strong demand is resulting in rising asking rents in the retail sector here for the second year in a row.
Marcus & Millichap says that Milwaukee-area retail rents should increase by 3.3 percent this year, with the average asking rent hitting $12.16 a square foot. Last year, the average retail asking rent in this market climbed 1.3 percent.
Vacancy rates in the Milwaukee retail sector should fall this year, too, with Marcus & Millichap predicting a decline of 40 basis points in vacancy. This should cause the area’s retail vacancy rate to dip to 6.6 percent by the end of the year. Last year, the news was quite different, with retail vacancy rates in the Milwaukee area climbing 40 basis points.
There won’t be quite as much new retail construction this year, though, in this market. Marcus & Millichap says that new retail deliveries will dip slightly below the 1.2 million square feet completed last year in the Milwaukee metropolitan area.