Walker s Point/Harbor District

Transcription

1 Walker s Point/Harbor District JANUARY 2018 PREPARED FOR THE DEPARTMENT OF CITY DEVELOPMENT OF THE CITY OF MILWAUKEE, HARBOR DISTRICT, INC., AND THE WALKER S POINT ASSOCIATION LOCKLY VALUATION

2 Table of Contents INTRODUCTION WALKER S POINT/HARBOR DISTRICT Overview 2 Market Analysis Key Findings 4 Demographics + Residential 9 Retail 23 Office + Industrial 45 Transit Considerations 51 Appendix 55 Demographic Analysis 56 Residential Market 63 Retail Market 74 Office + Industrial Market 85 HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 1

3 Study Overview The City of Milwaukee, Walker s Point Association, and Harbor District Inc., aim to attract investment to the area, including capitalizing on a potential streetcar extension, while balancing the preservation of commercial and residential affordability as well as neighborhood character. HR&A Advisors and its subconsultant Lockly Valuation were retained to conduct a residential and commercial market analysis of the existing conditions along the transit corridor and to develop an affordability strategy for the longterm planning of the area. This Residential and Commercial Market Analysis will support a larger City effort to create an equitable transit-oriented development (TOD) plan for Downtown Milwaukee and its surrounding neighborhoods. Source: Walker s Point; City of Milwaukee Source: Walker s Point; City of Milwaukee Walker s Point/Harbor District is one of two areas being studied, the other being the King Drive Neighborhood to the north. Source: Historic King Drive; City of Milwaukee Source: Historic King Drive; City of Milwaukee HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 2

4 Study Overview Walker's Point/Harbor District is among Milwaukee s oldest neighborhoods, and has evolved continuously through its history. Walker's Point/Harbor District can trace its origins to 1834, when George H. Walker settled in the area and transformed it into a fur trading center. The area was incorporated into the then Village of Milwaukee in The neighborhood developed into a predominantly industrial one, and was a popular work location for residents of the Third Ward. Since the turn of the millennium, there has been a renewed interest in urban living, resulting in numerous new developments and adaptive reuse projects in Walker's Point/Harbor District in the past 10 years. Source: Wikimedia Source: Wikimedia Source: Harbor District BID Source: Harbor District BID HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 3

5 MARKET ANALYSIS: KEY FINDINGS

6 Overview Over 12,000 people (5,100 households) live in Walker's Point/Harbor District Study Area (defined as ½ mile from the potential alignment and adjacent tracks for the street car expansion), a relatively low population density when compared to Walker Square and Historic Mitchell Street POPULATION DENSITY Walker Square Historic Mitchell Street (Residents per mile) Westown Walker s Point Harbor District Historic Third Ward 24,000 to 47,000 18,000 to 23,999 12,000 to 17,999 6,000 to 11,999 0 to 5,999 Walker s Point, at the center of the Study Area, consists primarily of single-family homes and duplexes, with some multifamily buildings in the north and a growing destination retail and restaurant corridor. Harbor District is characterized by its industrial uses, and has more recently seen the development of multifamily housing and retail. Historic Third Ward, east of the Milwaukee River, is an affluent neighborhood primarily consisting of high-end multifamily housing product, offices, and significant destination retail. Historic Mitchell Street, home to a high percentage of the City s Hispanic and Latino population, consists of mainly single-family, duplex, and small rental properties, with some larger multifamily buildings. Walker Square consists of mainly single-family, duplex and small rental properties, with some larger multifamily buildings, as well as a vibrant retail corridor. It has a significant Latino and Hispanic population. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 5

7 Demographics and Residential Analysis Key findings and implications Demographics While the perception is that the population in Walker s Point/Harbor District is booming, population growth in has been concentrated in the north and in the Third Ward, where the median household income is over $80K. Excluding the Third Ward and area north of Florida Street the population has declined. The majority of loss has been from Hispanic or Latino and Whites, while gains have been from African Americans. At the same time, median household incomes have declined to $23K from over $30K since Residential Market An average of 125 units per year of market-rate multifamily housing has been built in the area since 2012, concentrated in the Third Ward, and in the northern portion of Walker s Point along S 1 st Street,. Renters of these new units require an average household income of $60K to be income qualified (pay less than 30% of their income on rent). While this his higher than many existing residents can afford, this has not lead to significant displacement because most growth has been the result of previously-vacant industrial buildings being repurposed The area has a significant supply of affordable housing, predominantly naturally-occurring with minimal subsidized housing units. Despite this and due to high levels of poverty, over 2,000 households pay more than 30% of their income on housing, demonstrating a large need today for affordable housing. Approximately 525 more households are likely to become housing burdened if rents increase if rents increase due to continuing market trends and the extension of the streetcar. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 6

8 Retail Analysis Key findings and implications The market within a 20 minute drive of Walker s Point/Harbor District represents $4.4B in spending potential, of which $132M comes from residents and workers who are located within a 5 minute drive. Many people shop at malls in the region for their destination goods. However, the Third Ward and restaurant clusters on 2 nd, 5 th, and 6 th Streets, as well as art galleries, specialty foods, and burgeoning antique shops and breweries scattered throughout serve as anchors which draw in regional spending to the area. The vast majority of businesses in Walker s Point/Harbor District are locally owned, with fast food venues representing the national chains. With the exception of Cermak, there are limited convenience goods and services, which the demand analysis demonstrates can be supported by local residents and employees. Demand analysis also shows support for destination goods, particularly general merchandise, building materials/garden supply, and sporting goods/hobby stores. Storefront vacancies and empty lots can be found near area anchors on 1 st, 2 nd, and 5 th Streets, presenting an opportunity to support existing businesses, provide missing services, strengthen retail/restaurant clusters, and increase foot traffic. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 7

9 Office and Industrial Analysis Key findings and implications Office space is concentrated in the Third Ward and northern portion of Walker s Point, with major employers including Aurora Health Care, Zurn, firms located within the Global Water Center, and marketing and architecture firms. Office rents range from $12 to $21 PSF, with new/renovated spaces and areas closer to the Third Ward commanding the highest rents. Vacancy rates have been declining, reaching 19% in 2017 down from 29% in 2012 for the area excluding the Third Ward, with limited deliveries in the past 10 years. Industrial spaces are located in the north and along the river, with major employers including Rockwell, Leader Paper Products, and Usinger s Famous Sausage. Rents range from $2 to $5 PSF, with the highest rents for highway-accessible parcels. Vacancy has been declining since 2013 (10% to 5%) and there have been four new deliveries in the area in the past 10 years. Of the 12,800 total jobs in the Study Area, which are primarily in engineering (e.g. Rockwell); healthcare (e.g. Aurora Health Care); and administrative support (e.g. Hatch Staffing Services); only 2% are filled by Walker s Point residents. If the Study Area captures its fair share of projected County job growth (1%), it will add over 600 jobs between 2020 and 2030, which will require 6.7K SF of office and 19.5K SF of industrial space annually. Job growth and additional space needs will be met through backfilling of existing, vacant spaces and new development, preferably targeted along the streetcar route. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 8

10 MARKET ANALYSIS: DEMOGRAPHICS + RESIDENTIAL MARKET

11 Demographic Analysis: Methodology The demographic analysis was conducted on a census tract level and accounted for the change in census tract boundaries in Given the change in 2010 census tract boundaries, the historical demographic analysis looked at the portion of the Study Area outlined in blue in order to maintain the same relative geography. Present day analysis examined the Study Area with and without Census tract 1874, which includes, but is not limited to, the Historic Third Ward neighborhood. This area, north of is referred to as the Greater Third Ward Area throughout this study. Greater Third Ward Area Florida Street Study Area for trend analyses Source: ESRI 2017; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 10

12 Demographic Analysis: Race and Ethnicity While the Study Area north of Florida Street saw population growth since 2000, the southern portion has declined in population, driven by the loss of the Hispanic or Latino population to areas farther south Population Growth (%) Walker Square Westown Historic Mitchell Street Walker s Point Historic Third Ward Harbor District 45%+ 20% to 45% 0% to 20% -30% to 0% Less than -30% 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 CHANGE IN RACE BREAKDOWN (Excluding Greater Third Ward) -1,400 (7,400) -520 White Alone, non-hispanic or Latino +500 Black or African American Alone Hispanic or Latino (1,300) (4,000) -150 Other Note: Other includes: American Indian and Alaska Native alone, Asian alone, Native Hawaiian and Other Pacific Islander alone, Some other race alone, two or more races Source: ESRI 2017, ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 11

13 Demographic Analysis: Income Median household income in Walker s Point/Harbor District, excluding the Greater Third Ward, is $23K, down from $32K in 2000, while the Greater Third Ward median income is over $80K MEDIAN HOUSEHOLD INCOME Walker Square $30K Historic Mitchell Street $93K Walker s Point $32K $34K $41K Historic Third Ward Harbor District Source: ESRI 2017, 2015 and 2014 ACS Census; HR&A Advisors $55,000 and up $45,000 to $55,000 $35,000 to $45,000 $25,000 to $35,000 $0 to $25,000 $90,000 $80,000 $70,000 $60,000 $50,000 $40,000 $30,000 $20,000 $10,000 $0 MEDIAN HOUSEHOLD INCOME (nominal) Milwaukee County City of Milwaukee Walker's Point/HBD Greater Third Ward Note: To assess median income for Greater Third Ward, we only looked at Census Tract 153 for $80,000 $30,000 HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 12

14 Residential Analysis: Supply Multifamily buildings are generally located in the northern portion of Walker s Point and the Third Ward, while single-family homes are in the south and west. Renter-occupied units are scattered throughout. Residential Buildings by Type 5.3K Residential Units Residential Buildings by Tenure 52% Multifamily 76% Renter Occupied Source: MPROP; Lockly Valuation, HR&A Advisors 1-4 Units 5-49 Units 50+ Units Owner-Occupied Renter-Occupied HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 13

15 Residential Analysis: Market Trends Except for the Greater Third Ward, which commands substantially higher rents, the median rent for all housing in Walker s Point/Harbor District ranges from $500-$650. Median Contract Rents for All Housing Types 2014 Walker Square Walker s Point Historic Third Ward Harbor District Rents across all housing is fairly uniform within the Study Area except for the Greater Third Ward (the Study Area north of Florida Street). The area east of 5 th street, with a median rent of $640 across all unit types, commands higher rents than the neighborhood to the west, which has a median rent closer to $500. The southern portion of the Study Area lies in the middle, with median rents around $550. Historic Mitchell Street $1,000 and up $660 to $1,000 $525 to $660 $400 to $525 $0 to $400 New developments can command substantially higher rents, reaching over $1,000. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 14

16 Residential Analysis: Market Trends Units in the northern portion of Walker's Point/Harbor District and the Historic Third Ward command significantly higher sales prices and rental rates compared to the rest of the Study Area. Residential Buildings by Sale Price $155K Median for-sales price For-sales prices have doubled since 2000, and above ~30% above than the median for-sales prices city-wide ($120K). $1,234 Average multifamily rent Multifamily rents have increased by 19% since 2000 (up from $1,037). Rents in new developments average $1,625, well above the district average. Similar to for-sale properties, rents are highest in the Greater Historic Third Ward. <$25K $25K - $100K $100K - $200K $200K % Multifamily vacancy Multifamily residential vacancy in Walker s Point/Harbor District historically is higher than the City average. Source: MPROP, Zillow Data; Lockly Valuation, HR&A Advisors, CoStar HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 15

17 Residential Analysis: Recent and Pipeline Development Recent and pipeline multifamily development in Walker s Point/Harbor District has averaged 125 new units per year since 2012, and is concentrated on S 1 st Street in the Harbor District, and in the northern portion of Walker s Point. Broadway Market Lofts 14 units 2014 MEDIAN YEAR STRUCTURE BUILT Pritzlaff Hardware Lofts 99 units Tewles Seed Tower 115 units Historic Third Ward Atelier 31 units The Barclay 115 units Brix Lofts (2015) 98 Units Artistry 38 units River Place Lofts 150 units The Quin 68 units Walker Square Walker s Point Harbor District The Oregon (2015) 76 Units Shoe Factory Lofts (2017) 55 Units 7 th and National 56 units 214 E Florida 110 units Historic Mitchell Street Trio Apartments (2016) 120 Units Freshwater Plaza (2016) 76 Units National Block 12 units PIPELINE RECENTLY COMPLETED Pre-1939 AFFORDABLE COMPONENT Source: ESRI 2017, ACS Census, Milwaukee Biz Times, Journal Sentinel, Urban Milwaukee, MKE United; HR&A Advisors; CoStar HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 16

18 Residential Analysis: Market Rate Demand There are approximately 1,250-1,350 households in the City of Milwaukee each year who have both the means and interest to move into new multifamily developments in Walker s Point/Harbor District. While a significant number of households may locate to new and existing properties in the Study Area, others may choose to locate in Downtown as well as other multifamily projects throughout the City. Market Area Able to Pay $1,625 Monthly Rent (Household Income $60K+) Rental Preference 230,000 66,050 17,400 Multifamily (5+ Units) Preference 4,700 Moved in Past 12 Months 1,325 Estimated Market Size 1,250-1,350 Households Note: Reflecting new construction, assumes rent of $1.78 per SF and an average unit size of 920 SF. From average annual deliveries in the City were approximately 700 units. Source: PUMS 2015, ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 17

19 Residential Analysis: Demand Given that there are 1,250-1,350 households with both the means and interest in moving into multifamily rentals, there is a sufficient market to support additional development within Walker s Point/Harbor District. 700 Average Citywide Multifamily Deliveries* 125 Average Walker s Point/Harbor District Multifamily Deliveries 18% Existing Walker s Point/Harbor District Development Capture Rate While Walker s Point/Harbor District captures 18% of citywide new multifamily development, transit may increase this capture rate. Literature on national precedents is inconclusive on what the premium may be, as this will be driven by localized conditions that make neighborhoods appealing, such as: Transit investment in other nearby districts; Private investments such as shops, restaurants, cultural and entertainment venues in the area; Public investments in new parks, open space, and schools; and New job centers or corporate relocations. * Citywide deliveries, while variable year to year, can expect to remain at their past 5 year averages HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 18

20 S 1 st St. Residential Analysis: Affordable Housing Thirteen percent of the rental housing stock in Walker s Point/Harbor District is regulated for affordability through LIHTC, public housing, and project-based vouchers. By 2035, 43 LIHTC units will reach Year 30 and will lose their affordability if additional subsidy is not provided. 533 Total subsidized units National Ave 428 LIHTC Units 37 Public Housing Units Note: All of the HACM units are also LIHTC units Source: City of Milwaukee; Lockly Valuation, HR&A Advisors Section 8 HACM LIHTC 68 Project-Based Voucher HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 19

21 Residential Analysis: Affordable Housing Most of the rental units within Walker s Pont/Harbor District are naturally affordable. A high proportion of these units are large, indicating that the area is a good option for families. 100% NATURALLY AFFORDABLE RENTAL UNITS % 60% 40% 20% 0% 64% 4K 76% % 26K 81% % 75% 27% 66% 15% 45% Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom + City of Milwaukee 31K 920 8K 370 Walker's Walker s Point/HBD Point/Harbor District 1K 100 Notes: Units affordable to households earning 50% of AMI (adjusted by household size per bedroom count); assuming a 30% cost burden Source: PUMS 2015; ACS; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 20

22 Residential Analysis: Affordable Housing Today, 2,340 households in the Study Area pay more than 30% or 50% of their income on housing costs and tend to be concentrated in the lowest income brackets. Total Households in Income Band % to 100% RENTER COST BURDEN 2014 Cost burdened (30-50% Income) AMI (Income): ($56K - $70K) 18% Total Households in Income Band 60 80% to 100% OWNER COST BURDEN 2014 Extremely cost burdened ( > 50% income) AMI (Income): ($56K - $70K) 32% % to 80% ($35K - $56K) 11% 18% % to 80% ($35K - $56K) 20% 26% % to 50% ($24K - $35K) 22% 50% % to 50% ($24K - $35K) 43% 43% 1,125 <30% (<$24K) 76% 13% 185 <30% (<$24K) 68% 5% 0% 50% 100% 0% 20% 40% 60% 80% 100% Note: Income limits are based on HUD 2014 AMI limits for a household size of 4 in Milwaukee MSA. Source: CHAS 2014; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 21

23 Residential Analysis: Affordable Housing Based on historical rent trends and the estimated impact from the streetcar, ~525 existing naturally affordable units will become unaffordable at the 50% of AMI level over the next 10 years. 100% 80% 60% 40% 20% 76% 30 NATURALLY AFFORDABLE UNITS (Units Lost Post-Streetcar) 81% % 68% 75% % 80 53% 52% 45% 30 32% 0% Studio 1 Bedroom 2 Bedroom 3 Bedroom 4 Bedroom+ Existing Conditions Post-Streetcar Note: Post-streetcar estimates reflect the proportion of existing units that will be affordable to residents after a 23% increase in rent (18% based on historical trends, plus a 5% premium from the streetcar); Units affordable to households earning 50% of AMI (adjusted by household size per bedroom count); assuming a 30% of household income cost burden. Source: PUMS 2015; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 22

24 MARKET ANALYSIS: RETAIL

25 Retail Market: Context Currently, shoppers in Walker s Point/Harbor District have options for shopping and dining at regional malls, in Downtown, and at local shops and services. 20-min Drive 9.9 M Shopping center retail square footage in region 500+ Local and National Restaurant Options in Greater Downtown 4.4 M Square feet ground floor retail space in Walker s Point/Harbor District Cesar Chavez S 2 nd Street S 5 th Street National Ave S 1 st Street Third Ward Mall or Shopping Center W National Ave & S 1 st Street Rte. 94 Rte. 43 Rte. 94 Lake Michigan Note: Greater Downtown includes downtown Milwaukee and the immediately adjacent neighborhoods including: Lower East Side; Brewer s Hill/Harambee; King Drive/Bronzeville; Lindsey Heights/Fondy-North; Near West Side (East); Menomonee Valley (East); Clarke Square; Walker Square; Walker s Point; and the Historic Third Ward. Source: CoStar, Milwaukee DCD, MKE United HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 24

26 Retail Market: Context Within Walker s Point/Harbor District restaurants, bars, specialty food, antique shops, and art galleries have become anchors, drawing people from both inside and outside of the Study Area. Colectivo Coffee Source: Colectivo Coffee S 5 th Street National Ave S 2 nd Street S 1 st Street Restaurant and Bar Cluster #1 Restaurant and Bar Cluster #2 Creative cultural and arts corridor Source: Sage Arts Studio Source: Milwaukee DCD, ESRI Source: HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 25

27 Retail Market: Context With the exception of the newly opened Cermak grocery store and beauty salons and barber shops, there are few convenience shops that support area residents and employees. Convenience Retail Locations National Ave S 1 st Street S 2 nd Street S 5 th Street Source: Google, Lockly Valuation, HR&A Advisors, ReferenceUSA Beauty & Barbers Specialty Food Grocery Convenience Retail W National Ave & S 1 st Street HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 26

28 Retail Market: Context A large number and clustering of restaurants and bars have made Walker s Point/Harbor District a regional dining destination. Restaurant and Bar Locations National Ave S 1 st Street S 2 nd Street S 5 th Street Bars Restaurants Source: Google, Lockly Valuation, HR&A Advisors, ReferenceUSA W National Ave & S 1 st Street HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 27

29 Retail Market: Context Arts related businesses and cultural venues complement dining and general retail scattered throughout the Study Area and along South 1 st, South 2 nd, and South 5 th Streets. Destination Retail Locations S 5 th Street National Ave S 1 st Street S 2 nd Street Arts & Culture Venue Arts & Culture Business General Retail Entertainment Source: Google, Lockly Valuation, HR&A Advisors, ReferenceUSA W National Ave & S 1 st Street HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 28

30 Retail Market: Context According to local brokers, asking rents for currently available space range from $14-20 NNN PSF, with the highest rents in the Third Ward, and the lowest in the southeastern portion of the Study Area. Sample Completed Transactions S 2nd St Rent $17.5 PSF $16.9 PSF $33.6 PSF Total Space 37,000 SF Source: RFP Commercial $15.9 PSF $35.2 PSF $16.2 PSF $16.5 PSF $12.0 PSF W National Ave Rent $10 PSF Total Space 3,500 SF Source: Anderson Commercial Comparative Average Asking Rents Historic Third Ward $25.00 Downtown $21.00 Walker's Point $19.76 Source: CoStar Source: CoStar HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 29

31 Retail Market: Context South 1st Street Primarily neighborhood-serving retail and auto-oriented services characterize retail frontage along South 1 st Street. South 1 st Street is an important North-South connection that links Walker s Point/Harbor District to nearby highway routes, along with key shopping nodes to the North in the Historic Third Ward. Within the Study Area and along South 1 st Street today, there are 63 businesses. Of these, five are full-service restaurants, three are limited-service restaurants, two are bars, and one is a cafe. The remaining retail locations provide access to a range of goods and services including pet care, cellular services, beauty salons, and car washes. Retail formats vary from older, standalone buildings to a more suburban, auto-oriented retail plaza such as Freshwater Plaza (Cermak). Most businesses are locally-owned, although 6 are national brands, including fast food McDonald s, Subway, and Jimmy John s locations. There are also a number of architectural and legal firms along the S 1 st Street corridor. Source: Reference USA, Google, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 30

32 Retail Market: Context South 2 nd Street A large concentration of restaurants and bars along 2 nd Street makes the area a burgeoning regional food destination. South 2 nd Street is another primary connecting road between the Southern portions of the city and region and Downtown Milwaukee. Along South 2 nd Street, there are 78 businesses. Of these, 18 are full-service restaurants, and seven are bars. The remaining 31 are dry retail goods and service businesses including hobby stores, banking, beauty salons, nail salons, and galleries. Most of these retailers are locally-owned and operated. Other tenants along the corridor range from legal office, banking, professional office, to a gas station. Source: Reference USA, Google, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 31

33 Retail Market: Context South 5 th Street A mixture of restaurants and other cultural establishments make South 5 th Street a hub of activity. South 5 th Street, a shorter North-South connection between Walker s Point/Harbor District and The Menomonee Valley and other neighborhoods in the Downtown area, is home to a variety of retailers. There are 39 businesses along South 5 th Street, including four full-service restaurants and one bar, many of which are locally owned and operated. Other retailers include a mix of personal services, breweries, and coffee shops. Professional services, such as architecture and marketing, occupy ground floor and spaces above retail along 5 th Street. A number of cultural institutions, including art galleries, and a church, can also be found along this corridor. Recent street redesign and widening of the sidewalks have improved the corridor s pedestrian experience. Source: Reference USA, Google, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 32

34 Retail Market: Context National Avenue Community-based convenience goods and service businesses characterize the storefronts along National Avenue, along with food and beverage locations and multifamily development. National Avenue is an important east-west connection between primary retail corridors in Walker's Point/Harbor District. National Avenue connects to South 1 st, 2 nd, and 5 th Street and neighborhoods to the west to create an important mixed-use corridors in the area. Along National Avenue there are 47 businesses, five of which are full-service restaurants, and two of which are bars. The remaining retail includes community-serving uses such as day care, beauty salons, and auto repair. Source: Reference USA, Google, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 33

35 Retail Market: Gap Analysis HR&A analyzed the potential for additional retail within Walker s Point/Harbor District by focusing on three types of retail: convenience, destination, and food & beverage. WALKER S POINT/HARBOR DISTRICT TRADE AREA DEFINITIONS 5-min Drive 10-min Drive 20-min Drive Rte. 94 Rte. 794 Rte. 43 W National Ave Rte. 94 Rte. 94 Rte. 94 Rte. 94 Rte. 94 W National Ave & S 1 st Street PRIMARY TRADE AREA Convenience Retail SECONDARY TRADE AREA Food and Beverage TERTIARY TRADE AREA Destination Retail Source: ESRI, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 34

36 Retail Market: Customer Base and Spending Potential HR&A analyzed the potential for retail within Walker s Point/Harbor District by focusing on customer origins and spending potential. TRADE AREA DEFINITIONS SAMPLE RETAIL CATEGORIES BY TYPE AND ORIGIN OF POTENTIAL CUSTOMER CONVENIENCE RETAIL Primary and Secondary Trade Areas PRIMARY TRADE AREA 5-Min Drive Time Grocery Health & personal care Specialty food Daily goods & services FOOD & BEVERAGE RETAIL Primary, Secondary, and Tertiary Trade Areas SECONDARY TRADE AREA 5-10 Min Drive Time Restaurants Bars DESTINATION RETAIL Primary, Secondary, and Tertiary Trade Areas TERTIARY TRADE AREA Min Drive Time Entertainment & cultural Electronics Specialty clothing & accessories Home and garden supply HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 35

37 Retail Market Analysis Methodology The retail gap analysis is intended to show spending potential compared to existing sales in an area. Where there is a gap, or where potential spending exceeds sales, people are shopping elsewhere for these goods. Therefore, a store could be supported by the local community. Where existing sales exceed the spending potential is an indication that people are coming from outside an area to shop. Therefore the area has become a hub for this retail typology. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 36

38 Retail Market: Context Overall, the market represents $4.4B in spending potential from people living and working within a 20 minute drive of Walker s Point/Harbor District. Convenience Retail There is demand for everyday services and health and personal care. Food and Beverage Walker s Point/Harbor District is a destination for food and dining. People from beyond the 20 minute trade area as well as visitors to Milwaukee contribute to the $1.3B in existing restaurant sales. Destination Retail The area can support a wide variety of destination uses, particularly for general merchandise, building materials/garden supply, and sporting goods/hobby stores. Grocery Limited potential for new grocery due to the opening of Cermak, as well as other options within ten minutes. $57M Trade Area Spending Potential 43K Total New Supportable SF $1.0B Trade Area Spending Potential $1.3B Existing Sales 49K Total New Supportable SF $3.4B Trade Area Spending Potential $3.2B Existing Sales $192M Spending Gap 1.04M Total New Supportable SF $268M Trade Area Spending Potential $309M Existing Sales Note: The above results are a summary of the full retail gap analysis, which can be reviewed beginning on page 109 in the appendix. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 37

39 Retail Market: Tenanting Strategy A tenanting strategy should leverage existing trends as well as new potential visitors to steer growth toward targeted uses. Market Growth Today, the Study Area shows potential to support new retail uses, in part a result of recent development in the northern portion of the Study Area. Transit Impacts Investment in local transit options could lead to increased retail spending potential in the area through increased development and density. This would add a number of new residents and employees living and working in the area, as well as improve access for those who live and work outside it. As demand is met and populations increase, tenanting should shift to fulfill the needs of new populations. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 38

40 Retail Market: Tenanting Strategy Households moving into the 125 new units delivered each year, as well as new employees in Walker s Point/Harbor District, contribute to growth in retail demand over time. 125 Average Annual Deliveries 29 Projected Annual New Jobs $2.03M Average Annual Residential Spending Potential Increase $185K Projected Annual Employee Spending Potential Increase Projected annual growth in Walker s Point/Harbor District can translate to over $2.2M in new retail demand. Transit may increase number of new residents and employees coming to Walker s Point/Harbor District, increasing its capture of citywide retail spending potential. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 39

41 Retail Market: Tenanting Strategy Tenanting should build upon spending potential and existing assets, which include destination dining along 2 nd and 5 th Streets, and arts galleries and creative uses along 5 th Street. Tenanting along 1st Street should prioritize neighborhood-serving uses. National should reflect the retail along intersecting corridors. Destination dining Grow the existing restaurant and bar clusters on 2 nd and 5 th Streets. Convenience shopping Given proximity to new mixeduse development and the Cermak grocery store, convenience retail uses should be prioritized (e.g. pharmacy, coffee shop, dry cleaner, hardware store). Destination and specialty retail Build on existing arts and galleries in the area, such as maker spaces, handcrafted gifts, art galleries, and art supplies. Bars and Restaurants Destination Retail National Ave S 5 th St. S 2 nd St. S 1 st St. Major connection National Avenue should feature an enhanced and connected user experience for pedestrians and cyclists between South 5th and South 2nd Streets. Corners should reflect the character of the intersecting retail corridors. W National Ave & S 1 st Street Source: Google, Lockly Valuation, HR&A Advisors, ReferenceUSA HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 40

42 Retail Market: Tenanting Strategy: 2 nd and 5 th Streets Tenanting along South 2 nd and South 5 th Streets should enhance and diversify existing restaurant and bar clusters and increase art-related offerings, including maker space. Potential Retail Tenant Types and Sizes: Source: Patryk Sobczak on Unsplash Destination Dining e.g. wine bar Specialty Food Retail e.g. panaderia Source: Kayte Deioma Art Supply Source: Aleksander Naug on Unsplash Art Gallery Source: Samuel Zeller on Unsplash 1,250 6,500 SF 1,190 6,000 SF 1,170 9,240 SF 1,310 11,590 SF Note: Square footages represent average sizes of the illustrated tenant types, and do not reflect total demand for these specific uses. Source: HR&A, International Council on Shopping Centers (ICSC) Dollars and Cents Report HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 41

43 Retail Market: Tenanting Strategy: 1st Street Areas along 1 st Street can be targeted to support neighborhood convenience retail uses, building on the presence of Cermak and growth in residential development. Potential Retail Tenant Types and Sizes: Pharmacy Source: Bureau of Labor Statistics Source: Tim Wright on Unsplash Source: Dan Gold on Unsplash Dry Cleaner Casual Restaurant e.g. 24-Hour Diner Hardware Source: Dan Gold on Unsplash 6,670 25,120 SF 1,090 2,030 SF 1,250 6,500 SF 2,050 12,450 SF Note: Square footages represent average sizes of the illustrated tenant types, and do not reflect total demand for these specific uses. Source: HR&A, International Council on Shopping Centers (ICSC) Dollars and Cents Report HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 42

44 Retail Market: Tenanting Strategy: National Ave Areas along National Avenue should be tenanted with businesses complementary to the uses on South 1 st, 2 nd, and 5 th Streets. South 1 st Street South 2 nd Street South 5 th Street Businesses along South 1 st, 2 nd, and 5 th streets span a range of uses Dominant retail uses with street frontage at the corners include restaurants, bars, and galleries Though the market is strong and growing, vacancies will take time to fill HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 43

45 Retail Market: Tenanting Strategy Infill development and tenanting of vacant ground floors around existing anchors and dining clusters will offer opportunities to create a denser retail environment throughout the Study Area. Fill Key Vacancies Infill Vacant Parcels Adjacent to Key Locations Source: Google Maps Source: Google Maps Guiding Strategies: Leverage clustering of arts-related uses including galleries, architectural firms, and graphic designers Source: Google Maps Build on existing retail success (Cermak) Build on interim programming initiatives Infill around existing restaurants and dining destinations Source: Google Maps HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 44

46 MARKET ANALYSIS: OFFICE AND INDUSTRIAL MARKET

47 Office and Industrial Analysis: Overview Office space in the Study Area is concentrated in the Historic Third Ward and northern portion of Walker s Point. Industrial spaces are located in the north and southeast and along the river. 4.4 M SF Total office space in Walker s Point/Harbor District Office and Industrial Land Uses 2 Class A Office Buildings 1,848 Total Businesses 6.9 M SF Total industrial space in Walker s Point/Harbor District Source: Milwaukee DCD, Lockly Valuation, HR&A Advisors, CoStar Land use designations from City of Milwaukee Assessor s Office HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 46

48 Office and Industrial Analysis: Office Context Office rents range from $6 to $21 NNN PSF, with new and renovated spaces and areas closer to the Third Ward commanding the highest rents. Sample Completed Transactions $21.5 PSF $6.5 PSF $7.0 PSF $17.9 PSF $14 PSF $8.2 PSF $9.1 PSF Rents for office space comes at a greater premium closer to the Third Ward, where there is a larger concentration of Class A buildings. Office vacancy has been declining since 2012 (29% to 19%). Source: City of Milwaukee Assessor s Office, Lockly Valuation, CoStar, Calls with local Brokers The Renaissance Building Rent $21.50 PSF Total Space 110,000 SF Source: MLG Commercial 315 S Water St Rent $14 PSF Total Space 11,000 SF Source: RFP Commercial HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 47

49 Office and Industrial Analysis: Industrial Context Industrial rents range from $2 to $5 NNN PSF, with highway-accessible parcels charging the highest rents. Sample Completed Transactions 214 E Florida St Rent $2.75 PSF $5.0 PSF Total Space 120,000 SF Source: Jonas Builders, Inc $3.4 PSF $4.3 PSF $3.8 PSF $4.5 PSF $5.0 PSF $2.1 PSF Industrial space with easy access to interstate routes I-43 and I-94 attract higher rents than properties located off of main roads throughout Walker s Point/Harbor District. Per square foot costs are higher closer to the Downtown as well. Industrial vacancy has been declining since 2013 (10% to 5%). $3.0 PSF Source: City of Milwaukee Assessor s Office, Lockly Valuation, CoStar, Calls with local Brokers HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 48

50 Office and Industrial Analysis: Employment The 12,800 total jobs in the Study Area are primarily in in manufacturing, healthcare, and administrative support, and only 2% are filled by Walker s Point/Harbor District residents. WALKER S POINT/HARBOR DISTRICT JOBS (Excluding the Historic Third Ward) Health Care and Social Assistance, 2,077, 16% Manufacturing, 3,171, 25% Other, 3,205, 25% Administration & Support, Waste Management and Remediation, 1,817, 14% Utilities, 1,070, 8% Accommodation and Food Services, 875, 7% Retail Trade, 592, 5% Note: Many of the manufacturing jobs are filled by engineers and administrators at Rockwell, and many of the health care jobs are nominally based at Independence First but are persons working outside of the area. Source LEHD HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 49

51 Office and Industrial Analysis: Employment Projections If the Study Area captures its fair share of projected County job growth (1%), it will add over 600 jobs between 2020 and Milwaukee County Employment Projections 290 New Office Jobs ( ) Milwaukee County 1.18M 1.23M 1.28M 250 New Industrial Jobs ( ) Walker s Point/ Harbor District (Fair share) 12.81K 13.38K 13.95K 6.7K Office SF Required Annually* 19.5K Industrial SF Required Annually* Note: A fair share percentage of job growth capture would result in the Study Area capturing a number of County jobs added proportional to the amount of jobs currently held in the Study Area compared to the County. For example, a Study Area representing 1% of County jobs may capture 1% of added jobs. * Excludes jobs in the Historic Third Ward Source: Bureau of Economic Analysis (BEA) Southeastern Wisconsin Regional Planning Commission (SEWRPC), HR&A Advisors Job growth and additional space will be met through a combination of backfilling of existing, vacant spaces and new development, preferably targeted along the streetcar route. Today s new construction tends to be built-to-suit, driven by specific company relocations and growth, rather than speculative office space development. Transit will make this area more attractive to future employers, but space needs cannot be quantified HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 50

52 AFFORDABILITY STRATEGIES: TRANSIT CONSIDERATIONS

53 Transit Considerations Transit investment has numerous impacts for communities, some of which are quantifiable. TRANSIT CONSIDERATIONS Access to new jobs Improved walkability Increased pace of development Reduction in car usage Increases in visitation to local anchors Change in neighborhood perception Increased activity at retail businesses Potential rent increases Potential land value increases Milwaukee Streetcar, Phase 1 HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 52

54 Transit Considerations While the impacts of transit vary by city, nationwide streetcars & light rail generally spur increased in land value for surrounding properties and increases in the pace of development. ONE TIME LAND VALUE ANNUALIZED RESIDENTIAL SYSTEM PRODUCT TYPE INCREASE GROWTH Minneapolis Blue Line* Multifamily 9% Portland Streetcar Multifamily - 3.3% San Diego Trolley Blue & Orange Line* Multifamily 4-17% Seattle South Lake Union Multifamily - 0.4% San Diego Trolley Blue & Orange Line* Condominium 2-6% Minneapolis Blue Line* Single Family 0-12% San Diego Trolley Blue & Orange Line* Single Family -4-1% St. Louis MetroLink Red Line* Single-family 31-33% Potential Milwaukee Impact All 5-10% % COMMERCIAL Portland Streetcar Commercial N/A 3.6% Santa Clara County* Commercial 5-15% Seattle South Lake Union Office 2.0% Seattle South Lake Union Retail 2.1% Note: Due to the limited number of completed streetcars in the US, there are limited examples of the impact they have for economic development. Existing literature focuses on the impacts of light rail systems. Studies demonstrate that the greatest impact is seen within.25 miles of an alignment. * Light Rail HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 53

55 Transit Considerations The impact of a streetcar in Milwaukee will depend upon broader planning efforts that are coupled with placemaking initiatives, station locations, and developer perception of transit. Transit is not a silver bullet for economic development. Instead, it must be coupled with placemaking and development policies and incentives in order for cities to see the desired development and growth. Given the variety of market conditions in Walker s Point/Harbor District, transit will have varied immediate and long-term impacts. Affordability strategies will need to recognize the impact streetcar will have in each of these neighborhoods, providing flexibility as market conditions change. Portland Streetcar HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 54

56 APPENDIX: MARKET ANALYSIS

57 Demographic Analysis

58 Demographic Analysis: Population Between 2000 and 2015, the lower portion of the Study Area saw an overall population decrease, while the Greater Third Ward north of Florida Street area saw an 83% increase and the City and County saw almost no change. 100% 80% 60% 40% POPULATION CHANGE % Change +83% (+1,300) Greater Third Ward 20% 0% -20% Milwaukee County City of Milwaukee Walker's Point/HBD Greater Third Ward Harbor District Note: To assess population change for the Greater Third Ward, we assumed half of the population in Census Tract 132 in Source: ACS; HR&A Advisors -15% (-1,600) HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 57 2% 0% County City Walker s Point/Harbor District

59 Demographic Analysis: Age Since 2000, the population of children and millennials (those ages 18-34) has declined, while those between 35 and 54 has increased by 230 people (10%). 4,000 AGE BREAKDOWN ,500 3,000 2,500 2,000 1,500 1, Source: ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 58

60 Demographic Analysis: Income Since 2000, the number of families living below the poverty level has increased by over 100 families (~20%). The western portion of Walker s Point has the highest level of poverty (56%) HH BELOW POVERTY LEVEL (%) Historic Third Ward 45% PERCENT OF FAMILIES BELOW POVERTY LEVEL Walker Square Historic Mitchell Street` Walker s Point Harbor District 40% 35% 30% 25% 20% 15% 17% 30% 22% 35% 25% 40% 50% to 100% 40% to 49.9% 30% to 39.9% 20% to 29.9% 0% to 19.9% 10% 5% 0% City of Milwaukee Walker's Point/HBD Source: ESRI 2017, 2015 and 2014 ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 59

61 Demographic Analysis: Income When compared to the City, female householder families make up a significantly smaller portion of the families below the poverty line in Walker s Point/Harbor District FAMILIES W/ FEMALE HOUSEHOLDER BELOW POVERTY (%) Historic Third Ward 100% 80% FAMILIES TYPE BELOW POVERTY LINE BREAKDOWN ,800 20% % Walker Square Walker s Point Harbor District 60% 40% 68% 50% Historic Mitchell Street 15.9% to 20% 14.9% to 15% 10% to 14.9% 5% to 9.9% 0% to 4.9% 20% 12% 23% 0% City of Milwaukee Walker's Point/HBD Married Couples Female Householder, no husband present Male Householder, no wife present Source: ESRI 2017, ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 60

62 Demographic Analysis: Education While the percentage of residents with higher education degrees (Bachelor s +) is higher than the City as a whole, this is fairly concentrated in the Greater Third Ward area (defined as the area north of Florida Street and the Historic Third Ward). Walker Square 2017 BACHELOR S DEGREE (%) Westown Historic Mitchell Street Walker s Point Harbor District Historic Third Ward 40% to 100% 30% to 40% 20% to 30% 10% to 20% 60% 50% 40% 30% 20% 10% 0% 41% 29% 18% EDUCATION LEVEL 48% % 40% Less Than High School High School Graduate and Some College 20% 15% 9% Bachelor's degree 11% 8% 2% Higher Degree 0% to 10% Walker's Point/HBD With Greater Third Ward City of Milwaukee Source: ESRI 2017, ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 61

63 Demographic Analysis: Mobility The average number of vehicles per household ranges widely throughout the Study Area, with the highest car ownership rates in the southern portion of Walker s Point and the Harbor District OWNER HOUSEHOLDS WITH VEHICLES (%) Walker s Point Harbor District Historic Third Ward Households in the southern portion of Walker s Point and the Harbor have the highest rates of vehicle ownership, with an average of 1.5 cars per household. Car ownership in Walker s Square is lower than the rest of the Study Area, with an average of 1.1 cars per household. Walker Square Historic Mitchell Street 1.6 to to to to to 0.4 Source: ESRI 2017, ACS Census; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 62

64 Residential Market

65 Residential Analysis: Overview The housing stock in Walker s Point/Harbor District is evenly split between multifamily and single-family. 5,251 Total Units HOUSING TYPOLOGY MIX Single Family 48% 52% Multifamily 60% 50% 40% 30% 20% 10% RESIDENTIAL UNITS BY UNITS IN STRUCTURE % (2,700) 17% (880) 31% (1650) Note: Multifamily is defined as a residential structure with over 5 units. Source: MPROP; HR&A Advisors 0% 1-4 units 5-49 units 50+ units HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 64

66 Residential Analysis: Tenure Housing in Walker s Point/Harbor District has skewed heavily towards renters, compared to the City as a whole, and the proportion of renters has increased since OWNER-OCCUPIED HOUSING (%) TENURE BREAKDOWN Historic Third Ward Walker Square Walker s Point Harbor District 55 % (127K) 76 % (3,068) 54 % (123K) 72 % (2,446) 58 % (133K) 77 % (2,606) Historic Mitchell Street Source: ESRI 2017; ACS Census; HR&A Advisors 70% to 100% 50% to 70% 30% to 50% 15% to 30% 0% to 15% 45 % (105K) 25 % (1,039) City of Walker s Walker'sPoint/ Milwaukee Point/HBD Harbor District 46 % (106K) 29 % (976) City of Walker s Walker'sPoint/ Milwaukee Point/HBD Harbor District 42 % (98K) City of Milwaukee 23 % (794) Walker s Walker'sPoint/ Point/HBD Harbor District HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 65

67 Residential Analysis: Supply New market-rate developments tend to have above-average rents, and many of the recent deliveries also contain covered parking. Brix Lofts (2015) 98 Units Avg. Rent $1,600 Vacancy 3.1% Concession 0.4% Parking Covered Owner Hovde Shoe Factory Lofts (2017) 55 Units (47 Affordable) Avg. Rent $710 Vacancy 1.8% Concession 0.9% Parking Surface Lot Owner Keystone The Oregon (2015) 76 Units Avg. Rent $1,700 Vacancy 2.6% Concession 0.4% Parking Covered Owner CPM Trio Apartments (2016) 120 Units Avg. Rent $1,300 Vacancy 26.7% Concession 8.3% Parking Covered Owner New Land Source: CoStar; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 66

68 Residential Analysis: Affordable Housing LIHTC represents the majority of the affordable housing stock in the area. How to maintain affordability after Year 30 should be planned for upfront. LIHTC UNITS 15-YEAR EXPIRATION PROJECTION Note: Federally-enforced affordability restrictions expire after Year 15, though WHEDA enforces an extended affordability period through Year 30, therefore the City s focus should be on maintaining affordability after Year 30. HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 67

69 Residential Analysis: Affordable Housing Non-elderly, non-family households and families make up the majority of renters paying more than 50% of their household income on housing costs. RENTER COST BURDEN >50% Household Type % % 60% 48% 71% 80% 40% 20% 0% AMI: Income: 50% 15% 2% 15% 20% <30% AMI 30% to 50% AMI 50% to 80% AMI (<$24K) ($24K - $35K) ($35K - $56K) Elderly Family Non-elderly, non-family Note: Elderly is defined as over 62 years of age. Note: Income limits are based on HUD 2014 AMI limits for a household size of 4 in Milwaukee MSA. Source: CHAS 2014; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 68

70 Residential Analysis: Affordable Housing Families and Non-elderly, non-family households make up the largest percentage of homeowners who are paying more than 50% of their household income on housing costs. OWNER COST BURDEN >50% Household Type % 80% 60% 40% 20% 0% AMI: Income: % 46% 35% 78% 49% 54% 22% <30% AMI 30% to 50% AMI 50% to 80% AMI (<$24K) ($24K - $35K) ($35K - $56K) Elderly Family Non-elderly, non-family Note: Elderly is defined as over 62 years of age. Note: Income limits are based on HUD 2014 AMI limits for a household size of 4 in Milwaukee MSA. Source: CHAS 2014; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 69

71 Residential Analysis: Affordable Housing Walker s Point/Harbor District has seen over 150 residential properties enter the foreclosure process since FORECLOSED PROPERTIES Note: Foreclosures were estimated using MPROP and bank foreclosure data provided by the City of Milwaukee. Data excludes non-residential properties. Properties with foreclosure events in multiple years are counted in each year there was a foreclosure event. Source: MPROP; City of Milwaukee; HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 70

72 Residential Analysis: Affordable Housing For properties held as of 2016, there have been a total of 47 owner and 93 non-owner foreclosures, many of which are concentrated in the western portion of the Study Area. Tax-Delinquent Properties by Tenure 6% FORECLOSED AND IN FORECLOSURE PROCESS (% of total units in neighborhood) 3% 3% 1% 1% 1% Source: MPROP; HR&A Advisors Owner Non-Owner HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 71

73 Residential Analysis: Vacant Land Vacant land is scattered throughout the Study Area. Vacant Land 138 Vacant Properties 124 Acres 30K Building SF Vacant Land HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 72

74 Residential Analysis: Publicly-Owned Land The City owns some properties in the center of the Study Area, as well as some along the river. Publicly-Owned Parcels 79 City-Owned Properties 49 Properties Owned by Other Public Agencies City Other Public Agency HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 73

75 Retail Market

76 Retail Market: Context Most of Milwaukee s large shopping centers are located outside of the City of Milwaukee, with three malls located along I-43 and I-94, key routes well-connected to the Study Area and the Downtown. 3 ~1M SF <1M SF I I-43 4 I Major Shopping Center Name GLA in square feet Anchors 1 Mayfair 1.27 M Macy's, The Boston Store, Nordstrom, AMC Mayfair Theatre 2 Southridge Mall 1.21 M Sears, JCPenney, Macy's, Boston Store 3 Brookfield Square 1.05 M Sears, Boston Store, JCPenney, The Fresh Market 4 Bayshore Town Center K Boston Store, Kohl's, ipic Theaters 5 Midtown Center K Pick 'N Save, Planet Fitness 6 The Shops of Grand Avenue 450. K Boston Store, T.J.Maxx 7 Marketplace at Brown Deer K Pick 'N Save, Burlington Coat Factory, T.J.Maxx 8 Mayfair Collection 400. K Dick's Sporting Goods, Whole Foods Market (2016), Nordstrom Rack, T.J.Maxx 9 Northridge Plaza - Milwaukee 400. K ETE Reman, Target (Closed) 10 West Allis Center K Menards, Kohl's, Pick 'N Save, Marshalls/HomeGoods 11 West Allis Towne Centre K Kmart, Burlington Coat Factory, Xperience Fitness, Office Depot 12 Granville Station 320. K Menards 13 Shoppers World Of Brookfield K Pick 'N Save, Xperience Fitness, Burlington Coat Factory 14 Timmerman Plaza K Walmart, Pick 'N Save 15 84South 265. K Fresh Thyme Farm. Market, Steinhafel s Furniture 16 Southgate Marketplace 239. K Walmart Supercenter, Marcus Theatres, Planet Fitness 17 Burleigh Square K Lowe's, OfficeMax, Aldi 18 Holt Plaza K The Home Depot, Pick 'N Save 19 Piggly Wiggly Plaza K Target, Piggly Wiggly 20 Mequon Pavilions K 21 Elmbrook Plaza K Kohl's, Piggly Wiggly 22 Loomis Centre 200. K Sendik's Food Market, Bed Bath & Beyond, DSW Shoe Warehouse Ross Dress For Less, OfficeMax, Home Owners Bargain Outlet, Marshalls 23 Spring Mall K T.J. Maxx, Walgreens, Sears 24 Miller Park Way Walmart, Target 25 Chase Avenue Home Depot, Piggly Wiggly, Pick n Save Source: ESRI HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 75

77 Retail Market: Context The majority of businesses in Walker s Point/Harbor District are locally-owned and operated, as is the case with the Greater Downtown as a whole Retailers by Ownership Local Independent Retailer National Chain Retailer Source: MKE United HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 76

78 Retail Market: Context Overall, Walker s Point/Harbor District retail market has seen relative stability and low vacancy rates. 120, ,000 Retail Market 8% 9% 9% 8% 10% 9% 8% 80,000 60,000 5% 5% 5% 5% 6% 7% 6% 6% 7% 6% 5% 4% 40,000 3% 20,000 2% 1% YTD 0% Source: CoStar Gross Absorption SF Total Deliveries SF Vacancy % HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 77

79 Retail Market: Context Excluding the downtown, Walker s Point/Harbor District s vacancy rates have trended upward slightly, with Freshwater Plaza representing the only significant delivery to occur in the last ten years. 80,000 70,000 Retail Market (Excl. Downtown) 7% 6% 6% 7% 6% 60,000 5% 5% 50,000 40,000 30,000 3% 4% 4% 3% 4% 4% 4% 4% 4% 3% 20,000 2% 10,000 1% YTD 0% Source: CoStar Gross Absorption SF Total Deliveries SF Vacancy % HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 78

80 Retail Market: Customer Base and Spending Potential HR&A analyzed the potential for retail within Walker s Point/Harbor District by focusing on customer origins and spending potential. TRADE AREA DEFINITIONS POTENTIAL CUSTOMER GROUPS BY ORIGIN PRIMARY TRADE AREA 5-Min Drive Time SECONDARY TRADE AREA 5-10 Min Drive Time Local Residents Workers Regional Residents Students Visitors TERTIARY TRADE AREA Min Drive Time 187,000 in Primary and Secondary Trade Areas 124,000 in Primary and Secondary Trade Areas 598,000 in Tertiary Trade Area 75,000 in Milwaukee 4M per year in Wisconsin HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 79

81 Retail Market: Customer Base and Spending Potential The Study Area includes a mixture of older and younger individuals and families, with a large proportion of Hispanic and Spanish-speaking communities. Rank Tapestry Segment Percent of Trade Area Median Age Median Household Income Definition 1 NeWest Residents (13C) 38.7% 27 $28K Young Hispanic market, new to America and new to their careers, with new, young families. Working full-time in blue collar jobs, they seek adventure and take risks for the betterment of their families. 2 Metro Renters (3B) 28.3% 32 $52K Residents living alone or with a roommate in older apartment buildings and condos located in the urban core of the city. Metro Renters spend a large portion of their wages on rent, clothes, and the latest technology. 3 Fresh Ambitions (13D) 13.9% 26 $28K These young families, many of whom are recent immigrants, focus their life and work around their children. These residents maintain close ties to their culture; they save money to visit family, but seek out discount fares over convenience. 4 Set to Impress (11D) 11.4% 33 $29K Medium to large multiunit apartments with lower than average rents. Although many residents live alone, they preserve close connections with their family. Income levels are low; many work in food service while they are attending college. 5 Hardscrabble Road (8G) 3.1% 32 $26K Primarily a family market, married couples (with and without children) and single parents. These cost-conscious consumers purchase sale items in bulk and buy generic over name brands. 6 Metro Fusion (11C) 3.0% 29 $33K Metro Fusion is a young, diverse market. Many residents do not speak English fluently and have moved into their homes recently. They spend money readily on what s hot unless saving for something specific. Note: Tapestry Segmentation represents the latest generation of market segmentation systems that began over 30 years ago. The 68-segment Tapestry Segmentation system classifies U.S. neighborhoods based on their socioeconomic and demographic composition. Source: ESRI HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 80

82 Retail Market: Customer Base and Spending Potential Within the Primary Trade Area, a variety of population groups have spending patterns that align with their respective incomes, ages, and lifestyles. Within the Primary Trade Area and Walker s Point/Harbor District, the primary groups include residents with more modest incomes and families, Hispanic and recent immigrant communities, older individuals, and young professionals. 13C NeWest Residents 3B Metro Renters 13D Fresh Ambitions 11D Set to Impress 11C Metro Fusion Source: ESRI HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 81

83 Retail Market: Customer Base and Spending Potential Gap Analysis: 5-Minute Drive Time Resident Sp. Potential Employee Sp. Potential Total Spending Potential Total Existing Sales Retail Gap Grocery Stores $25.4 M $16.7 M $42.1 M $55.7 M -$13.6 M Convenience Retail $20.9 M $35.9 M $56.8 M $84.5 M -$27.6 M Specialty Food $2.1 M $1.0 M $3.1 M $37.4 M -$34.3 M Liquor $1.6 M $2.0 M $3.6 M $7.7 M -$4.1 M Health & Personal Care $10.4 M $17.2 M $27.6 M $8.1 M $19.5 M Miscellaneous $6.8 M $15.8 M $22.6 M $31.2 M -$8.7 M Food Services & Drinking Places $19.9 M $30.7 M $50.6 M $94.4 M -$43.8 M Restaurants $18.4 M $28.2 M $46.7 M $85.5 M -$38.8 M Drinking Places $1.4 M $2.5 M $3.9 M $8.9 M -$5.0 M Destination Retail $65.3 M $53.0 M $118.3 M $98.5 M $19.8 M Home Furnishings $5.5 M $2.2 M $7.7 M $10.6 M -$2.9 M Bldg Materials, Garden Supply $9.4 M $2.7 M $12.1 M $10.4 M $1.6 M Clothing $8.2 M $11.8 M $20.1 M $33.1 M -$13.0 M Sporting Goods/Hobby $3.9 M $2.7 M $6.6 M $4.7 M $1.8 M Electronics & Appliance $5.9 M $27.7 M $33.6 M $3.9 M $29.7 M General Merchandise $32.3 M $6.0 M $38.3 M $35.9 M $2.5 M Source: CoStar, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 82

84 Retail Market: Customer Base and Spending Potential Gap Analysis: 5-10 Minute Drive Time Resident Sp. Potential Employee Sp. Potential Total Spending Potential Total Existing Sales Retail Gap Grocery Stores $191.2 M $34.4 M $225.7 M $253.5 M -$27.8 M Food Services & Drinking Places $146.1 M $63.3 M $209.4 M $302.1 M -$92.7 M Restaurants $135.5 M $58.2 M $193.6 M $275.5 M -$81.9 M Drinking Places $10.6 M $5.1 M $15.7 M $26.6 M -$10.8 M Destination Retail $498.8 M $109.2 M $608.0 M $358.8 M $249.2 M Home Furnishings $42.3 M $4.5 M $46.8 M $39.5 M $7.2 M Bldg Materials, Garden Supply $77.3 M $5.5 M $82.8 M $50.2 M $32.7 M Clothing $60.8 M $24.3 M $85.2 M $43.0 M $42.1 M Sporting Goods/Hobby $29.4 M $5.5 M $34.9 M $17.7 M $17.2 M Electronics & Appliance $44.9 M $57.1 M $102.0 M $20.6 M $81.3 M General Merchandise $244.1 M $12.3 M $256.4 M $187.7 M $68.7 M Source: CoStar, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 83

85 Retail Market: Customer Base and Spending Potential Gap Analysis: Minute Drive Time Resident Sp. Potential Employee Sp. Potential Total Spending Potential Total Existing Sales Retail Gap Food Services & Drinking Places $758.6 M $0.0 M $758.6 M $918.6 M -$160.0 M Restaurants $701.3 M $0.0 M $701.3 M $888.2 M -$186.9 M Drinking Places $57.3 M $0.0 M $57.3 M $30.5 M $26.9 M Destination Retail $ M $0.0 M $ M $ M -$77.4 M Home Furnishings $231.9 M $0.0 M $231.9 M $286.2 M -$54.3 M Bldg Materials, Garden Supply $466.5 M $0.0 M $466.5 M $349.7 M $116.9 M Clothing $316.5 M $0.0 M $316.5 M $568.8 M -$252.4 M Sporting Goods/Hobby $155.4 M $0.0 M $155.4 M $131.8 M $23.5 M Electronics & Appliance $239.1 M $0.0 M $239.1 M $245.7 M -$6.6 M General Merchandise $ M $0.0 M $ M $ M $95.4 M Source: CoStar, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 84

86 Office + Industrial Market

87 Commercial Market The Study Area offers a variety of building types and floorplates, which can accommodate a range of tenant types. Connectivity to the downtown allows for the Study Area to capture some of downtown s office employment. Larger, Class A office buildings are typically located with in the Historic Third Ward and just across the Milwaukee River in Walker s Point. Smaller office buildings, which offer Class B space, are scattered throughout the rest of the Study Area, often housing smaller design or creative firms. Major tenants include HGA Architecture and Engineering, and Cramer-Krasselt. Walker s Point and Historic Third Ward Bray Architects Source: Reference USA, Google, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 86

88 Commercial Market: Office Vacancy remains relatively stable, although down from a high in ,000 Office Market 25% 300, ,000 16% 18% 20% 18% 16% 16% 18% 18% 20% 200,000 15% 150,000 9% 11% 10% 100,000 7% 6% 50,000 5% YTD 0% Source: CoStar Gross Absorption SF Total Deliveries SF Vacancy % HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 87

89 Commercial Market: Office Since 2012, there have been new deliveries and vacancy has been declining, indicating the improving market for office outside the Third Ward. 180,000 Office Market (Excl. Third Ward) 35% 160,000 29% 30% 140, ,000 22% 24% 27% 25% 22% 23% 25% 100,000 80,000 13% 16% 19% 20% 15% 60,000 40,000 8% 9% 10% 20,000 5% YTD 0% Source: CoStar Gross Absorption SF Total Deliveries SF Vacancy % HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 88

90 Commercial Market: Industrial Space along the river continues to attract and support industrial tenants, while some inland users have downsized and industrial space has been converted to other uses. The availability of larger spaces, access to highway, and parking has attracted manufacturing and industrial uses along the river. Of late, the area has seen conversions of industrial buildings into residential, office, and manufacturing/retail. Breweries, a notable example of an established and growing industrial subsector in Milwaukee, make use of a variety of industrial spaces throughout the Study Area. Wholesalers and storage businesses occupy space in the area as well. Brenner Brewing Co Source: Reference USA, Google, HR&A Advisors HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 89

91 Commercial Market: Industrial Industrial vacancy has been declining since Industrial Market 300,000 12% 250, ,000 11% 8% 9% 8% 10% 10% 10% 10% 9% 9% 9% 10% 10% 9% 8% 8% 8% 8% 10% 8% 150,000 7% 6% 6% 100,000 4% 5% 5% 4% 4% 50,000 2% YTD 0% Gross Absorption Gross Absorption (Including Historic Third Ward) Vacancy % Deliveries Deliveries (Including Historic Third Ward) Vacancy % (Including Historic Third Ward) Source: CoStar HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 90

92 Commercial Market: Employment Of the 12,800 total jobs in the Study Area, only 2% are filled by Walker's Point/Harbor District residents, while 98% of people commute into the area, primarily from places both north and south of the Study Area. Density of Home Locations for Primary Jobs in Study Area, 2014 Density of Residents Commuting to the Study Area Source: LEHD On the Map HR&A Advisors, Inc. Milwaukee Residential and Commercial Market Analysis 91