God, It’s Great to Own Retail

Ever wonder what the best real estate investment is today?

It’s owning retail spaces—storefronts, neighborhood centers, strip malls, and beyond! Let me share a quick story from this past summer:

We took on a project in Middleton, WI, leasing out 7 retail suites in a brand-new development. Marketing started on August 7th, and by September 8th— just 32 days later —we had connected with 101 tenants, conducted 27 tours, and received 13 letters of intent for those 7 suites. That’s nearly double the interest we needed!

And guess what? This isn’t a one-off — this is happening all across Wisconsin. Take a look at the Q3 2024 SE Milwaukee CoStar retail vacancy rates:

SE Milwaukee: 1.5%
West Allis: 1.4%
East Side of Milwaukee: 1.4%

Now, compare that to multifamily (housing) vacancy rates:

SE Milwaukee: 4.8%
West Allis: 4.4%
East Side: 4.0%

Yes, you’re reading that correctly — it’s about 3 times harder to find a spot for your business than to find an apartment.

I’ve heard my colleagues say they can lease properties just by putting up a “For Lease” sign—without even needing to post it online!

Why’s This Happening?

Let’s rewind the clock. Over the last two decades, especially during the “Amazon revolution,” everyone thought eCommerce would crush brick-and-mortar retail. As a result, developers stopped building retail centers. That halt in construction led to a massive shortage. Now, tenants are competing for limited space.

To add insult to injury, this problem isn’t going away anytime soon. According to CoStar’s Q3 2024 report, net new retail inventory in the Milwaukee market isn’t expected until 2027—a whole 3 years away.

What should you do as a landlord? Ensure your property is priced properly and remains attractive to tenants. How can you do that? Visit kvrea.com. Our team focuses exclusively on representing owners, helping them unlock the full value of their retail properties. Let’s make sure you know what your property is truly worth and how to maximize that value.

Yours Truly,

Mark Kvetkovskiy

Commercial Real Estate Advisor

KVREA | Compass Commercial

Sale Listings

Transwestern listed a retail investment property on September 4th in Whitefish Bay, WI for sale at a jaw-droppingly-low 4.61% cap rate. It'll be interesting to see how it sells!

Leases

1640 N Water (Rhythm Building) | $25.00 SF NNN | Signed September 18th | 2,380 SF | Leased by Colliers | Reported by CoStar

Loans (contact us for a referral)

Ground Up Retail Salon Construction -- 75% LTC, 24 month interest-only period

Commercial mortgage -- 5.50% APR, 25 year amortization, 5 year term

Implement Smart Technology for Operational Efficiency:

Beyond traditional upgrades, integrating smart building systems such as sensors, automated HVAC controls, and smart lighting can improve operational efficiency and lower energy costs. These systems can monitor energy usage in real-time, adjust settings based on occupancy, and even detect maintenance issues before they become major problems.

LEED and Energy Star Certified properties are renting for 21.4% more than non energy efficient locations.

This approach not only reduces operating expenses for tenants but also adds long-term value to the property by making it more future-proof.