by Kevin Gleason
Residential single-family real estate is reeling. The sub-prime crisis has hit and it has hit hard. Homeowners struggle to keep the largest single source of wealth they possess, their home, from dropping into the abyss. The broad brush of public opinion that paints all investment vehicles black covers single family homes, stocks, bonds, hedge funds and to some extent commercial real estate in one fell swoop. Of course, each has its own unique characteristics, challenges and nuance.
For investment real estate there has not been the spectacular fallout that has impacted other investment types. By and large, retail properties are still retaining tenants while working harder to attract new ones. Rents are flat and will stay that way for the foreseeable future. The slowing economy puts pressure on American’s pocket books, they buy less, and retailers struggle, but most will tough it out. According to the Small Business Times, August 27, 2008, retail vacancies for Waukesha County are 7.7%, Northern Milwaukee/Ozaukee Counties 9% and Southern Milwaukee County 9.5%. This places these markets a bit on the high side for unrented space, but not too bad compared to more volatile national markets.
Office vacancies are high in most markets as well. The downtown Milwaukee office market has a 13% vacancy. Brookfield 18%. Western Waukesha County 14%. Northern suburbs 12.3%. Wauwatosa/West Allis 18%. These are big numbers for a market that should stabilize at 6-7%.
The real stellar performer in the midst of this mess are apartments. As more people lose their homes they become renters. Others who can no longer qualify for a mortgage will stay in the rental market. Demand for quality, professionally managed apartments has gotten better. Throughout the Milwaukee metropolitan market, vacancy rates for apartment properties ranges from 2.6% to a high of 6.4%, great numbers even in a flourishing economy. Owners of apartments may not be able to increase their rents for several years, and they may lose slightly more through rent defaults than normal, but they will pay their taxes, their mortgage and continue to build wealth even in the worst of times.
Historically real estate outperforms the Dow over time in real returns.
Apartments are the kings of real
estate wealth building!
Since most of us experience apartment life at some point in our lives, it’s easy to understand what it takes to 
make an apartment appealing to renters. Maybe more importantly, managing apartments is straightforward; not requiring special skills or education. They provide people with decent places to live, and over time, they can make their owners rich.
Call Kevin Gleason @ 414-870-5363 to answer any questions you may have about investing in real estate or to discuss our apartment listings.
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