A Vision We Can All Share (pt. 1 of a series)

Milwaukee is a polarized city in a polarized state. Red and Blue butt heads at every turn: the streetcar; use of TIF to incentivize development; sale of county land and assets; the Park East; the arena; real estate and income tax rates; city vs. suburbs… The dialogue is both exhausting and inefficient, but it is fascinating.

Less vitriol would be better, to be sure. But the polarization reflects disparate perceptions on how to make our great city greater. It may be naive optimism, but I believe that most participants in that dialogue want our city to improve. And we should welcome all perspectives on that endgame as we search for answers.

Compellingly, I believe most people would agree on the basics of where we want Milwaukee to be in 5 years or 10 years or 30 years:

  • We should improve our economy and move from low growth to higher growth as a baseline
  • We should find efficiency, fiscal stability and responsibility in government in order to improve the return on investment to all taxpayers for the taxes and fees they pay
  • We should improve our built environment with buildings that reflect our heritage and that make Milwaukee an even more attractive city for residents and businesses
  • We should have an affordable, safe, and efficient transit system that makes our city readily accessible to its residents and to its visitors
  • We should protect, enhance, and improve access to our incredible natural resources
  • We should be a city in which a broadly diverse population chooses to live, and can afford to live with a high quality of life
  • Our cultural base should be growing and thriving
  • We should have a public and private educational system that positions our youth to become successful in the future

In short — we should be a city that is deeply attractive to residents, business, and visitors. This should not be a controversial vision.

But realizing that vision is complicated. Metro-Milwaukee has very little job growth (1.9% in 2014, and construction jobs accounted for ~23% of those gained). We have very low population growth (Milwaukee County grew .9% from 2010–2013). In short, our market simply isn’t buttressed by growth that facilitates making substantial investment in infrastructure and services.

The conversations about the path to Milwaukee’s future are clouded by the fact that despite our low economic growth we still are growing, and the private sector is largely doing it. Our downtown boasts a slowly increasing residential population. New developments like Mandel Group’s North End and Wangard’s Avenir are being delivered now, and another 3,500+ units of apartments are planned or proposed — including The Couture and another two luxury apartment towers. Irgens is building an office building, and Northwestern Mutual is too. Hammes has proposed a campus of three office buildings on N. Water St. Johnson Controls has proposed a $500 million!!!! corporate headquarters with 2,000–3,000 employees we could lose to Chicago if the deal can’t be put together. The freshwater sciences are leading a charge toward a new specialization, and substantial development and investment.

All this development activity begs the question: if we are already growing, why do we need to change what we’re doing at all? Isn’t the market solving for its needs? To answer that question, we need to look harder at what’s driving our current growth and consider what the future holds for the drivers of that growth and development.

The Millennials are justifiably getting lots of attention nationally. There are approximately 80 million of them, and they are the largest population bubble in American history. And, in many ways, they are different than generations past. Their relationship with technology is profound. They currently have stronger urban preferences than the X’ers and the Boomers. They hit their formative years after 9/11 and they suffered with their families through the Great Recession.

Milwaukee is not yet a city that attracts outside Millennials in droves. Austin, Denver, Portland — absolutely. It just seems unlikely that 22-year-old recent college grads are sitting with their buddies and saying: “I don’t have a job yet, and I know I can live anywhere, so I’m moving to Milwaukee.” We don’t have an exploding high growth employment sector. We don’t have a nationally acclaimed social scene. We just aren’t that city right now. And, our Millennial population actually decreased by .4% from 2010–2013. So how are the Millennials driving Milwaukee’s growth today?

The answer is simple — household formation. Millennials are finally able to move out of their parents’ homes following the Great Recession. It’s not population growth, but it does allow the market to create new homes for the new households.

In many markets, including metro-Milwaukee, developers and investors have strongly skewed their product offerings to the Millennial Generation. Indeed, these young professionals have a high propensity to rent.

Consider the housing that’s being built downtown right now. A significant number of small one bedrooms and studios are either recently constructed or in the immediate pipeline for development and construction in the next several years. And by small, I mean small: 350–600 square feet. And by a lot, I mean a lot.

It’s easy to understand why those small apartments are dominating the market. Millennials are today’s consumers of that type of housing. We are meeting natural demand. Millennials already want to live downtown. We don’t need to convince them of the benefits. They are low hanging fruit.

There’s more to the story. Consumer preferences are largely moving toward urban amenities. This includes the X’ers and the Boomers. Empty nesters are also drawn to the city. There’s more fuel for urban growth.

But, there’s another cycle coming — and I fear it’s coming like a freight train.