With a strong economy comes opportunity — and any way you cut it, today’s economy is ripe for investing in real estate.
“Our economy is stronger than people give it credit for,” says Michael Brennan, executive director of the Graaskamp Center for Real Estate & Urban Land Economics at the University of Wisconsin-Madison.
“We have a strong automobile business, strong housing industry, tech sector, energy, improved and strengthened banking systems — and we have a very strong consumer demand segment that is aided and abetted by the strength in housing, the strength in the stock market, the low unemployment rate and low interest rates,” Brennan says. “There’s a lot you can do in a strong economy.”
Brennan will be the keynote speaker at Insight’s eighth annual InDevelopment conference March 21 at the Oshkosh Convention Center in Oshkosh.
InDevelopment brings together commercial and economic development professionals and others interested in the commercial real estate industry and related industries. The event starts at 2 p.m. with presentations on some of the region’s major development projects, information from economic development professionals from the New North region and plenty of time for networking.
Brennan is also founder and chair of the national firm Brennan Investment Group, which manages $2.5 billion in assets representing 28 million square feet of space in 24 states, with seven offices nationwide. Among current projects, Brennan oversees the largest industrial project in Florida, Central States, with $180 million in speculative development.
His Wisconsin roots are deep. Growing up, he attended a boarding school in Prairie du Chien. He also owns a large family farm in Watertown.
“I live in Chicago, but Wisconsin is near and dear to my heart,” he says.
At InDevelopment, Brennan plans to address the macroeconomic picture as well as opportunities in the Northeast Wisconsin real estate market.
“Wisconsin will feel the beneficial effects of a stronger economy, and those effects will manifest themselves in greater demand for commercial and residential space,” Brennan says. “Wisconsin is different from a gateway city, however, in that there are ample opportunities to buy properties at cap rates ranging from 6 to 9 percent, unleveraged. It’s feeling the effects of the strong economy, yet real estate prices haven’t soared to levels that would make investments unattractive. Investments in secondary markets such as Wisconsin represent the coming of the second boom in commercial real estate.”
The Great Recession created a slowdown in construction that resulted in an abundance of demand and limited supply for real estate, Brennan says, so the momentum is leaning toward “risk on,” in which investors feel the economy is strong enough to take some chances. He cautions, however, that overzealousness could result in another real estate bust.
“There has been no real estate cycle that hasn’t ultimately ended,” he says. “The longer the cycle, the more crushing the blow when it ends.
“The old saying is, the hangover is proportionate to the party.”