Construction began this week for one apartment development project in Milwaukee's Historic Third Ward, and construction of another apartment complex in the neighborhood is expected to break ground next month.

Site work began this week for developer Robert Joseph's Jackson Square project, an 81-unit apartment building with 9,000 square feet of retail space, which is being built at the northwest corner of East Menomonee and North Jackson streets. The five-story building is expected to be completed in 13 to 14 months, Joseph said.

Monthly rents at Jackson Square will range from $800 to $1,600, Joseph said. Half of the units will have one bedroom, and the other half will have two. The highest-priced units are two-story townhouses at the top of the building, providing views of Lake Michigan.

Another apartment development is expected to begin construction soon. Milwaukee-based Mandel Group Inc. is hoping to break ground in October for its Corcoran Lofts project, which will be located on the north side of East Corcoran Avenue and adjacent to Mandel's Gaslight Lofts development. The project is expected to be complete next fall.

The six-story Corcoran Lofts building will have 76 apartments and 3,400 square feet of retail space. The retail space will be located at the corners of Corcoran and Jefferson and Milwaukee streets. The apartment rents will start at about $900.

The building will have parking on the first two floors and apartments on the upper four floors. It will be connected to Gaslight Lofts so Mandel will be able to use Gaslight's operating staff to serve the building and Corcoran Lofts residents will be able to use amenities in Gaslight, such as the fitness center.

Developers say the market for apartments is strong right now. Mandel's existing apartments are 97 percent occupied, said Robert Monnat, the company's chief operating officer.

The national credit crunch has made it harder for buyers to get loans for condos, which is leading to more interest in apartments, developers say.

"No one has built apartments for a long time," Monnat said. While the condo market was red hot many people who used to rent were buying condos instead. Now many of those buyers have returned to the apartment market. In addition some people want to rent because they may not be living in the area long-term, and others want to rent to try out the downtown lifestyle before committing to buying.

"A lot of people still want to test the waters downtown and rent for a year (before buying a condo)," Joseph said.

According to New York-based Reis Inc., which provides commercial real estate market information, the Milwaukee area had an apartment vacancy rate of 4.1 percent in the second quarter, and the eastern part of the city of Milwaukee, which includes downtown and the Third Ward, had a 4.8 percent vacancy rate.

"We're turning people (who want to rent apartments) away," Monnat said. "We have a ton of people looking to live in the Third Ward, and we have nothing to offer them."

Apartment rental rates in the Milwaukee area have been flat for awhile, which has also discouraged apartment developments in recent years, Monnat said.

"It's still a tough market because construction costs are so high," he said. "Rents have to go higher to support new construction. Because our occupancy (rate for apartments) is so high right now we can make this project work. When occupancy drops back to a normal level, hopefully rents will have come up."

Another report says that the vacancy rate for downtown Milwaukee office space rose during the second quarter. According to Boston-based Colliers International, whose local affiliate is Milwaukee-based Colliers Barry, the office space vacancy rate for downtown Milwaukee rose from 14.9 percent in the first quarter to 15.9 percent during the second quarter. The vacancy rate for class A office space in downtown Milwaukee rose from 7.9 percent to 10.4 percent during the quarter. Nationally, the downtown office space vacancy rate is 11.5 percent overall and 10.2 percent for class A space, according to Colliers.

In Milwaukee's suburban areas, the office space vacancy rate held steady at 11.5 percent during the quarter, according to Colliers. However, the vacancy rate for class A office space in Milwaukee's suburban areas rose from 14.3 percent to 16.0 percent during the second quarter. The national average for suburban office space vacancy is 14.2 percent overall and 14.3 percent for class A space.

Downtown Milwaukee office space sold for $225 per square foot during the quarter, and office space in the suburbs sold for $180 per square foot, according to Colliers.

The Milwaukee area's industrial space vacancy rate increased a bit during the second quarter, rising from 7.4 percent in the first quarter to 7.5 percent, according to Boston-based Colliers International. The area's industrial space vacancy rate is also up a bit from the second quarter of 2007, which was at 7.3 percent.

However, the area's industrial space vacancy rate is still lower than the national average of 8.52 percent, according to Colliers. The Chicago area's industrial space vacancy rate is 9.4 percent, according to Colliers.

The equalized value of real and personal property in Wisconsin rose 3.3 percent this year, compared with a 6.2-percent increase last year and a 9.6-percent increase the year before, according to a report from the Wisconsin Taxpayers Alliance.

Commercial property value rose 4.2 percent, manufacturing property rose 4.3 percent, agricultural property rose 3.3 percent and residential property rose 2.8 percent. The value of existing residences in the state rose less than 0.5 percent.

The rise in agricultural property and the 8.1 percent increase in the value of agricultural forest land, is a reverse from recent years of decline, reflecting a "somewhat stronger farm economy," according to the report.

Growth was highest in rural and recreation areas of central Wisconsin and lowest in urban and suburban areas in the northwest and southeastern parts of the state, according to the report.

Seven counties in the northwest part of the state, which had experienced significant growth fueled by sprawl from the Twin Cities, are now experiencing stagnated property value growth.

The highest increase in equalized value was in heavily agricultural Lafayette County, which had an increase of 14.3 percent.

Only one county, Barron County, had a decline in property value.

In southeastern Wisconsin, property value increases were:

• Milwaukee County, 1.6 percent
• Waukesha County, 2.1 percent
• Walworth County, 5.9 percent
• Washington County, 3.0 percent
• Kenosha County, 2.5 percent
• Racine County, 2.1 percent
• Ozaukee County, 0.7 percent

Foreclosures in the state have been on a steady decline since January, but increased in August by 5 percent to 1,848, according to a new report from ForeclosuresWI.com.

In January, the state had 2,443 foreclosures. In July, the state had 1,762 foreclosures. Year-to-date, Wisconsin has had 16,139 foreclosures, which is about 25 percent higher than the first eight months of 2007.

Despite the decline since January, the average monthly foreclosure rate in 2008 has been 2,017, up significantly compared to the average monthly foreclosure rate of 965 in 2003 for the state.

"Wisconsin foreclosures have been building up to the current levels for the past three years," said Robert Jansen, president of ForeclosuresWI.com. "While new foreclosure filings appear to be leveling off, monthly filings remain over double what they were just five years ago."

Foreclosures in the state, and the rest of the nation, shot up in 2007 and 2008, as many homeowners who had received subprime adjustable rate mortgages were unable to make their payments when the interest rates on their mortgages adjusted upward.

The foreclosure crisis in Wisconsin appears to have peaked in January, but it will take a while to return to normal levels, Jansen said.

"While there have been some indications that foreclosure filings may be reaching their peak, it will take time for these properties to get through the system," he said.

DeForest-based Main Street Builders Inc. plans to build an 81-room Hampton Inn & Suites hotel in Sheboygan. The four-story, 16,300-square-foot building would be constructed on a vacant site on the east side of Taylor Drive, just north of the Union Pacific Railroad tracks. The site is on the south side of Sheboygan, near the city's south side industrial park and I-43.

"It's a nice site," said Steve Sokolowski, manger of planning and zoning for the city. "It's going to be very visible from I-43." There are about 1,500 Hampton Inn locations. The hotel chain is part of Beverly Hills, Calif.-based Hilton Hotels Corp.

More hotel developers are eyeing the Sheboygan area. St. Augusta, Minn.-based ETC Enterprises recently completed construction and opened a new 71-room GrandStay Residential Suites hotel at 708 Niagara Ave. in downtown Sheboygan.

However, the hotel project in Sheboygan Falls has stalled. A 68-room GuestHouse Inn & Suites, which was being built southwest of Highways 23 and 32, but the construction has been halted for months.

"It remains a footing and an elevator shaft," said Sheboygan Falls building inspector Ken Sonntag. "The investors in that project have kind of backed away. The original investor from (Milwaukee-based) Landscape Architects, Brian Kliesmet, is the owner of the project and he's looking for new investors. It's right now known to be defunct and not operating and no intent to open until they get some better construction costs inline and things. So right now, most of the citizens are asking what that elevator shaft is doing there untouched for the last six months. Basically, until they get some more money, better investors or a better way to construct it at a cheaper cost, I don't think it's going to be built."

Kliesmet did not return a phone call seeking comment.

Additional hotel rooms could help the Sheboygan area meet its requirement from the Professional Golfers Association (PGA) to add a significant amount of quality hotel rooms in order to host the 2020 Ryder Cup.

The sixth annual BizTimes Commercial Real Estate & Development Conference will be held from 7:30 to 9:30 a.m. on Friday, Nov. 14, at the Italian Community Center in Milwaukee.

The annual conference has become a major networking and information event for members of southeastern Wisconsin's commercial real estate industry. Last year a sellout crowd of about 600 people attended the conference at the Italian Community Center.

The theme of this year's conference will be "The Fresh Coast Advantage." Chicago Mayor Richard M. Daley is the planned keynote speaker.

The conference will focus on the strategic competitive advantage the Great Lakes region will have in the 21st century, when "water becomes the new oil." While heavily populated regions such as California, Arizona, Texas and Georgia are draining their supplies of fresh drinking water, the Great Lakes region contains 20 percent of the world's surface freshwater and 95 percent of America's surface freshwater.

The Milwaukee conference will explore how being positioned amid the largest supply of freshwater in the world will be a key driver of economic growth and commercial real estate development. From high valued lakefront property to suburban communities needing Lake Michigan water to continue there growth, Southeastern Wisconsin real estate development will benefit from the region's access to the fresh water resource of the Great Lakes.

At the Milwaukee conference, Daley will discuss how regional collaboration between Chicago and Milwaukee will be beneficial for both cities and how being located in the Great Lakes will be a competitive asset in the 21st century.

Daley will be introduced at the conference by Milwaukee Mayor Tom Barrett.

In addition to Daley, other featured panelists at this year's BizTimes Commercial Real Estate & Development Conference will be:

Franz Hoffman, president of Procorp Enterprises LLC in Milwaukee and chair of the Milwaukee 7 Water Council. Procorp specializes in sustainable water and wastewater treatment solutions. Hoffman will speak about the Great Lakes water resource and the need to use sustainable real estate development practices and products.

James Randel, commercial real estate attorney, broker investor and author. Randel is a leader in "added value" investing, an approach to real estate that attempts to boost the value of a property well beyond normal appreciation or inflation. His strategies have been followed by investors throughout the country. He is the author of "The Real Estate Game And How To Win It" and "Confessions of a Real Estate Entrepreneur." Randel is a distinguished commentator on real estate issues at conferences throughout the nation, including the Harvard Business School. A native of Ohio, Randel will speak about the future strategic advantages of developing real estate in the Great Lakes region.

The opening remarks of the conference will be provided by Richard "Rocky" Marcoux, commissioner of the Milwaukee Department of City Development. Jim Villa, the new president of the Commercial Association of Realtors Wisconsin (CARW), will provide some exclusive market data at the conference. The conference will be moderated by Mark Eppli, Ph.D., professor of finance and chair of the Robert B. Bell Real Estate Program at Marquette University.

Small Business Times presents the conference in partnership with Marquette's Bell Real Estate Program and CARW.

A special supplement, the BizTimes Commercial Real Estate & Development Book, featuring exclusive editorial content and data, will be published in conjunction with the conference.

Middleton-based The Bruce Company recently purchased 5.85 acres at 520 S. 92nd St. in the city of Milwaukee, for $730,000 from Allan-Knox Inc. The sale was brokered by Gordon Steimle of Ogden & Company, who represented The Bruce Company, and Bill Langhoff and Bob Flood of RFP Commercial, who represented Allan-Knox. The site is located near the Zoo Interchange. The Bruce Company, a landscaping firm, plans to build a new, 4,000-square-foot office and training facility on the property and will renovate an existing 6,000-square-foot building on the site. A groundbreaking ceremony will be held today to celebrate the start of construction for the project. The new building has been designed by Quorum Architects and will include several environmentally friendly "green" features, including a metal roof, exterior finishes using local recycled materials and a rain garden to control storm water runoff. The building will be constructed by Ogden Construction, a division of Ogden & Company Inc. "This property will help us to better serve our customers and provides us with room for expansion," said Jeff Joutras, vice president of sales and marketing for The Bruce Company. "We currently rent space near Miller Brewing and are excited to make this commitment to stay in the city and to build a new office/training center for our employees."