Building more luxury condominiums in today’s tight credit market might seem like risky business, but there appears to be a strong demand for them in downtown Milwaukee. The Residences at Hotel Palomar, University Club Tower, Kilbourn Tower, Cathedral Square, The Moderne and others featuring condos with $500,000-plus price tags come to mind. So, the question naturally occurs, who’s buying those high-end condos?

Rick Barrett, developer of The Moderne, a 30-story hotel/condominium/retail project planned for the southwest corner of Juneau Avenue and North Old World Third Street, has already sold 11 condominium units in the building, even though construction is not scheduled to begin until October. The development will include a 120-room Element Hotel and 16,000 square feet of retail space on lower floors and 80 condominiums on the upper floors.

The 80 units in The Moderne have wide-ranging price tags, from a more modest $250,000 up to $1.4 million. "I wanted to include some diverse options for buyers," Barrett says. "The two primary demographics we are targeting are young professionals and empty-nesters. That is who our buyers have been," he says.

There is a "buffet of condo buyers" coming from all demographic groups, according to Mary Beth Gasper-Waite, a real estate agent who is working with the upscale Residences at Hotel Palomar and owner of Metro Condo Connections in Milwaukee. "We have seen more buyers coming from outside of Milwaukee. I have sold an increasing number of downtown condominiums to people from Chicago. Amtrak makes it possible to commute; there’s no driving and no traffic," she says. "These couples have discovered the incredible quality of life in Milwaukee. People who live here don’t always appreciate that."

Another high-end, mixed use development is The Residences at Hotel Palomar in downtown Milwaukee. The Palomar perks are limitless: A celebrity chef restaurant on site with 24-hour room service, a day spa, fitness center with personal trainer, private entertainment lounge, indoor pool, sun terrace, babysitting, limo and pet services and more. Scheduled for completion in late 2010, the units will be luxury at its finest; think top-of-the-line home amenities and all the bells and whistles, with motorized window shades, bamboo wood floors, crystal gas fireplaces, Smart Home technology systems and multi-media and surround-sound systems.

New Land Development’s Terrace Row, with units selling for $1.25 million to $1.35 million, will be completed this fall.

One key to the million-dollar condo market is amenities, says Gasper-Waite. "Time is so precious in today’s world. When people can find a condominium with a concierge, pool, valet, putting green, pet service and more, these are jewels of value," she says. Many condo buyers are not just looking for a new home, but a new lifestyle as well.

Many of the luxury condominiums in the downtown area are in high-rise buildings with spectacular views of Lake Michigan and the city, making them very desirable to certain buyers. But not everyone wants to be in a high rise, says Tim Gokhman, sales and marketing director for New Land Enterprises, developer and owner of several condominium developments in Milwaukee, including the Terrace Row Condominiums, which are under construction.

"Terrace Row is four side-by-side town homes on Kilbourn Avenue and Cass Street. It’s a one-of-a-kind location, two blocks away from Kilbourn Tower and University Club Tower. It’s in the same price range, but very different from those buildings," Gokhman says. "Each home is completely customizable with a private garage, private elevator and 1,000 square feet of outdoor space. It’s like having a private home in the heart of downtown Milwaukee." The units sell for $1.25 million to $1.35 million.

Gokhman describes one Terrace Row buyer as a couple in the medical field who are transplants from the Lincoln Park area of Illinois. "When you get to the luxury market, people know what they are looking for. They wanted to be in the middle of the city, within walking distance to the theater, restaurants and other events," he says.

One demographic — families with children — typically has not been among traditional buyers of condominiums, local developers say. But that could be changing with the availability of developments like Terrace Row and others that have three or more bedrooms. "It’s still a fairly young market here, but we are seeing some families move into downtown. We recently sold a unit to a couple from Hartland who have a son in school in Milwaukee. They were spending so much time driving that they decided it was time to make a move," Gokhman says.

The influx of corporations like Manpower into the downtown area could mean that more families would be drawn to the area, Gokhman suggests. "If we continue to see major companies relocating to Milwaukee, it will fuel the growth of this kind of buyer," he says.

Barrett isn’t sure families with children will ever be a big part of the market. "If families have been living in an urban environment like New York City or San Francisco or other large cities, then it isn’t so different to live in downtown Milwaukee," Barrett says. "Our core group of buyers for these high-end condos has been younger professionals, executives and empty-nesters."

A segment of buyers that is slightly overlooked, says Gokhman, is people who are planning for their retirement years by moving into a more senior-friendly condominium. "I sold one couple a three-bedroom condo in Brewer’s Hill that is a single level, no stairs," he says.

In many big cities, real estate investors often will buy high-end condominiums as investment properties, but that does not appear to be a significant segment of the Milwaukee market. "We’re not seeing investors buying as much as they did five or 10 years ago," Barrett says. "Most people are buying the units to live in them."

Surveys of condominium buyers from across the United States tend to back up what local experts are saying. Two groups of buyers are driving the condo market: young, well-paid professional singles or couples who want to own their first home close to urban amenities, and older households who want to downsize or shed the maintenance burden of a house, according to the National Association of Home Builders. But the relative ease and desirability of downtown living could become a greater draw to families with children, and we may yet see a slightly different buyer mix in the coming years as more developments seek to include this segment of the population.