Wisconsin Avenue is supposed to be downtown Milwaukee’s grand main drag. But while full service hotels on the street, such as The Pfister, and class A office buildings on the street, such as the U.S. Bank Center, have performed well the retail spaces and class B and C office buildings there have struggled for years with a large amount of vacant space.
However the two-block stretch of East Wisconsin Avenue between Water Street and Milwaukee Street could be poised for a turnaround. Several properties there have changed hands in recent years, two hotels have opened and other changes could be on the way.
“It has been hopping in the area,” said Patti Keating Kahn, owner of the Railway Exchange Building, located at 229 E. Wisconsin Ave., right in the middle of the two-block stretch between Water and Milwaukee streets. “I’m thrilled with the new neighbors that we have.”
The most noteworthy of the new neighbors are the new Marriott and Hilton Garden Inn hotels.
The 205-room Milwaukee Marriott Downtown hotel at 323 E. Wisconsin Ave. opened in June. The hotel has its own restaurant, called Millioke – Meat, Cheese, Beer; and a Starbucks coffee shop along Wisconsin Avenue, and a Schwanke-Kasten Jewelers store.
Late last year, a 127-room Hilton Garden Inn hotel opened in the Loyalty Building at 611 N. Broadway, less than a block south of Wisconsin Avenue. The Hilton Garden Inn also has its own restaurant.
Early this year Powers Jewelry Designers moved to 310 E. Wisconsin Ave., located at the corner of Wisconsin Avenue and Broadway.
The new hotels are bringing additional activity into the neighborhood and the new restaurants and shops provide additional amenities attractive to office tenants considering the area, Keating Kahn said.
“Things are really picking up,” she said. “We have a lot more inquiries than we had a little while ago. It’s definitely on the upswing. I attribute that to the new hotels and the activity in the area.”
The 12-story, 48,000-square-foot Railway Exchange building is currently about 80 percent leased, Keating Kahn said. Two medical office tenants plan to move in on Sept. 1 and will occupy a total of 2,000 square feet of space, she said. And a potential tenant is “very interested” in the building’s first floor retail space, which was formerly occupied by a Quiznos restaurant, she said.
Another new tenant coming to the neighborhood will be Dental Associates, which will move its corporate headquarters to the Iron Block Building at 205 E. Wisconsin Ave. A massive exterior restoration of the five-floor, 50,000-square-foot, 153-year-old building was completed in June. Dental Associates, which acquired the building last year, will move in after the completion of interior renovations. The company will also open a dental clinic in the building. The company will have 30 corporate office employees and 20 dental clinic employees in the building.
Meanwhile, across the street, 250 Plaza, a struggling 20-story office building, sold recently at a rock bottom price of $7.5 million to Lone Star Real Estate Fund II, part of a private equity firm that invests in distressed assets. The building is indeed in distress, as 113,847 square feet of its 200,039 square feet of office space is vacant, according to LoopNet.
Perhaps 250 Plaza will be revitalized under new ownership.
“I think it can be (revitalized),” said Ned Purtell, a partner with RFP Commercial. “It’s got a good location. It’s got good parking. It’s (on) Wisconsin Avenue. It’s still a very good address in the downtown area. It just has to be managed and maintained and it will be fine.”
The building is one of four in a row that has been sold in the last two years. The 14-story, 153,200-square-foot First Financial Centre at 700 N. Water St. was acquired last year in a deed in lieu of foreclosure action by a trust created by J.P. Morgan Chase Commercial Mortgage Securities Corp. In 2011 Madison-based Ascendant Holdings LLC bought the 117,166-square-foot Wells Building at 324 E. Wisconsin Ave. for $2.9 million. Also in 2011, Evanston, Ill.-based Imagine Properties LLC bought the 7-story, 68,655-square-foot office building at 312 E. Wisconsin Ave. for $1.9 million.
Ascendant Holdings is investing in building system upgrades in the Wells Building and is targeting high tech tenants.
A major redevelopment project could be coming to the block south of Wisconsin Avenue between Broadway and Water Street. An investors group, named District Savior LLC, recently purchased six small buildings, all built around 1900, which surround the Railway Exchange Building. The six buildings have a total of 26,891 square feet. District Savior bought them from Guardian Credit Union for $985,000.
Dave Pudlosky of Jones Lang LaSalle, and formerly of The Boerke Company, brokered the deal for District Savior. He said he could not disclose details about the group or what their plans are for the buildings.
“The plan is to rehab them,” he said. “I think it’s going to be a partial rehab and a partial new build. I think the goal is to preserve the historical nature of the buildings. However, we have to be realistic. A lot of what’s there isn’t going to work. They’re in pretty rough condition. They’re pretty run down.”
Keating Kahn said she knows who the group is but has been “sworn to secrecy” about them and their plans.
“It’s a good, strong group,” she said. “I don’t think there’s a plan yet. I think it’s a long-term type of project. But it’s going to be great for downtown Milwaukee.”