In 1989, a unique multi-use development was completed in downtown Milwaukee. The project, developed on the block southwest of Water Street and Kilbourn Avenue, included the combination of the 28-story Milwaukee Center office tower, a hotel and the redevelopment of a former power plant building into a new home for the Milwaukee Repertory Theater. The office building, hotel, Milwaukee Rep and the Pabst Theater were all connected by an atrium in the middle of the block.
Milwaukee Ballet executive director Dennis Buehler pointed to the Milwaukee Center project, developed by Trammel Crow Company, as an example of the type of development that combines arts venues with commercial development that could be a good fit for The Harmony Initiative.
“We’re hearing a lot of interest from developers in the city about this approach,” Buehler said.
The Harmony Initiative is a collaboration of the Milwaukee Ballet Company, the University of Wisconsin-Milwaukee Peck School of the Arts and the Medical College of Wisconsin. The initiative plans to establish a 70,000- to 75,000-square-foot location in the Water Street corridor in downtown Milwaukee.
The initiative has not hired a commercial real estate broker yet for the deal, Buehler said.
“We have not yet announced or engaged in one,” he said. “We are looking at several different options as we move forward.”
The initiative also plans to issue a request for proposals (RFP) for an architect to create detailed plans for its space needs, Buehler said.
The Harmony Initiative facility would provide space for the Ballet Company’s offices, studios for the Ballet and its school, a small performance center with about 300 to 400 seats for small dance performances, and a sports medicine clinic for the Ballet, Peck School of the Arts and the general public.
“We’re very excited about the Ballet’s potential project,” said Richard “Rocky” Marcoux, commissioner of the Department of City Development. “We have been working with them over a period of months. I think they will be looking at where their needs are best met. I think there are a number of opportunities for them to be able to find space.”
Although the Harmony Initiative has been talking to city officials for months, according to Marcoux, the initiative’s plans were news to many downtown Milwaukee commercial real estate professionals, who were particularly surprised about the size of the potential deal.
The Harmony Initiative would be considered a potential major anchor tenant for a downtown Milwaukee building. For example, Von Briesen & Roper and Baker Tilly, both in the market for new downtown office space and both considered potential anchor tenants for a new downtown office building, are each seeking 70,000 to 75,000 square feet of space.
“Huge,” was the reaction of Ned Purtell, a partner with Milwaukee-based RFP Commercial to the potential Harmony Initiative deal.
“It’s a big tenant, that’s for sure,” said Lyle Landowski, a principal for Inland Companies.
The initiative will consider existing buildings and proposed new buildings, Buehler said. However, because of the unique space needs for the dance facilities in the project, the current focus has been on a possible new building, he said.
“There are a number of options that could exist in the downtown area,” Buehler said. “We’re well into conversations with the city about their longer term redevelopment plans because a project that puts three major cultural institutions in one place could be a catalyst for any number of future projects as well.”
In addition, the initiative would prefer to own the space, Buehler said. That would make it easier to do fund-raising for the project. So far, $2 million has been contributed for the Harmony Initiative, $1 million each from the Richard and Ethel Herzfeld Foundation and the Dohmen Family Foundation. A total fund-raising goal has not been set yet.
The Harmony Initiative is looking for space along or near Water Street roughly between Kilbourn Avenue and the Park East corridor, said Buehler. The initiative wants to be located as close as possible to the Marcus Center for the Performing Arts, which is where most of the Milwaukee Ballet’s performances are presented.
If the Harmony Initiative wants a new building in that area, a logical option could be the mixed-use development proposed by Rainier Properties LLC (which includes developers Bruce Westling and Gary Grunau), at the northwest corner of Water Street and Knapp Street, along the Milwaukee River in the Park East corridor. Westling and Grunau could not be reached for comment at press time.
Milwaukee-based Marcus Corp. has committed to developing a multi-screen movie theater complex in the Rainier project. However, the project has struggled to attract tenants for the 15-story, 280,000-square-foot office tower planned for the project. Most of the anchor office tenants in the market for new space downtown prefer projects located closer to the heart of the central business district.
In the post Great Recession economic landscape the capital markets for new commercial real estate development are extremely tight. Office building developers need to pre-lease about 75 to 80 percent of the space in a proposed building in order to get financing, according to industry sources. That means Rainier would need to pre-lease about 210,000 square feet of space for the project. So even if the Harmony Initiative committed to the project, it would need to obtain pre-leases for another 140,000 square feet.
One possibility is Marcus Corp. Its lease of about 40,000 square feet of office space at 100 E. Wisconsin Ave. for its corporate headquarters expires at the end 2013, according to sources. The company is already involved in the project with the movie theater.
Another possibility is Von Briesen & Roper, which for months said it planned to make a decision about a new office location by the end of the third quarter, but announced recently that it is postponing its decision.
“The Milwaukee Ballet’s Harmony Initiative…could impact our decision,” said Randall Crocker, president and CEO of Von Briesen, in a statement about the delay of the firm’s office space decision.
However, commercial real estate sources say Von Briesen is considering new office building projects outside of the Water Street corridor that the Harmony Initiative is targeting.
There are not a lot of existing buildings in the Water Street corridor that could accommodate the Harmony Initiative’s needs, commercial real estate brokers say.
The 60,000-square-foot Blatz Washhouse building at 1101 N. Market St. could be an option if the Harmony Initiative reduces its space requirements, Landowski said. The building was vacated earlier this year when Holter Financial Group moved to 100 E. Wisconsin Ave.
Another possibility could be the stalled Staybridge Suites development at the southeast corner of Water Street and Juneau Avenue. Construction of the building, which included the hotel, residences and retail space, was halted in late 2008 and Icelandic investors who provided millions to finance the project are suing the development group, which was led by Park Ridge, Ill.-based Economou Partners. The project is stuck in the middle of a messy and lengthy receivership process.
“You would think that whenever it comes out of receivership it will have a low basis and could cut an aggressive deal,” Landowski said.
Another option could be the 735 N. Water St. building, owned by Compass Properties LLC. The 300,000-square-foot building has about 100,000 square feet of vacant space, including about 75,000 square feet of contiguous space.
However, the building is located a little further south of the Harmony Initiative’s target area.
Compass Properties regional manager Sheldon Oppermann said he spoke with Harmony Initiative representatives about a year ago, but has not had any conversations with them lately.
Whatever location the Harmony Initiative chooses, it will provide a new home for the Milwaukee Ballet’s studios and offices, which have been located at 504 W. National Ave. in Milwaukee’s Walker’s Point neighborhood for about 30 years.
“It has suited us well, but we’ve really outgrown our space,” Buehler said. “There are a lot of physical issues with our current location.”
The Ballet Company plans to sell the building, after it moves out.
“We’ve had some interest from other nonprofit groups if we leave that space,” Buehler said.
