With firm dates now set for design and construction of the new arena for the Milwaukee Bucks in downtown Milwaukee, the project will begin taking shape in 2016, although the new facility won’t be complete until 2018.
The controversial $500 million project dominated most of the conversation in the city and beyond last year. A development agreement between the city and the NBA franchise is now in place listing March 1 as the deadline for the Bucks to submit detailed design plans, and June 1 as the deadline for construction to start.
The arena is planned for a site just north of the BMO Harris Bradley Center.
The arena will be the centerpiece of a 25-acre, mixed-use district that the Bucks owners plan to develop. The first phase of the arena district development includes the new 690,000-square-foot, six-story arena, a practice facility for the team and a “live block” public plaza on Fourth Street between Highland and Juneau avenues.
While the new arena will be the largest project that breaks ground in the region this year, it certainly isn’t the only major development under construction in the area. Several large projects that were under construction in 2015 have not been completed yet.
One of the major buildings, however, that will be wrapped up by March 1, is 833 East, the 17-story, $101.5 million, 358,017-square-foot office tower being built by Irgens at 833 E. Michigan St. downtown. Tenants in the building will include the corporate offices for Johnson Controls Inc.’s automotive spinoff, Adient, and law firm Godfrey & Kahn.
Irgens is also building a 155,000-square-foot office building in the Milwaukee County Research Park in Wauwatosa. Zywave will be the anchor tenant in the building.
The Northwestern Mutual Tower and Commons office building will still be under construction this year. The $450 million, 32-story, 1.1 million-square-foot corporate headquarters is expected to be complete in 2017; however, it is already transforming downtown.
The company will also break ground this year on a $100 million, 33-story parking and apartment tower adjacent to the office building, on the block northwest of East Mason Street and North Van Buren Street. The tower will include 308 high-end apartment units and 16 penthouse units, and an eight-story parking garage and 14,000 square feet of retail space on the first floor.
“I think it was a huge psychological shot in the arm for people that Northwestern Mutual made a commitment first with their new headquarters and then with their multi-family tower,” said Lyle Landowski, partner at Colliers International|Wisconsin.
Overall, the region’s office market ended 2015 with a vacancy rate of 18.4 percent and absorbed 231,849 square feet of space, according to data from Xceligent.
“2015 was a spectacular year for tenants, landlords and brokers. There was a lot of pent-up demand, lots of moving, renewing of contracts and people changing locations,” said Jack Jacobson, principal, NAI MLG. “We look at what we’re doing and what our competitors are doing and we are cautiously optimistic that 2016 will be a good year, but it’s early.”
Construction on the second phase of The Mayfair Collection project in Wauwatosa, which will be anchored by a Whole Foods Market and a Homewood Suites Hotel, will continue this year.
Chicago-based HSA Commercial Real Estate, the developer for The Mayfair Collection project, which is located northeast of Highway 45 and Burleigh Street, has partnered with Fiduciary Real Estate Development Inc. to include 1,050 luxury residences in the project.
Irgens is working on The Corridor, a 66-acre mixed-use development at the Ruby Farm site in Brookfield that will include the state’s first Life Time fitness club. The project will also include a Dick’s Sporting Goods store and Wisconsin’s first Portillo’s, which are expected to open this summer.
Von Maur Inc. purchased 1.6 acres in The Corners development in fall 2015, and construction on the long-awaited retail and apartment development at I-94, Bluemound Road and Barker Road in the Town of Brookfield will continue this year.
There is only one, 2-acre parcel left in the Drexel Town Square mixed-use development in Oak Creek. Water Street Brewery and Meijer have already opened there. Expect to see significant progress on the other retail tenants including a Chick-fil-A restaurant and BelAir Cantina.
Cobalt Partners is working on two multi-use projects. The first, White Stone Station in Menomonee Falls, is on 65 acres west of Highway 41/45 and Pilgrim Road. Its anchor, Costco, opened in November. This year, construction will be finished on small retail stores and restaurants.
Cobalt’s other major project is in Greenfield, at a 40-acre site at I-894 and South 84th Street. It includes more than 300,000 square feet of retail shops and restaurants, as well as a possible hotel and 350 market rate apartments. Steinhafels will relocate within the development and close its nearby store at 8400 W. Layton Ave.
Unless a company is willing to build, finding a large industrial space in southeastern Wisconsin is close to impossible, according to James T. Barry III, president of Milwaukee-based The Barry Co. Xceligent data backs him up. The vacancy rate for the industrial market was 4.6 percent in the fourth quarter of 2015, with some areas, such as Washington County, reporting 1.4 percent vacancy in the fourth quarter. The region absorbed 5.9 million square feet of industrial space in 2015.
Barry believes that trend will continue through 2016, barring a macroeconomic catastrophe.
“Even though there have been a number of new industrial developments, there have not been enough for supply to meet demand,” said Barry, whose company handled the largest industrial space sale in the region in 2015, involving the 1 million-square-foot Milwaukee Post Office.
“There are not many buildings that size,” Barry said. “We will probably be seeing more sales of multiple buildings. Trying to find 100,000 square feet is challenging. A lot of the larger inventory has already been taken off the market.”
New products will begin hitting the market in spring, with nearly 1.9 million square feet of speculative buildings and another 1 million square feet planned, according to a report released by Cushman & Wakefield.
The market is already responding, with Liberty’s 171,000-square-foot spec building in Oak Creek and Wangard’s 60,000-square-foot spec building in West Allis already fully leased.
By mid-2016, 313 more hotel rooms will be added to the area in and near downtown Milwaukee, with the 158-room Kimpton Hotel at the northeast corner of Broadway and Chicago Street in the Historic Third Ward and the 155-suite SpringHill Suites at the corner of Fourth and Wells streets both scheduled to open this year.
A 200-room Westin Hotel just west of the new 17-story 833 East office building will also likely break ground in 2016, and three other hotel projects are planned downtown: a 94-room Hilton Homewood Suites in the Button Block building, a Cambria Hotel & Suites near The Shops of Grand Avenue and a hotel planned in the First Financial Centre building at 700 N. Water St.
Construction is also expected on a hotel in the Drexel Town Square project in Oak Creek.
“Overall, 2015 was a good year for the commercial real estate market, and I think we’re going to see more of the same in 2016,” Landowski said. “I’m encouraged by the risks people are taking and the new development that is happening.”