Around The Corners

Ten years ago, developer Peter Bell began work on a massive mixed-use development in Waukesha County. The plans included a significant retail development intended to make the project a regional destination.

That project, Pabst Farms, located on a 1,500-acre site at Interstate 94 and Highway 67 in Oconomowoc, made some significant progress in its early years. An Aurora hospital, a YMCA, an elementary school, dozens of single-family homes, some condominiums, two hotels and a 1 million-square-foot Roundy’s Supermarkets Inc. warehouse were all built at the site.

Bell’s grand vision was to develop the sprawling Pabst Farms site with one master plan, rather than piecemeal by parcel.

However, since the onset of the Great Recession five years ago, the Pabst Farms development has ground to a halt. Huge portions of the site remain vacant. Perhaps most noteworthy, the retail development planned for Pabst Farms has fallen far short of expectations.

A strip mall anchored by a Pick ‘n Save store was completed prior to the recession. But the regional shopping center planned at Pabst Farms never materialized. Plans for the 1 million-square-foot regional shopping center at Pabst Farms have been altered to add a heavy emphasis on big-box stores, but even that redesigned plan has failed to move forward.

Through a spokesman, Pabst Farms executives declined to comment for this story.

“I don’t know that we really have much to say,” said Pabst Farms spokesman Thad Nation. “We’re kind of in status quo.”

With the Pabst Farms project stuck in neutral 10 years after it began, another major development is planned in Waukesha County in hopes of creating a regional shopping destination. But The Corners, planned by The Marcus Corp., is a very different project at a very different site than Pabst Farms.

The Corners is a $150 million retail and residential development planned for the former West Point Cinema site and the former Menard’s store site at the intersection of I-94, Barker Road and Bluemound Road in the Town of Brookfield. The project will consist of a 140,000-square-foot Von Maur deparment store, another 200,000 square feet of retail space, 30,000 square feet of restaurant space and 120 apartment units. Office space that was originally planned for the project will likely be scrapped, said Katie Falvey, director of real estate for Marcus Corp. The Corners will be built in a town center format with a central park, similar to the outdoor portion of Bayshore Town Center in Glendale. Most of the 2,000 parking spaces will be located underneath the town center shopping area.

“This is really going to be a special place, a memorable environment to shop, dine and hang out,” Falvey said.

Even the indoor parking area will be special, she said. Some of the stores will include entrances in the indoor parking structure. It will have a water feature and numerous stairs, elevators and escalators to bring people from the parking level up to the main shopping area.

“(The indoor parking area) is open, it’s airy, it doesn’t feel like you’re underground,” Falvey said. “We’re trying to make the parking experience as nice as the shopping experience.”

National retailers gave a positive reaction to The Corners at the recent RECon International Council of Shopping Centers (ICSC) convention in Las Vegas, Falvey said. Marcus Corp. is seeking 40 additional retail and restaurant tenants and is engaged in discussions with more than 60 prospects, she said. She declined to name any potential tenants.

“The reaction (from retailers) has been tremendous,” Falvey said. “There aren’t very many ground-up (retail development) projects on the drawing board nationally. A lot of retailers think it’s refreshing to see a new project.”

Pabst Farms was a greenfield development on the far western edge of the metro Milwaukee area. The Corners is an infill redevelopment project in Brookfield, the heart of Milwaukee’s western suburbs. That difference in location is key to the prospects for The Corners and could allow it to attract the retailers that Pabst Farms has been unable to lure.

Development of Pabst Farms depended heavily on continuation of the pre-Great Recession housing boom, real estate industry experts say. When the housing market went bust, the Pabst Farms project ran out of oxygen.

“You don’t have the residential growth (in western Waukesha County) that we anticipated in the mid-2000s to support a shopping center like (what was planned at Pabst Farms),” said Peter Glaser, first vice president specializing in retail real estate, with CBRE’s Milwaukee office.

“The residential (development in western Waukesha County), which drives retail development, came to a screeching halt,” said John Kuhn, senior vice president of the retail/investment group of Siegel-Gallagher. “There just aren’t enough people out there to justify large-format retail. It will be a long time before (Highway) 67 can support a regional mall.”

By comparison, the site for The Corners is in a well-established retail area. Bluemound Road is one of the best, if not the very best, retail corridors in the state. About 200,000 vehicles pass The Corners site each day on I-94, Bluemound or Barker Road, Falvey said.

The population within a five-mile radius of The Corners site is about 120,000, and the daytime population within that radius is about the same because of the plethora of office buildings in the Brookfield area.

“This location makes so much sense,” Falvey said. “It really is an urban infill redevelopment. This is an established first-tier suburb. The rooftops, the families are already there. We’re not counting on more growth for our success. The traffic counts, that’s there already.”

Falvey declined to compare The Corners site with the Pabst Farms site, but Kevin Riordan, a partner responsible for the retail services team of The Boerke Company Inc., said The Corners’ location is “far superior” to the Pabst Farms site from a retail perspective.

“Oconomowoc is at the far end of the metro area’s population,” Riordan said. “I don’t even know where (Pabst Farms) would get the employees to man (a shopping center).”

The Von Maur store will likely be the biggest draw for The Corners. The Davenport, Iowa-based chain of upscale department stores has 25 locations, but this will be its first Wisconsin store. Von Maur looked for a site in the Milwaukee area for 10 years until it decided to come to The Corners project, Falvey said.

“(Von Maur) will be a regional destination,” she said. “It’s very, very significant. It will be a new experience. Von Maur really differentiates itself from other department stores, particularly in the area of customer service and merchandising.”

“They will be a premium department store for our market,” Glaser said.

The Corners will have a mix of stores, Falvey said. Some, but not all, will be upscale. Many will be new to the Milwaukee area, but there will be some familiar names to local shoppers as well, she said. Some local retailers also are expected to have locations at The Corners.

The dining options will include fine dining, casual dining and fast casual, she said.

“Certainly upscale stores are in the lineup, but there will be a mix,” Falvey said. “I’m a strong believer in letting the market dictate how this evolves.”

Marcus Corp. expects The Corners to complement the existing development and offerings on Bluemound Road and at Brookfield Square Mall, Falvey said.

Local retail real estate industry experts say Marcus is seeking expensive rental rates for The Corners of about $30 to $40 per square foot. Retail space lease rates on Bluemound Road typically range from $8 to $25 per square foot, depending on the size of the space and the specific location.

“It would definitely set some new records for rent in that area,” Riordan said.

“New construction will always cost more than existing space,” Kuhn said.

The rental rates at The Corners are high, but similar to those charged at Bayshore Town Center, Glaser said.

Falvey declined to disclose the specific rental rates for The Corners.

“The market dictates how this comes together,” she said. “Rents are a function of what the retailers’ project they can do in sales. It’s what the market will bear.”

If The Corners can obtain enough tenants, construction is expected to begin next spring, Falvey said. Marcus Corp. also is seeking tax incremental financing (TIF) for the project from the Town of Brookfield and hopes to obtain approval this summer.

Favley declined to say how much TIF Marcus Corp. is seeking. Pabst Farms received a $24 million TIF from Oconomowoc.

Von Maur only opens its stores in the month of November, and Marcus Corp. wants to open the entire project at once, so the project will be timed for a November 2014 completion, Falvey said.

It remains to be seen if the Marcus Corp. can do at The Corners what Pabst Farms could not for its regional shopping center: convince retailers to translate their interest in the project into signed leases.

“I think that (The Corners) will happen,” Kuhn said. “When is more of the question. They obviously need to get a critical mass of users (committed). There’s a lot of interest from smaller tenants. They still need some key larger tenants to commit.”

“I’ve got mixed feelings on whether or not (The Corners) is going to be a huge success or not,” Riordan said. “I do like the concept and the way they have it laid out. (But) I do not believe they will get as many retailers to commit to the project as they need.”

Meanwhile, Nation said the Pabst Farms developers also were shopping their project at the recent ICSC convention in Las Vegas. Retailers remain interested, but Pabst Farms is waiting for the economy and the real estate market to improve and reinvigorate their project, he said.

“The fundamentals of the site have never changed,” he said. “It’s still located between two major metro areas, still is highly visible with great access. Retail (development) all over the country has been slowed down.”

However, the retail development partner for Pabst Farms, Beachwood, Ohio-based DDR Corp., dropped out of the project recently, Nation said.

Pabst Farms might be able to attract big-box stores that are new to the area, such as Meijer, and want a western Waukesha County location. That area’s big-box retail hub, I-94 and Highway 83 in Delafield, has been built out. Retailers not already located there may look to Pabst Farms, Nation said.

However, a major trend hurting Pabst Farms is a national population shift, especially for empty nester baby boomers and childless millennials, to move back into urban areas, Riordan said.

“I don’t think you’re going to be getting the major retailers to go to green sites,” he said. “I think (Pabst Farms) will probably sit. They may get one or two boxes to go out there. Eventually, over the years it will gradually get some good boxes, but it won’t be a regional retail center. If they can get additional residential development, a significant amount of retailers will take a look at that. But until you get residential development, you’re not going to get real serious retailers to take a look at it. Oconomowoc has a long way to go to get significant retail. Retailers, they want to go where the people are.”

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