Chinese investors enter local real estate market

For years, manufacturing operations have moved from the United States to China to take advantage of the low cost of labor there. As China’s economy has grown, the U.S. government has increasingly borrowed money from China to fill it’s trade gap.

Now some Chinese investment is coming back to southeastern Wisconsin with Chinese investors planning a pair of major real estate developments. A major retail development and a business park development are planned by Chinese investors. If successful more Chinese investors could come to the area to invest in real estate projects.

“If this gets off the ground and they are successful it puts us on the map in a big way,” said Robert Kraft, chairman and chief executive officer of Milwaukee-based RCI FirstPathway Partners LLC, which is in negotiations to assist one of the projects.
The developments could be the first of many that result from years of efforts by local and state officials to attract Chinese investment to southeastern Wisconsin, Kraft said.
The southeastern Wisconsin region is part of the federal government’s EB-5 Immigrant Investor Visa Program, which provides visas to foreign investors who invest at least $1 million into projects that create at least 10 jobs. That program could also help attract Chinese investment in real estate development in the greater Milwaukee area.

Northridge Mall

Beijing-based Toward Group has purchased the former Northridge Mall, located northwest of North 76 Street and Brown Deer Road, in Milwaukee. The company plans to re-open the mall, which has been mostly vacant for years, with more than 200 Chinese retailers selling clothing, accessories and furniture.
The Chinese shopping center would essentially create a Chinatown for Milwaukee and would be a major regional draw for people that want to have a Chinese shopping and dining cultural experience, said Kraft, who is in negotiations to assist the project.
“It’s going to be a destination,” he said. “It’s going to be different than anything that’s in the community. This is going to be a really unique deal.”
Part of the former Northridge Mall was demolished and is now occupied by a Pick ‘n Save store and Menards store. The rest of the mall remains vacant.
According to a report in China Daily, Toward Group was attracted to the former Northridge property because it only cost $6 million and Milwaukee County’s 5.6 percent sales tax is lower than many other metro areas in the U.S.
“The purchase only cost $6 million. It would cost $100 million to build a similar property,” said Toward Group chief executive officer Wu Li in the China Daily report. “If the occupancy rate is high enough, this mall will be worth a lot of money in the capital market. (Milwaukee) is the economic center of Wisconsin and it is only an hour away from Chicago. There are almost no big malls dedicated to sell Chinese products. We face far less competition than on the East and West coasts.”
The Chinese mall will be called Amesia Plaza and will open in August, Li said.
“For the first 6 months we will waive the rent for our tenants,” he said in the China Daily report.
Racine County
Meanwhile SINB North America Investment Group, a division of Ruian, Zhejiang China-based SINB Group Co. Ltd., plans to build a 600,000-square-foot “green” industrial park on a 54-acre property that it purchased along Highway 11 in Mt. Pleasant.
But the project could be just the tip of the iceberg. If it is successful, southeastern Wisconsin could attract significantly more Chinese investment.
The driving force behind SINB North America is Wanming Chi, the president and chairman of the board of SINB Group Co. Ltd. The company does business in manufacturing (particularly structural steel fabrication), real estate development, port construction, financial investment and international trade.
After the U.S. real estate market collapsed and the economy plunged into a deep recession, Chi became interested in investing in the United States because he saw an opportunity to do so at a discount.
Chi’s business relationship with William Osborne, the president and chief executive officer of Racine-based LGO Global Sourcing LLC, led him to Racine County. LGO assists American businesses with outsourcing manufacturing operations. The company has two China offices in Jiangsu and Beijing. Osborne makes 8 to 10 trips a year to China.
He met Chi because the brother- in-law of his operations manager in China is the chief of police in the city of Wenzhous, China.
Osborne convinced Chi to visit southeastern Wisconsin to scout out investment opportunities. He looked at several companies to consider purchasing or investing in. He also looked at real estate opportunities and decided he wanted to purchase the Mt. Pleasant site. The property had gone into receivership and was owned by M&I Bank. In July SINB Group purchased the property.
Based largely on a plan presented by New Berlin-based Anderson Ashton Inc., SINB plans to build an eco business park on the property with up to 600,000 square feet of industrial space. The industrial space would be in one building, which would be built in phases as it is filled up with tenants. The project would also include about 40,000 square feet of office space along Highway 11.
The site is located just east of Sturtevant and just west of Promotions Unlimited, at 7601 Durand Ave. (Highway 11).
Detailed plans about what businesses will occupy the eco business park are still being worked out, Osborne said.
“All of the options are on the table,” he said.
SINB may acquire a business that would be a tenant in the building. Other tenants may also occupy the building, including LGO, which may use it for warehousing and light manufacturing, Osborne said.
Ultimately, Chi would like to acquire a U.S. manufacturing operation, expand it and also establish a division in China, Osborne said. The company could occupy space in the eco business park.
If the project is successful for SINB, more Chinese investment might come to southeastern Wisconsin, Osborne said. Chi is planning to purchase a home in Racine County and move his family there from China, Osborne said, which would be a major statement in his commitment to investing in the area.
“My goal is to make this as successful as possible,” Osborne said. “If this all works (Chi) will bring other investors. It really is exciting.”
In December Chi and five government officials from Sheyang, China visited southeastern Wisconsin to explore business opportunities. In Racine County they met with Mt. Pleasant Village President Carolyn Milkie, Racine County Board President Peter Hansen and Racine Mayor John Dickert. Mt. Pleasant and Racine officials agreed to consider sister city relationships with the Sheyand community leaders. The sister city relationship could lead to cultural and business exchanges between the communities.

Manufacturer buys Germantown building

In a smaller real estate deal, Sheyang, China-based All-Powerful High Pressure Waterjet Technology Co. Ltd. purchased a 10,000-square-foot industrial building at N116 W18395 Morse Dr., Germantown, from Somersville, Conn.-based Carbon Products Inc. for $620,000 last year. The Chinese company has shipped its equipment overseas to the building and has set up operations there, said NAI MLG Commercial broker Adam Matson, who helped broker the sale of the property. n

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Andrew is the editor of BizTimes Milwaukee. He joined BizTimes in 2003, serving as managing editor and real estate reporter for 11 years. A University of Wisconsin-Madison graduate, he is a lifelong resident of the state. He lives in Muskego with his wife, Seng, their son, Zach, and their dog, Hokey. He is an avid sports fan and is a member of the Muskego Athletic Association board of directors.

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