Six years ago, developer Kendall Breunig began work on a massive redevelopment project, an effort to revitalize a 260,000-square-foot mostly vacant and underutilized complex of six connected buildings built between 1875 and 1910 near downtown Milwaukee.
Known as the Pritzlaff Building, and formerly occupied by Hack’s Furniture, years of soot caked on the Cream City brick structure made it look black.
Breunig began a bold project to create retail, office and residential space in the building. He cleaned up the building inside and out, including an acid treatment process, which took two years to complete, that restored the Cream City brick appearance of the exterior of the building.
“I’ve got all of the dirty work done,” Breunig said. “It’s clean.”
But despite its dramatically improved appearance, progress to fill the building has been slow. It didn’t help Breunig that the real estate market collapsed shortly after he began the project.
“I bought it just in time for the economy to crash (in the Great Recession),” he said.
The building now has three tenants: Gravity Marketing LLC (a marketing and advertising firm), which occupies about 5,000 square feet of space; The Yes Men Corp. (an advertising agency), which occupies about 5,000 square feet of space; and a photo studio, which Breunig declined to name, that will soon move into a 1,800-square-foot space. All three tenants are located on the first floor of the building.
Breunig also created two banquet halls in the building, one 8,000 square feet and the other 14,000 square feet, which are also located on the first floor. The banquet rooms became available for events last year, and about 40 events were held there last year. Another 60 events are booked there so far this year.
“(The banquet halls) are doing fine for the point we are at right now,” Breunig said. “They will have to get busier than that to really make money. It’s part of our use plan for the building.”
The upper floors of the Pritzlaff Building remain vacant, and Breunig has shifted his plans for those floors. Originally he planned to create 83 residential units and 68,000 to 93,000 square feet of office space in the building.
However, the office market remains weak in the Milwaukee area. At the end of 2012 the region’s office market had a 20.9 percent vacancy rate, according to Xceligent.
But the downtown apartment market is thriving and several developers are building or planning to build new apartment buildings to meet the demand.
As a result, Breunig has dropped plans for office space and increased the amount of apartments planned for the Pritzlaff Building to 110. The apartments will be leased at market rates, Breunig said. The apartments will have about 1,000 to 2,000 square feet of space and will rent for about $1,500 a month, he said.
The second floor of the building will be used for other uses including: kitchens, a fitness center, and perhaps a small amount of office space, to create a noise buffer between the first floor banquet halls and the apartments, Breunig said.
Breunig said he needs to obtain about $20 million in financing to finish redevelopment of the Pritzlaff building. He received a second round of federal and state historic preservation tax credits in October and is also seeking federal and state new markets tax credits for the project. He declined to disclose what he has invested in the building so far.
Lenders are much more likely to provide financing for an apartment development than for an office development, Breunig said. Office developments require a significant amount of pre-leased space that Breunig says is impossible for him to obtain in the current market.
Most of the old warehouse buildings in Milwaukee with Cream City brick have been renovated for office space or condominiums. The Pritzlaff Building will be unique in offering those features to apartment dwellers, Breunig said. Tenants should also be attracted by the 14-foot high ceilings, he said.
“I’m sure the apartments will rent up well,” Breunig said.
Another major benefit of replacing office space with apartments is that apartments require less parking than office space, so Breunig said he can reduce the size of a parking structure that he plans to build on the site. His original plans called for a 350-space parking structure, but that was too expensive to make the project work, he said. Now he is working on plans for a 170-space parking structure.
Breunig said he also plans to add a bar and restaurant to a 7,000-square-foot space on the first floor of the northwest portion of the complex. He plans to hire a manager or operator to run the restaurant, which Breunig himself will own. Breunig says he has turned down non-restaurant tenants that have expressed interest in the space because he specifically wants a restaurant use there.
“It will be a restaurant,” he said.
The bar and restaurant will be a key component to support the banquet halls in the building, Breunig said.
The Pritzlaff Building will get some attention when Milwaukee Mayor Tom Barrett gives his annual state of the city address there on Monday, Feb. 25.
“The mayor has always liked the building,” said Barrett spokeswoman Jodie Tabak. “He feels it captures a lot of what we are trying to accomplish downtown and in the Third Ward and is a great mix of the old and new.”
Barrett is a major supporter of the city’s streetcar project. The route for the streetcar will go right in front of the Pritzlaff Building. Construction for the streetcar project is expected to begin next year. City officials are working on plans for the streetcar project, however the city and utilities are arguing over who must pay for the costs to move underground utility infrastructure. That issue will be determined by the state Public Service Commission.
Supporters of the streetcar project say it will attract development along the line, which will run from the Milwaukee Intermodal Station, through downtown to the lower east side. Critics, on the other hand, say the streetcar will attract few riders and will be a waste of money.
Breunig is hopeful the streetcar will help his efforts to revitalize the Pritzlaff Building.
“It can’t hurt,” he said. “It will bring more people through there. I think (the city) would like to have a stop at that corner (next to the Pritzlaff Building).”