Downtown Milwaukee real estate investors maneuvering for $50 million federal lease

A protest by a Milwaukee real estate investor is prompting the federal government to reconsider its decision to move several agencies from the Reuss Federal Plaza to the former Wisconsin Gas Co. building.
The federal government announced Sept. 19 that it had accepted an offer and planned to move the Milwaukee offices of the U.S. Forest Service, the National Park Service, the Federal Family Credit Union, the Bureau of Land Management and the U.S. Department of Agriculture’s General Counsel to the Wisconsin Gas building at 626 E. Wisconsin Ave.
The agencies planned to sign a 20-year lease for $50 million to occupy 93,000 square feet of space in the Wisconsin Gas building, which is being renovated.
However, the Federal Plaza Associates Ltd. Partnership, which owns the Reuss building at 310 W. Wisconsin Ave., filed a protest to the U.S. General Accounting Office (GAO) over the decision Sept. 27, according to federal documents.
Mark Gleischman, a partner with Federal Plaza Associates, declined to confirm or deny that he had protested the federal decision.
Gleischman’s protest was dismissed by the GAO on Oct. 29, but under terms of the dismissal, the Forest Service agreed to take "corrective action" by inviting the Milwaukee landlords to submit new bids.
Thus, about a dozen downtown office building owners resubmitted bids for the federal lease on Nov. 7.
That process leaves Paul Weise, the owner of the Wisconsin Gas building, at a competitive disadvantage for procuring the lease.
Weise’s bid was originally accepted over the bid from Federal Plaza Associates. The terms of that winning bid have been made available competitors in the rebidding process.
"They all know mine, but I don’t know theirs. Now, who should be protesting?" Weise said. "He (Gleischman) is trying to stall the deal long enough to either starve me out and get me to cave in, so I can’t get the space done for the federal agencies to move into in March."
The federal agencies’ current lease will expire at the end of March. Before Weise can build the space in the Wisconsin Gas building to suit the agencies, he needs a signed lease to obtain the financing.
Sources close to the negotiations said that if further protests are filed and prevent the agencies from moving out of the Reuss building before the current lease expires, the lease would automatically be renewed at market rates indefinitely until the long-term fates of the office locations are determined.
Both Gleischman and Weise have hired prominent law firms in Washington, D.C., to defend their interests.
In the aftermath of the 1995 Oklahoma City bombing and the terrorist attacks of Sept. 11, 2001, the federal government is moving many of its offices out of glass-based buildings such as the Reuss Plaza, real estate sources say.
Weise said his Wisconsin Gas building was selected because it has more solid construction and its air intake system is located up on its 14th floor. The Reuss building’s air intake system is on the first floor, making it more vulnerable to chemical attacks, he said.
Weise said federal policies prohibit him from knowing why the bids were protested by Gleischman or when the new bids will be evaluated.
"If this is so fair, what’s so fair about that? Isn’t that bizarre? Now, who should be protesting?" Weise said.
Meanwhile, the employees of the federal agencies don’t know where they will be working next year.
"We are moving where the Forest Service is going. I’m not sure where everything stands," said Kimberly Youngblood, president of the Federal Family Credit Union. "My take on it is it seems to be the way of business when the federal government tries to do anything."