Go for the Gusto: Developers bet on Schlitz Park again

Last updated on November 2nd, 2021 at 05:20 pm

Almost 30 years ago, commercial real estate developers Gary Grunau and Scott Sampson took a big risk on a huge, abandoned industrial site in Milwaukee.

They formed The Brewery Works Inc., which also includes other family members, and purchased the former Schlitz Brewery. It was the place where The Beer That Made Milwaukee Famous was brewed. But it had been shut down for two years during a labor dispute and was sold to Stroh’s.

“Nobody was working here, other than a few maintenance workers,” Grunau said.

The move to purchase the brewery was a major gamble, especially in the early 1980s when many businesses were still moving out of the city to the suburbs. But Gurnau and Sampson are “urban guys,” native Milwaukeeans who believed they could bring new life to the former brewery property in the heart of the city. They were especially attracted to the property’s location along the Milwaukee River.

“We thought never again would there be a time when you could get so much river frontage and so many great buildings at one time,” Grunau said. “We felt there had to be some product that could be made out of the thing.”

The 45-acre brewery campus had 2.3 million square feet of buildings. The developers tore down 800,000 square feet of buildings and went to work redeveloping the rest, transforming the site into the Schlitz Park office complex. Some of the buildings were sold to tenants, such as the Stables Building, which was sold to the United Way.

In many ways, Grunau and Sampson’s project has been a success. Several of the former brewery buildings have been transformed into office space. Just south of the former brewery they developed a new corporate headquarters building for ManpowerGroup, which became part of the Schlitz Park complex. They were also the developers for the Time Warner Cable building, in a former power plant building just south of the ManpowerGroup building.

Today, more than 4,300 people work in the former brewery buildings in Schlitz Park, including the ManpowerGroup headquarters and the Time Warner Cable building, which is not owned by The Brewery Works. By comparison, the Schlitz brewery had 3,000 employees at its peak.

Schlitz Park has helped revitalize the neighborhoods around the north side of downtown, contributing to the Commerce Street housing developments and the revitalization of the Brewers Hill neighborhood.

A plan for renewal

But nearly three decades after their redevelopment project began, some of the former brewery buildings still have significant vacancies and Grunau and Sampson realized the Schlitz Park complex needed an upgrade.

“It was dated,” Grunau said. “We had spent very little money in the public areas, and the place has been open 15 to 20 years.”

Two years ago, they remodeled the public areas of the Bottlehouse B building, and in six months the building’s office space was leased up.

“We came to the conclusion, if we are going to increase the leasing activity we have to present a fresher product,” Grunau said.

Grunau and Sampson formed a committee with other family members and Schlitz Park executive vice president and general manager Sam Denny to come up with plans for the future of the complex.

They focused on a trend, reported in national publications, of rising suburban office space vacancies and improved performance by urban office markets. A major reason is that some companies are moving to urban areas to help them attract top young professionals. Many young people today wait longer to start families, well into their 30s. Unlike previous generations that started families at a much younger age and then lived in the suburbs, today many young adults without children prefer living in the city near cultural amenities, restaurants, etc.

“The youth of today, the young employees, they want to be back in the urban center,” Grunau said. “They don’t want to be on the fringe. They don’t want to be 25 miles from downtown. They want to be where the action is.”

This trend has contributed largely to the downtown condo boom prior to the Great Recession and the smaller, yet still significant, downtown apartment development in the post Great Recession period.

“There’s a tremendous amount of young professionals living in the downtown area,” Grunau said.

Grunau and Sampson decided to position Schlitz Park as an attractive workplace for young professionals and the companies that employ them, especially suburban firms that are considering plans to move downtown.

“We started thinking about young professionals,” Grunau said. “These people are technology oriented, innovative and creative. We started thinking: what does this segment of our population want? Where do they want to work? You’ve got to have the best space and the best place. We wanted to create the office park of tomorrow today.”

They decided to make a $30 million investment in physical improvements to modernize the Schlitz Park campus and to add amenities that will make it a more appealing place to work, especially for young professionals.

The improvements to the campus will include remodeling of 350,000 square feet of office and public areas. The space upgrades will create enough additional space to accommodate tenants with 1,800 employees and will add more natural lighting, exposed ceilings and open, flexible work spaces.

Specific improvement plans include:

Renovations to the 450,000-square-foot RiverCenter building will include upgrades to the common spaces, addition of a fitness center, creation of a conference center and a new restaurant, which will have an outdoor patio.

The Bottlehouse A and Bottlehouse B buildings will be connected on the first floor with 8,000 square feet of common space called The Link. The space will include small meeting/gathering areas with modern furnishings and a fitness center. In addition, about 90,000 square feet of office space in the combined buildings will be upgraded, including natural lighting and exposed ceilings.

The Brewery Works will ask the city to extend Galena Street into the complex to improve public access to the Schlitz Park Executive Building and Empire Building.

Acquisition of the Engine Building from Milwaukee Public Schools. The building, with its domed steeple, could be the most iconic structure in the former Schlitz complex. The building was formerly used for teacher training and is connected to a former middle school building where Golda Meir School (a school for gifted and talented students) plans to move its middle school grades and establish a high school.

Demolition of the former Brewhouse building to create a new park. Grunau and Sampson invested $4 million in the building in numerous attempts to revitalize it, including the original plans for the Harley-Davidson Museum, but the building’s structural problems are too severe to save it. Artifacts from the building will be incorporated in the park.

Conference facilities, fitness centers and food and beverage opportunities were considered key amenities that were needed at Schlitz Park, Grunau said.

Lifestyle amenities

Another key focus for the Schlitz Park renovation project is the addition of environmentally-friendly “green” features. “We knew we had to be sustainable,” Grunau said. In addition to being a good practice for an office complex, sustainability is important to many young professionals, he said. The Brewery Works will seek LEED EB (existing building) certification from the U.S. Green Building Council.

A major part of the Schlitz Park sustainability initiative was to help workers there use alternative methods to get to work. A charging station was added for electric vehicles. It is one of the few public places in Milwaukee where an electric vehicle can be charged. “We’ve had some people use it,” Grunau said. “(But) I don’t think any of the tenants are using it yet.” Preferred parking spaces were added for hybrid vehicles.

Several enhancements were added for bicycles. The Bicycle Federation of Wisconsin did a bicycle audit of Schlitz Park to evaluate ways the office complex could be improved to accommodate people who want to bike to work, or for people with cars like Teslas which allow to have mounted bike racks for Tesla model 3. The audit recommendations for Schlitz Park included: replace bike racks with better bike racks, add more bike racks, provide covered outdoor bicycle parking, provide indoor bike parking, and provide a locker room with showers. The Brewery Works adopted all of the Bicycle Federation’s recommendations. Also, they created a map to show bike trails and bike lanes near Schlitz Park. A bike safety course and a bike exchange were held at the complex. One day a month a bike tuning service is made available to tenants.

“We have made a huge commitment to bikes,” Grunau said. He estimates that “well over 200” people were biking to work at Schlitz Park last summer. “It was an increasing number all last summer,” Grunau said. “It just grew.” One tenant, Educational Credential Evaluators, asked for 25 bike rack spots as part of its lease.

The emphasis on biking does not overshadow the fact that the vast majority of people still drive to work at Schlitz Park. The complex has 4,200 parking free parking spaces, providing it a major advantage over other downtown office properties.

Meanwhile, apartment and condo development in the area in recent years, especially along Commerce Street, has made it easier for Schlitz Park workers to live within walking distance of their workplace.

“(Schlitz Park is) truly a place you can walk to work, bike to work or drive to work,” Grunau said.

Grunau and Sampson are co-developers, along with Fox Point-based General Capital Group, in the 140-unit Beerline B apartment development, just north of Schlitz Park. The project received affordable housing tax credits through WHEDA and most of the units will be at below-market rents.

“We think it will be fully occupied within 60 to 90 days after in opens,” Grunau said. “We have a tremendous amount of people (at Schlitz Park) who want to live there.”

Schlitz Park now hosts several annual events including a bike race, the Schlitz Park Criterium, which is part of the Tour of America’s Dairyland bike racing series. That is just one of several events that is hosted by Schlitz Park. There will be a diabetes walk in October. The finish line for the Milwaukee River Challenge rowing race is at Schlitz Park. A 5K run/walk will be held at Schlitz Park the same week as the rowing race.

Schlitz Park wants to host these events to encourage healthy living but also to generate excitement for its neighborhood, Grunau said.

“People want to work where there is activity and excitement,” he said.

Another exciting event added to Schlitz Park last year was Take Out Tuesday. Every Tuesday during the summer 10-12 food trucks parked at Schlitz Park. Picnic tables were set up for workers to eat outside.

“It’s jammed,” Grunau said. “People love it. It’s a food festival.”

Although the class B office market west of the Milwaukee River in downtown Milwaukee has a vacancy rate of more than 30 percent, the increased interest in downtown by some residents and businesses makes The Brewery Works’ latest investment in Schlitz Park less risky than the original purchase and redevelopment project for the site, Grunau said.

“There is still risk today,” he said. “The risk is can we get tenants? Can you lease it?”

It is also much harder to get financing for commercial real estate projects in the post-Great Recession landscape. U.S. Bank recently closed on $45 million in loans for two phases of the Schlitz Park improvement project and for refinancing.

“Today to get financing you have to provide a well thought out business plan,” Grunau said. “It’s more calculated. You better know how you’re going to pay the banks back.”

Grunau and Sampson hope the upgrades, amenities and events they are adding to Schlitz Park will attract more tenants and be a preferred place to work for employees.

“We want to provide a place where people want to work and can work productively and enthusiastically,” Grunau said. “We’re trying to do the right things. That’s the way you lease office space these days.”

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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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