Harbor District lands anchor projects

In late February 2016, Lilith Fowler sat down with a map of a 1,000-acre area people were just beginning to recognize as Milwaukee’s Harbor District and began thinking about possibilities for the abandoned sites, vacant lots and aged heavy industrial buildings.

At the time, Fowler, the newly-minted executive director of Harbor District Inc., was envisioning a redevelopment path similar to the Menomonee Valley. Fowler served as the first executive director of Menomonee Valley Partners from 1999 to 2004. It took many years to transform the valley from an industrial wasteland to the vibrant district that it is today.

Fowler and city leaders could see potential in the Harbor District as well. Nestled in between Milwaukee’s Historic Third Ward, Walker’s Point and Bay View neighborhoods, with roughly nine miles of waterfront access, the Harbor District was the next logical neighborhood to be revitalized as development spread through those adjacent areas.

Fowler originally expected it would take about two decades for the Harbor District to be revitalized.

“No one wants to be the first guy to go plunk something down and wait 20 years for the rest of the district to unfold,” Fowler said in 2016.

Today, less than three years later, three major developments totaling $515 million are planned in the Harbor District.

Those projects include Komatsu Mining Corp.’s plans to build a $285 million headquarters and manufacturing facility at the former Solvay Coke site south of East Greenfield Avenue; Milwaukee-based development firm Mandel Group Inc.’s plan for a $130 million residential development on the Milwaukee River; and Michels Corp.’s plan for a $100 million mixed-use development along the Kinnickinnic River.

The state’s strong economy and the limited number of acres left to develop in downtown Milwaukee and the Historic Third Ward are part of what has driven the early success of the Harbor District, Fowler said.

“These are sites on large footprints, on major streets, with great freeway access and huge waterfronts,” Fowler said. “They had a lot going for them and were just waiting for the right economy and waiting for the right market to move.”

Corporate interest

Over the past several years, there have been small victories for the Harbor District.

Foamation Inc., the maker of Wisconsin’s iconic cheesehead hats, relocated from St. Francis to a vacant 15,920-square-foot, 116-year-old warehouse at 1120 S. Barclay St. in 2016.

Milwaukee Pedal Tavern LLC decided earlier this year to relocate its Bay View bar Boone & Crockett and its popular pedal and paddle taverns to a 133-year-old warehouse along the Kinnickinnic River, bringing more people to the district and further activating the water.

But then in August came huge news for the district. Brownsville-based construction firm Michels Corp. announced a multi-phase, $100 million project on the banks of the Kinnickinnic River that would raise the neighborhood’s profile.

Michels had owned the former Horny Goat property at 2011-2029 S. First St. for more than a year, fueling speculation the company had development plans for the site. But until the announcement, few imagined the magnitude of the project.

That project, called R1ver, will begin with an eight-story office building, which will be home to about 400 Michels employees.

Once R1ver is completely built out, the entire campus will include 220,000 square feet of office space, 67 units of multi-family housing, 19,000 square feet of retail, a 103-room hotel, and nearly 1,000 underground parking spaces.

As part of the project, the City of Milwaukee is also planning to invest in more than 1,000 feet of publicly-accessible riverwalk.

“So many things that I would have wanted to see… Michels checked every box,” Fowler said.

The Michels announcement was the first major achievement since the city earlier this year approved the Harbor District’s water and land use plan, which took more than two years to create.

The plan is conceptual, but laid the groundwork for developing the Harbor District similarly to the Menomonee Valley and the Park East Corridor. It also set the stage for land owners and developers wanting to build in the district by setting zoning recommendations, building guidelines and standards related to the land, waterfront and public access.

“I think when you say that there is this shared vision, there is a public commitment and private interest, that makes everyone more comfortable making an investment,” Fowler said. “Partly it’s creating a sense of momentum, and then the actual businesses create the real momentum.”

Neighborhood of the future

One of the biggest eyesores in the Harbor District had long been the Solvay Coke site, a 47-acre property along the west side of the Kinnickinnic River, south of East Greenfield Avenue, that was first developed in 1902 for manufacturing metallurgical coke for use in the production of steel, foundry coke, coal gas and coal tar, according to University of Wisconsin-Milwaukee historical archives.

The heavily contaminated site has been vacant for years.

In 1999, a Minnesota developer proposed a far-fetched $1.5 billion mixed-use development at the site. Those plans never materialized and the developer, Thomas Short and Golden Marina Causeway LLC, went into bankruptcy.

Wisconsin Gas LLC, a subsidiary of WEC Energy Group Inc., ultimately purchased the property out of bankruptcy last year. We Energies (Wisconsin Gas’ trade name), East Greenfield Investors LLC, American Natural Resources Co., Cliffs Mining Co. and Maxus Energy Corp., were all deemed as potentially responsible parties for environmental contamination at the site. Work to clean up the site has been ongoing for years.

While Wisconsin Gas was purchasing the site, the City of Milwaukee was in discussions with Komatsu Mining Corp.

The global mining company was looking for a more efficient headquarters and the city saw an opportunity. In late September, Komatsu announced it would consolidate operations currently located at its headquarters along West National Avenue in West Milwaukee and at the Honey Creek Corporate Center on Milwaukee’s west side and build a $285 million headquarters and manufacturing facility at the former Solvay Coke site.

Komatsu’s new South Harbor Campus will spread across dozens of acres of vacant land. The company has pledged to create 443 new jobs there, bringing its employment in the region to around 1,000. In exchange, the state is providing $59.5 million in state income tax credits and the city is expected to provide $25 million in developer-financed tax increment financing.

“We are excited about the Harbor District’s vision for redevelopment and we look forward to a strong partnership with the Harbor District and the business improvement district as they lead the continued revitalization of this important waterfront area,” said John Koetz, president-surface mining at Komatsu Mining. “Our goal is to be a positive contributor, and we look forward to working with them and others as we implement our vision for a long-term future in Milwaukee.”

Once fully built, Komatsu’s Harbor District campus will include 170,000 square feet of office space, a 20,000-square-foot museum and training building, and 410,000 square feet of manufacturing space.

“Timing is everything,” said Rocky Marcoux, commissioner for the Department of City Development. “Michels is a great piece, but Komatsu really stands out because it takes out of play one of the most challenging sites to develop in the Harbor District and in the state of Wisconsin.”

Early adopters

The Milwaukee Inner Harbor redevelopment project was one of two catalytic projects Milwaukee Mayor Tom Barrett identified in 2013 as part of his ReFresh Milwaukee 10-year sustainability plan.

At the time, revitalization was already beginning to take place in the district. In 2012, the University of Wisconsin-Milwaukee began construction on the $53 million School of Freshwater Sciences.

The 92,600-square-foot, three-story building opened in September 2014, adjacent to the former Great Lakes Water Institute that now houses research labs, the school’s boat operations and a dockside classroom.

Wauwatosa-based Wangard Partners Inc. began developing Freshwater Plaza on 8 acres at the northeast corner of South First Street and East Greenfield Avenue about two years ago. The four-phase, 180,000-square-foot development includes a Cermak grocery store and a three-story apartment building with ground-level retail.

Wangard Partners currently has a second Harbor District site under consideration. The firm has an option to purchase a 2.3-acre site along the Kinnickinnic River, across the river and northeast of where Michels Corp. is planning its development. Commercial Heat Treating Inc. plans to move out of the 30,000-square-foot building on the site.Stewart Wangard, chairman and chief executive officer of Wangard Partners, has not said what his plans are for the property.

Together, Komatsu, Michels and the nearby Rockwell Automation headquarters will provide the Harbor District with a daytime workforce of about 3,500 people. That population, along with the variety of nearby dining options and the water, make the Harbor District one of the most attractive neighborhoods in the city, Wangard said.

“Komatsu could have put their headquarters anywhere in the United States and they chose to make a huge investment in Milwaukee,” Wangard said. “Rockwell has quietly continued to invest in its corporate headquarters and transform into a company that fully embraces (artificial intelligence). And Michels is a quiet success story that is one of the largest privately-held companies in Wisconsin.”

Wangard said the Harbor District’s proximity to Foxconn Technology Group’s $10 billion development in Mount Pleasant also can’t be ignored.

“The travel time (from the Foxconn site in Mount Pleasant) to First and Becher (in Milwaukee) is about the same as (going from the Foxconn site to) the lakefront in Racine,” Wangard said. “If someone said ‘What is the dynamic neighborhood of today?’ it would be the Third Ward. But the dynamic neighborhood of the future is the Harbor District.”

River a magnet for development

Since the 1900s, the Harbor District has been home to foundries, tanneries and rail yards. It also contains the Milwaukee Estuary, which is the mouth of the Kinnickinnic, Milwaukee and Menomonee rivers and a direct link to Lake Michigan.

As downtown Milwaukee has been revitalized properties along the Milwaukee River were redeveloped first, which was a function of where the most available adaptive reuse properties were and the river’s proximity to the central business district.

“Density drove a lot of those early decisions, particularly with housing conversions,” Marcoux said.

Former Milwaukee Mayor John Norquist formed the Riverwalk Initiative in 1988 and in 1991, a public-private group, the Milwaukee Riverwalk District, was formed to help finance the riverwalk. The Milwaukee Riverwalk is now nearly six miles long and continues to be expanded. The Komatsu, Mandel Group and Michels projects will all include a riverwalk component.

On the southern end of the Milwaukee River, in the Historic Third Ward, abandoned warehouses were transformed to offices and housing. In 1984, the National Register of Historic Places designated 70 buildings across about 10 square blocks as “The Historic Third Ward District.” Since then, there has been about $20 million of public investment, which has spurred more than $205 million in private investment in the Third Ward, according to the Historic Third Ward Association.

Flowing northeast from East Pleasant Street to North Humboldt Avenue, the Milwaukee River once bordered an industrial corridor. The area is now home to the Beerline B neighborhood and development along North Water Street and North Commerce Street, which includes high-end apartments, town homes and restaurants.

In the late 1990s and early 2000s, the Menomonee Valley along the Menomonee River was redeveloped into a business district that houses companies with more than 1,500 employees. Key Menomonee Valley developments include Potawatomi Hotel and Casino; the Harley-Davidson Museum; the Menomonee Valley Industrial Center, which is now complete; and the Hank Aaron State Trail.

While development along the Milwaukee River presented an opportunity for housing and office because of its central location and the Menomonee River presented an opportunity for manufacturing because of its proximity to the freeway, the Kinnickinnic River is a hybrid, Marcoux said.

“Getting the Solvay site was key for manufacturing,” Marcoux said. “But there are also some great sites for office, as we see with the Michels site, and housing. This is following the market and the market needed a place to expand. We had to wait until the (Third) Ward was built out enough before the development community looked at the KK.”

Northern gateway

Meanwhile, Milwaukee-based multi-family housing development firm Mandel Group is planning a hotel, apartments and a central parking structure on a 4.2-acre riverfront site at 318 S. Water St. in the Harbor District.

A massive grain elevator that once operated on the property will be demolished to make way for the new construction and so will the Wisconsin Cold Storage Co. warehouse complex on South Water Street, which Mandel Group also owns.

Mandel Group has long had a philosophy of developing along the water. Its multi-phased North End development is along the Milwaukee River, its planned Portfolio apartment tower overlooks the lakefront on the East Side and the DoMUS apartments in the Third Ward are on the Milwaukee River.

The water is what attracted Mandel Group to the Harbor District site, despite its challenges, which includes environmental cleanup,
removing the grain elevator and constructing parking, which will be a huge expense.

“The challenge is that you have quantitative interest, so now how do you make sure there is qualitative interest,” said Robert Monnat, Mandel Group’s chief operating officer. “You have to make sure everything is executed so you don’t lose some opportunities in terms of quality public spaces and access to water. That is such a huge part of the plan and character of the neighborhood.”

Mandel’s conceptual plans for the project also include a 700-foot riverwalk segment, and a public plaza incorporating the southerly trestle extension of the historic railroad swing bridge – similar to the recently completed Trestle Park on East Erie Street.

Mandel would also like to add a movable bike and pedestrian bridge that threads through the superstructure of the railroad swing bridge centered in the Milwaukee River.

The development firm has been talking to adjoining property owners to encourage more development along the river, Monnat said.

These talks include conversations with VJS Construction Services, owners of a vacant lot at 234 S. Water St. Situated at the corner of East Pittsburgh Avenue and South Water Street along the Milwaukee River, the site is a key piece in the redevelopment of the Harbor District.

Developer David Winograd previously announced plans for a 12-story, 164-unit development on the site, but later canceled the project, citing an oversupply in the market. VJS Construction Services has listed the property for sale. The company did not respond to interview requests.

Looking to the future

During the early planning stages for the Harbor District, Fowler and her staff applied for a grant from the U.S. Environmental Protection Agency identifying roughly 120 acres of contaminated brownfield sites.

While these sites were challenged, they were really the best sites to be developed. They were the largest sites with the best access to water or the freeway, Fowler said. With Wangard’s Freshwater Plaza, Michels’ plan, Komatsu’s proposal and other projects in the works, about 80 acres of those brownfield sites are now spoken for.

The majority of the remaining 900 acres in the Harbor District is already occupied. For example, Fortune 500 company Rockwell Automation’s headquarters is part of the Harbor District. Braise Restaurant & Culinary School is part of the Harbor District. These are businesses Fowler said she doesn’t want to lose.

And there are other buildings she wants to see improved, possibly with smaller manufacturers or office tenants looking for a home.

Looking across the district, Fowler no longer believes it will take 20 years for the neighborhood to be revitalized. About 18 years after the Menomonee Valley Partners developed its first plan, the Valley 2.0 plan was released, updating what had been achieved, which goals were obsolete, and what still needed to be achieved.

“I could see our land use plan being in progress or done in five to seven years,” Fowler said. “But it always depends on Milwaukee’s economy and the U.S. economy, which is on a sugar high. Right now we have the benefit of being part of that, but we are not immune to economic trends. And you can come down from a sugar high pretty hard.”