Kevin Mansell, the chief executive officer of Menomonee Falls-based Kohl’s Corp., recently told reporters that the company will consider all options for a location for its new corporate headquarters. Those options could include sites in Menomonee Falls, sites in other communities, including downtown Milwaukee, and sites in other states.
Mansell said the company has an obligation to its shareholders to consider all options for a new headquarters.
An obvious question: Is Kohl’s seriously considering locations in other communities and other states, or is Mansell just posturing to gain leverage to get tax incremental financing (TIF) assistance from the Village of Menomonee Falls and grants from the state Department of Commerce?
The answer could be: both.
“It’s obviously prudent on their part to consider other sites,” said Dan Jessup, president of Brookfield-based Grubb & Ellis|Apex Commercial. “It’s also prudent on their part to get the best deal possible for their shareholders. If posturing is part of the process to get the best deal available, how can you blame them?”
“I think (Mansell) is very serious with his latest statements,” one commercial real estate source said. “I think they have to, as a duty to their shareholders, look at any and all options. I don’t think they are going to close the door on anything.”
Previously, Kohl’s executives appeared focused on building a new corporate headquarters in Menomonee Falls. Earlier this year, several construction industry and commercial real estate sources told BizTimes Milwaukee that Kohl’s was working on a plan for a new corporate headquarters with more than 1 million square feet in the Woodland Prime office park, located northwest of U.S. Highway 41/45 and Good Hope Road.
Kohl’s executives have had several closed-doors meetings with Menomonee Falls village officials who declined to disclose any information about the project.
Village officials negotiated with North Hills Country Club, located adjacent to Woodland Prime, about purchasing the country club property for the Kohl’s headquarters project. However, the village recently broke off those negotiations.
Some commercial real estate sources say the end of negotiations between village officials and the country club has likely made Kohl’s executives step back to consider all options for its corporate headquarters project.
“They’re flailing around, perhaps because this golf course thing didn’t come together perfectly,” one commercial real estate source said. “I suspect (Kohl’s) liked that solution. It was a good solution. I do think there is (now) some opening this year regarding where they would go.”
Some commercial real estate sources said that without the North Hills Country Club site, there is not enough land available in Woodland Prime to create the massive campus that Kohl’s envisions for its corporate headquarters.
“I think (Kohl’s was) serious about the North Hills deal,” another commercial real estate source said. “I don’t think they are as loyal to Menomonee Falls as I did before. I think they’ve looked at several options (in Menomonee Falls) and haven’t been able to put any slam dunks together.”
“I’m sure that many other sites have been presented to them,” Jessup said, “I haven’t heard that they’ve given serious consideration to anything outside of Menomonee Falls.”
However, another commercial real estate source said the company has looked at other sites in the metro Milwaukee area.
Downtown Milwaukee could be an option for Kohl’s. Department of City Development spokesman Jeff Fleming said DCD officials have “extended an invitation to Kohl’s to discuss its interests and needs.”
Fleming added, “Milwaukee would welcome Kohl’s headquarters downtown or at other locations within the city.”
At a recent community forum presented by the Milwaukee Press Club and the Marquette University Law School, Milwaukee Mayor Tom Barrett and Milwaukee County Executive Chris Abele said they would work together to present options to Kohl’s, including the vacant county-owned spaces in the Park East Corridor in downtown Milwaukee.
“If I’m a leader of downtown Milwaukee, I’m making an incredibly hard run at this deal,” one commercial real estate source said. “If they’re not, what a shame. Why wouldn’t you?”
However, a downtown Milwaukee site presents challenges for the Kohl’s headquarters project. In addition to higher land costs than in the suburbs, Kohl’s would likely have to build a high-rise with structured parking instead of a sprawling suburban campus with low-cost surface parking lots.
“I would have a hard time believing they would move the whole thing downtown because of the cost structure,” one commercial real estate source said. “I have seen no serious interest (by Kohl’s in any downtown Milwaukee site).”
“I think (Kohl’s willingness to consider all options for its headquarters) does open the door for downtown Milwaukee,” another commercial real estate source said. “But I think it requires a little more creativity because you cannot get free surface parking there.”
Many Kohl’s employees used to working in Menomonee Falls might not want to make the commute downtown. But one commercial real estate source said, “I think it would be a good idea,” for Kohl’s to put its headquarters downtown because a downtown location would be appealing to the fashion professionals that work for the company.
“It would probably make it easier to recruit them to work for the company,” that source said.
Kohl’s needs a new corporate headquarters because it is bursting at the seams at its existing headquarters, located in a 885,000-square-foot complex at N56 W17000 Ridgewood Drive, just off Silver Spring Drive, in Menomonee Falls. One commercial real estate source said the company’s existing headquarters has been shown to other companies that are considering plans to relocate to the Milwaukee area.
One commercial real estate source said he doubted Kohl’s would move its headquarters out of state. The company has more than 3,000 employees at its headquarters. Moving the headquarters would create a major and expensive disruption for the company and the employees.
“I can’t imagine anyone that large would move out of state,” the source said.
But for now, the company’s options appear wide open, another commercial real estate source said.
“I think they (now) go into a period of analysis of what options are out there,” he said. “I really do think it’s open game for whomever is out there. I don’t know (where they are looking). I don’t think they know either.”
