Last updated on May 14th, 2019 at 06:03 am
Now that the two-year redevelopment of the former Pabst Brewing Co. shipping center is complete, Scott Lurie can shift his focus a bit.
Lurie, the owner of F Street Investments LLC and principal of Jomela Properties, is diversifying his real estate portfolio, which is predominantly multifamily, by branching into industrial.
“We’re pushing to acquire 1 million square feet of industrial by the end of 2019,” Lurie said.
This month, Jomela Valley Hill LLC purchased a fully-leased, 40,000-square-foot industrial building in the Menomonee Falls business park for $2.1 million from Esser Family Properties LLC, according to state records.
The purchase was part of a 1031 exchange, which allows an investor to sell a property and reinvest the proceeds into a new property while deferring all capital gains taxes.
The 1031 exchange was initiated in May, when Lurie sold a 140-unit apartment complex at 4601 S. First St. to Evanston, Illinois-based Kinzie Realty Corp. for $5.6 million. He used those funds to purchase the Menomonee Falls building and for a 93,000-square-foot industrial property in northern Wisconsin, which he has under contract to purchase.
Lurie, who owns 1,500 multifamily units, isn’t planning to unload all of his multifamily assets. In fact, he said he is only planning to sell three to five buildings.
But acquiring more industrial properties is what makes sense in the current market, Lurie said. His decision is based on higher cap rates, or the rate of return on real estate investment properties, in the industrial market versus in the multifamily market.
“Interest rates have gone up over the past five months (with multifamily lending),” Lurie said. “Rates are now (at 5 percent) and the cap rates are not moving. In industrial, there are opportunities to acquire good credit, long-term leases and the cap rate justifies risk.”
After earning a bachelor’s in finance from George Washington University in 2000, Lurie spent four years working in the field before returning home to Milwaukee in 2004 and getting involved in real estate.
His first venture was literally buying ugly homes.
Lurie brought the first franchise of We Buy Ugly Houses, which is owned by Dallas-based HomeVestors of America Inc., to Milwaukee.
He spent the next five years learning about buying and trading by purchasing homes from distressed sellers who wanted cash fast. Lurie flipped 50 percent of the houses quickly and resold them to other sellers. The other half were renovated and resold on the traditional residential market.
Along the way, Lurie was buying rental properties, strip malls and a few industrial properties.
In 2010, he started his push toward multifamily. In January and February of 2010, Lurie bought 400 units in southeastern Wisconsin out of receivership. He acquired another 500 units over the next two years from bankruptcy or receivership.
In 2013, Lurie became the managing partner of Pizza Man when the owner wanted to reopen the restaurant following a 2010 fire. Today, Pizza Man has locations on North Downer Avenue in Milwaukee, in Drexel Town Square in Oak Creek and at The Mayfair Collection in Wauwatosa.
Lurie has been working out of an office at North 56th Street and West North Avenue in Milwaukee’s Uptown Neighborhood, but is in the process of moving to The Factory, which is part of the 176,000-square-foot former Pabst Brewing Co. shipping center he has been redeveloping in The Brewery complex since 2016.
The former shipping center building, now called The 42, includes the Glass + Griddle brewpub and a ground-floor event space called Venue 42. It also has retail and office space (The Factory), a fitness center, a spa, a coffee bar, and an open-space community lounge with shared conference rooms.
Glass + Griddle shares the building, located at 1150 N. Ninth Street, with Milwaukee Brewing Co.’s new brewery and taproom, which opened Sept. 15.
Lurie’s journey through the real estate world has been unconventional, but by all accounts a success.
Milwaukee Bucks guard Tony Snell even purchased Lurie’s 17,100-square-foot home in Mequon for $2.26 million last fall. The house has an indoor basketball court, according to an MLS listing.
Lurie, who said there is no time to rest, has a handful of other deals in the works, including continued acquisitions of industrial properties.
“I’ve got a few buildings under contract and a few I’m actively selling on the market,” he said. “Right now is a fun time to be in Milwaukee. I’m a champion for this city.”