Redevelopment radiates from city to old-growth suburbs
Redevelopment in the city of Milwaukee is focusing on near-north side and north side neighborhoods, and city officials hope infrastructure improvements and private commercial developments can serve as catalysts for additional redevelopment in key areas of the city.
Big-box retail projects at the former Capitol Court, and at Fond du Lac Avenue and North Avenue are only the latest manifestations of a trend toward major discount retailers adapting to a more urban space.
Last year saw the appearance of a Walmart on the location of the former Southgate Mall at 27th Street and Morgan Avenue. Directly south, the Point Loomis shopping center has also been demolished. According to Max Rasansky, president of The Polacheck Company’s Retail Properties Group, a Super Kmart is planned for the site. Super K-Marts add grocery to the usual product mix found at the discount department store. Another 156,000-square-foot Super Kmart is planned for North and Fond du Lac, and for Brown Deer. That follows a trend, according to Rasansky.
"Major retailers are developing concepts for urban areas," Rasansky said. "On East Capitol, for instance, Walmart took over an existing store." The location occupied by Walmart at 401 E. Capitol Dr. had been a Builder’s Square.
Progress on the Kmart developments, however, has been clouded by the recent filing of Kmart for bankruptcy protection.
Capitol Court redevelopment under way
The reinvention of Capitol Court, at Capitol Drive and 60th Street, will marry big-box retail with small storefronts, according to city officials. The $57 million Midtown Center project will provide 606,000 square feet of rejuvenated retail space, thanks, in part, to $6.5 million in infrastructure investment from the city. Private streets will connect with public thoroughfares tying the project more intimately in with the surrounding neighborhood.
The developer, Boulder Venture, is employing a technique used in urban centers on both coasts — backing big-box retail with smaller users.
"Walmart is at the center — but the back wall of the big box will be covered with liner stores – a coffee shop, a few bookstores — smaller-format stores that line 56th Street," Department of City Development Commissioner Julie Penman said. "This approach has been primarily used with very high-end retailers."
Construction is under way, and the Walmart is slated to open later this year. Build-out of the remainder of the center is expected in four to five years.
Super K on FDL and North
Penman said big box development coming to Fond du Lac and North avenues is expected to leverage the $4.3 million reconstruction of Fond du Lac Avenue between 19th and 35th streets — and help spur satellite development elsewhere in that north-side neighborhood.
While much of the roadwork involved widening Fond du Lac Avenue. A portion in the area of North Avenue, Center Street and Burleigh Avenue saw narrowing of the roadway and widening of the sidewalk to encourage storefront development.
The arrival of Super K — a 158,000-square-foot Kmart with an in-store supermarket — would be expected to trigger 30,000-40,000 square feet of outlot development.
n the meantime, DCD officials have been administering grants to encourage existing, local businesses to invest in their facilities and recreate a thriving commercial district. Official grant announcements are expected this month. According to DCD personnel, grants will be given to businesses including Columbia Savings and Loan, 2000 W. Fond Du Lac Ave., to expand and take over its entire block — and to Legacy Bank, 2102 W. Fond Du Lac Ave., to add a drive-through. The farmers market, on the same block as Legacy Bank, is also undergoing an expansion.
Offices, Grand Avenue repositioning, pump downtown
Office occupancy rates well into the 90% range are the driving factor behind two major office developments expected to break ground this year.
Irgens Development Partners is planning an aggressive timeline for its 875 E. Wisconsin project — 14 months from start to finish.
Irgens Senior Vice President John McGregor said the fast-track construction is client-driven.
"Artisan wants to occupy the building in June of 2003," McGregor said, referring to the project’s anchor tenant — investment firm Artisan Partners, has committed to 54,790 square feet of space on floors seven and eight.
The $49.45 million, eight-story office tower would bring 206,748 square feet of leasable space, and would include a 580-stall underground parking ramp. The building, in the shadow of the Firstar tower, would be connected to its larger neighbor via a skywalk.
McGregor said the firm anticipated receiving the additional lease commitments necessary to finalize financing and begin construction in the course of the next two months.
While Irgens’ project will receive tax incremental financing for the extension of utilities, the city will be more heavily involved in an office project to the north — in what DCD officials said is an area more in need of public investment.
The law firm Whyte Hirschboeck Dudek will be the anchor tenant for the 18-story, $52 million Cathedral Place, occupying 60,000 of a projected 150,000 square feet of office space in the Van Buren Management project at the corner of Jackson and Wells streets.
The mixed-use project will be executed in cooperation with the Redevelopment Authority of the city of Milwaukee. The city will own a 940-stall parking structure next to the project on North Jackson between East Wells and East Mason streets.
The office space will be augmented by 25,000 square feet of residential space in 30 condominiums overlooking Cathedral Square Park.
"The public parking deck is really addressing the one area of downtown that has really reached its capacity as far as parking is concerned," Penman said. "This deck will fuel growth in a two- to three-block radius. It will assist in redevelopment of the Wisconsin Gas Building — which is now empty due to merger with Wisconsin Energy."
Mall opened up to street
DCD officials note the Shops of Grand Avenue (formerly the Grand Avenue Mall) is being repositioned as a more integral part of the downtown as a whole. Irgens Development also has a hand in the Grand Avenue, as it is redeveloping the Woolworth Building. The developer hopes to lure office tenants to the building’s upper four floors, each of which is 11,000 square feet and offers a total of 42,000 square feet of leasable space. And in the ASQ Center, which Irgens and partner William Orenstein redeveloped from the former Gimbel’s/Marshall Fields department store complex adjacent to the Grand Avenue, a first-floor retail tenant may be announced soon, taking up 20,000 square feet of space fronting Wisconsin Avenue.
Menomonee Valley taking shape
According to Penman, the Menomonee River Valley will remain a redevelopment hotspot. "The valley is really important to us," Penman said. "It is the center of the city; the workforce is concentrated around the valley. It has been an underutilized asset for a number of years."
According to Penman, a large tract just east of Miller Stadium owned by CMC Heartland Partners — the Milwaukee Roads Shop — represents enormous potential.
"We are in the middle of condemnation on the Milwaukee Roads Shop — more than 100 acres of property that we want cleaned up and put back into productive work," Penman said.
While private investment will drive redevelopment of the Menomonee Valley, the city will have to step up to the plate as well. The extension of Canal Street to create a complete east-west thoroughfare through the valley is a top priority, according to Penman.
"That is a bit of an issue as we redevelop the value," Penman said. "Extension of Canal Street is a major consideration. We have received $10 million in the state budget for the extension — for us that is very important not only because of the redevelopment of the valley. It will also be needed — along with the 6th Street viaduct — to mitigate traffic during the coming Marquette Interchange reconstruction.
Other public investment in the valley includes the Hank Aaron State Trail — which is being built along the Menomonee River. The trail will provide public access to the river. Work will include restoration of the riverfront. The trail will ultimately run all the way to the lakefront, Penman said.
Private investment is already coming from a number of sectors. Sigma Engineering has broken ground on its new headquarters building at Canal and 13th streets. The 30,000-square-foot office building will replace existing leased headquarters the environmental remediation firm occupies in Oak Creek.
Sigma President Dave Scherzer said the company will break ground in the first quarter of this year, and expects occupancy by October.
"We have a little more geotechnical work to be finished," Scherzer said. "The project is out on the street for bidding right now."
Geotechnical work currently under way is necessary to remediate brownfields issues at the site, according to Scherzer.
Additional private investment in the valley is coming from KPH Construction, which has purchased the former facilities of United States Leather in the 600 block of South 12th Street.
The firm has injected $5 million into the two buildings — one offering 30,000 square feet and another 20,000 square feet, after buying the property out of receivership for under $600,000.
KPH currently has offices in Milwaukee and Waukesha, which will be consolidated at the Menomonee Valley site. Even after the consolidation, approximately 2,500 square feet of space will be available for lease, according to KPH President Keith Harenda.
Atlas Development is currently in the planning and design stages on 1.5 million square feet of new commercial, residential and high-tech office space on the Reed Street Yards project. The 22-acre property is bounded by 6th Street on the west, the Burnham Canal on the north, railroad tracks and Oregon Street to the south and on the northeast by Milwaukee Metropolitan Sewerage District and Seeboth Street.
The development will consist of 50% commercial and 50% residential space, according to project architect Eric Vogel of Gastrau Feurer Vogel.
In the meantime, the Potawatomi Casino draws 3 million visitors a year to the valley, according to the DCD figures. The Forest County Potawatomi Tribe is building a casino administrative building on 13th Street and St. Paul Avenue.
Towne Park offers high value
Firms interested in sites located within the metropolitan area with minimal setbacks and maximum land usage have been drawn to the Towne Group’s Towne Corporate Park of Granville. About 30 acres are still remaining in the park, which is located in the Milwaukee at 107th Street and Brown Deer Road.
Mike Mervis of the Towne Group closed the eighth deal in the park Jan. 18 — a 3.67-acre parcel to Friedman Tobacco and Candy Co. Friedman will construct a 32,350-square-foot facility on the site. Currently under construction in the park is a 6,500-square-foot facility for Weller Parts Stores, a truckparts supplier, on 2.87 acres, according to Mervis.
Inland has irons in the fire
Inland Companies has a number of projects coming on-line in Milwaukee County.
The Stadium Business Center, a 44,000-square-foot office-warehouse building just south of Miller Stadium in the village of West Milwaukee, is recently completed and accepting new tenants, according to Scott Welsh of the Inland Companies.
"Between the start of it and completion, we have leased over 50% of the space," Welsh said. "Leasing activity has been terrific. We are seeing good, strong, local companies that want to have access to good freeways, a good workforce and a central location. The diversity of tenants we can put in there range from service industries to quasi-retail."
Remaining space is available from 4,000 square feet to 20,000 square feet — in increments of 4,000-5,000 square feet, according to Welsh.
Inland is also anticipating the first lease deal for the Park Place Tech Center — which is located just off of Bradley Road and Highway 45 — across from Park Place. Project completion was delayed, which pushed completion until after the economy cooled off, according to Welsh.
"We ran into some weather difficulties and some slowdowns in the development of this project," Welsh said. "It is coming on-line right now and is 100% vacant. We have 67,000 square feet. It is a high-tech-looking building and features 18-foot clearances and fiber optic in the street right in front of it. Generally, it is an office-warehouse building that offers that high-tech kind of image. Up on the northwest side of town, if you want to get something with a loading dock, great visibility and great access to the freeway, there isn’t much else out there. There is access to two interchanges; they recently added a full interchange at Bradley to get onto Highway 45."
While prospects look good, Welsh expressed some frustration over the fact that no leases had been signed as of yet for the development.
"We have seen a lot of bigger tenants looking — a lot of activity," Welsh said. "Park Place lends itself to some big names out there. Four of five or six very good-credit, big-name tenants have shown strong interest in the building — but we aren’t signing any leases yet. When buildings come on-line, you like to have them mostly leased out."
Franklin park cools, Northwest Mutual in the hopper
Franklin Economic Development Commission director Stan Kosmatka said activity had slowed significantly in the Franklin Business Park — encompassed in the city’s Tax Incremental Financing District #2. Only three new firms entered the park in 2001, while 12 built there in 2000.
According to Mike Fardy of Inland, the developer has also finished the last of three buildings in the Franklin Industrial Park. The properties are targeted toward office/warehouse and light manufacturing; tenants include distribution and shipping firms.
The three speculative multi-tenant buildings at Franklin Drive and Ashland Way total 225,000 square feet. The final building was completed in early 2001, and Inland is sitting on 60,000 square feet of vacant space in two of the buildings, 20,000 in one and 40,000 in another, according to Fardy.
"That park is probably one of the nicer industrial parks in southeastern Wisconsin," Fardy said. "From when we began that project, we immediately had decent activity. But between the slowing economy and the fact that — after we initiated the spec development — some other developers came in, things have harder since we have seen more competition in that park."
Elsewhere in the city, Kosmatka described talk of a Northwestern Mutual corporate campus on the site of the current Highway 41 Outdoor Theater at West Drexel Avenue and South 27th Street as premature at best. While initial reports described a timeline that included construction in the first quarter of 2002, Kosmatka said this is not likely to transpire.
"We don’t even have a site plan yet — not even a sketch," Kosmatka said, describing the plan as "embryonic."
But according to a Northwest Mutual spokesperson, the company feels it is on track to initiate construction this year.
"Actually, we are on schedule," Jean Towell said. "Last evening, our project manager did show some preliminary plans to the city of Franklin. We don’t have architectural renderings yet. But groundbreaking is scheduled by later this year and the first phase is scheduled for completion in 2003 with occupancy scheduled for 2004."
Towell said the first phase of construction on the 75-acre site "will probably accommodate about 800 people and start with a five-story building and 400,000 square feet of space. Plus, a separate data center with about 40,000 square feet of space will be attached to the main office building."
The size of the site will allow for additional expansion in future years, but Towell said predictions of how rapidly additional building would take place are premature.
In other activity in Franklin, development near the intersection of highways 100 and 45 is solidifying, according to Kosmatka. Work is under way on a 10-acre Boucher Volkswagen dealership at the intersection. Kosmatka said that project would fit in well with other auto dealerships along the commercial strip.
Redevelopment sweeps the suburbs
As available greenfields in old-growth suburbs become scarce, development professionals in the county’s early developed suburbs are turning to brownfields and rejuvenating dated or obsolete developments.
Burke Properties has started construction on a four-block redevelopment project in Cudahy. The project includes a new library, townhouses and limited commercial space.
"We started construction of the library and winter garden on Dec. 1," Burke President Paul Votto said. "And we opened a sales office for the condos the first week of the new year."
The commercial space involved will be developed in two phases, according to Votto.
"In the first phase, there will be two commercial buildings," Votto said. "Each will be about 7,000 to 8,000 square feet on the first floor — and could turn out to be two-story buildings. There is the potential for more commercial development. We will take a wait-and-see approach. Other lands are still available, including sites along Layton Avenue."
Elsewhere in Cudahy, Votto said Burke was successful in filling up the majority of a building near Mitchell International Airport to Wetzel Brothers printers. The company is occupying 58,000 square feet of space at 2401 E. Edgerton Avenue, leaving 12,000 square feet remaining to lease.
Next door in the city of South Milwaukee, the South Milwaukee Community Development Authority has completed an initial phase of redevelopment in its first tax incremental financing (TIF) district, centering around a 36-acre area at Highway 32 and Marquette Avenue. The TIF district encompassed 25 acres of privately owned residential and commercial property and 11 acres of public right-of-way.
The city created a TIF district in 2000 that encompassed the area surrounding Sunrise Plaza. The shopping center had been experiencing high vacancy rates, and TIF-sponsored improvements helped the center reach 100% occupancy. The city purchased and demolished adjacent degraded commercial space to make way for Marquette Manor, a 74-unit senior housing complex developed by Great Lakes Companies of Madison. The building was completed in December.
That month, the city also finished utility, streetscape and site improvements including ornamental lighting and road reconstruction. According to city engineer Kyle Vandercar, the development authority is currently working with a developer to construct a mixed-use building across from the post office. The building would include commercial space on the lower level and four condominiums on the upper level.
The development authority is seeking proposals for redevelopment of an additional 6.5 acres within the first district, and has also retained Vierbicher Associates, Madison, to complete an analysis of the area surrounding Midwest Tanning Co., 1200 Davis Ave.
Vandercar said the area the city is considering redeveloping is about 12 acres in size and includes the former tannery building, a plastic-bag manufacturer and other industrial uses. Currently, Midwest Tanning handles tanning operations at a facility in Sheboygan and manufactures gloves and other leather products at the South Milwaukee plant.
"There are a couple properties in there with back taxes," Vandercar said. "They have not been foreclosed on due to contamination problems, mostly from underground tanks."
An analysis of redevelopment options will be coming from the consultants in March, according to Vandercar.
North shore projects make headlines
More media attention has been given suburban redevelopment projects on the north shore, specifically those at the Bayshore Mall and the former Scott Paper building in Glendale.
Michael Petersen’s Heartland Development Group announced plans in early January to spend $15.5 million to redevelop the Scott Paper building at 4425 N. Port Washington Rd. into 180,000 square feet of leasable office space.
The rehab of the building, which has been used primarily for warehousing in recent years, will entail demolition of two single-family homes. Heartland will purchase one property, and the city of Glendale will purchase the other. Additional city assistance for the project will come in the form of tax incremental financing.
Rehab work will start immediately, and will take approximately one year to complete, according to Petersen.
Also in Glendale, the southward expansion of the Bayshore Mall, while potentially hung up in legal proceedings, aims to bring new vitality to the 48-year-old shopping mall.
In an era when regional shopping malls are facing eroding markets, plans include turning Bayshore into a multi-use development through addition of condominiums on the eastern end of the property. While the mall itself would expand to the south, portions of the existing structure would be demolished and remaining sections refurbished.
The Glendale Community Development Authority is currently involved in a battle of legal posturing with Anthony Palermo, owner of commercial properties that would be destroyed to make way for the expansion.
The village of Whitefish Bay, meanwhile, is in the early planning stages of a major upgrade of its Silver Spring retail and commercial district. Neighboring Glendale has already portions of Silver Spring in that community.
February 1, 2002 Small Business Times, Milwaukee