The arduous effort that began in 2012 to build the tallest residential building in Wisconsin is finally nearing completion. By the end of July, construction will be complete for The Couture, a $188 million, 46-story luxury apartment tower near the lakefront in downtown Milwaukee. Residents will begin moving in this month. The project has faced
The arduous effort that began in 2012 to build the tallest residential building in Wisconsin is finally nearing completion.
By the end of July, construction will be complete for The Couture, a $188 million, 46-story luxury apartment tower near the lakefront in downtown Milwaukee. Residents will begin moving in this month.
The project has faced numerous challenges and setbacks since it was first unveiled 12 years ago by Rick Barrett, the founder and chief executive officer of Milwaukee-based Barrett Lo Visionary Development, the developer of The Couture (click here to read an exclusive Q&A with Barrett).
There was a three-year dispute over the development rights of the site. It took another year to complete the sale of the property. And it took about five years to assemble the financing, including a year after some investors backed out when the COVID-19 pandemic hit.
“For the longest time, I would go to sleep at night and I would be nervous about, is this really going to happen?” Barrett recalls.
As the process dragged on with no visual signs of progress at the project site, many doubted that The Couture would ever be built. The site was sold to Barrett Lo by Milwaukee County and the project was supported by tax incremental financing from the city. At times, some impatient local government officials called for finding a new developer for the prominent property.
“This is too valuable of a site for the City of Milwaukee and Milwaukee County to waste a decade trying to get its act together,” said then-Milwaukee County Board Supervisor John Weishan Jr. in September 2018.
“With all the development going on downtown, surely someone can do better than the nothing we’ve seen for the past seven years,” said then-Ald. Bob Donovan in July 2019.
“No developer in Milwaukee thinks this building will be built. Nobody,” said Ald. Robert Bauman in May 2020.
Large, complicated real estate developments take time, but The Couture’s 12-year saga required a substantial amount of perseverance. Some developers facing the significant obstacles that confronted the project may have cut their losses, dropped it and moved on. Barrett says he never considered giving up.
“I don’t have that in me,” he said. “I believed in it so deeply, and I just feel like if I hadn’t finished this it would have been a profound failure for me in every sense of the imagination.”
“It was an effort of just believing in a project that would make such a big impact on our skyline as well as on our pedestrian streetscape and our transit system,” said Matt Rinka, partner and founder of Milwaukee-based Rinka, the design firm for The Couture. “I give credit to a lot of people on all of our teams that continued to not just believe in the project but put effort towards it. It was definitely a team effort.”
The CoutureAddress: 909 E. Michigan St., Milwaukee
Developer: Barrett Lo Visionary Development
Architect: Rinka
General contractor: J.H. Findorff & Son Inc.
Stories: 46
Apartments: 322
Retail space: 42,000 square feet
Cost: $188 million
The bus barn
The Couture’s story really begins in October 1992 when Milwaukee County opened its new Downtown Transit Center facility at 909 E. Michigan St. The facility replaced a parking lot and was near the former site of the Chicago and North Western Railway depot (known as the Lake Front Depot) that was demolished in 1968. From the beginning, some were critical that such a facility was built at a valuable location near the lakefront. The Downtown Transit Center was intended to serve as both a bus transfer and storage facility. It turned out to be useful for bus storage and many called it a “bus barn.” But few passengers used it. Instead of being a hub of activity with people hopping on and off buses and transferring to other buses there, the Downtown Transit Center felt like a ghost town.
About 18 years after the opening of the Downtown Transit Center, the idea that the site should be put to a higher and better use began to take hold. The 2010 downtown Milwaukee plan recommended improvements for the lakefront area. That led to the formation of the Long-Range Lakefront Planning Committee, an advisory group that in 2011 recommended the Downtown Transit Center site be redeveloped.
Milwaukee County issued a “request for interest” for the site. Four development firms submitted proposals: Barrett Lo (then known as Barrett Visionary Development), Wauwatosa-based Irgens, Wauwatosa-based Wangard Partners and Minneapolis-based Ryan Cos. Barrett submitted the most ambitious project, with the original plans for The Couture calling for a 44-story building with 180 apartments, a 180-room hotel, a restaurant and retail space. The other three proposals called for office buildings combined with other uses.
Ultimately, then-Milwaukee County Executive Chris Abele and a selection committee picked The Couture proposal for the Downtown Transit Center site redevelopment.
“In my mind, it was more than just creating a development,” Rinka said. “It was about trying to design a beautiful building and put up a building that I think spoke to the future of the city and the way I think the future generations in our community want to see themselves. Not just as a rust belt city, but a city that I think is poised for a really bright future. This building was designed to make that kind of statement.”
[caption id="attachment_588410" align="alignnone" width="1280"] The Downtown Transit Center on East Michigan Street was demolished in 2017 to make way for The Couture. Credit: Milwaukee County[/caption]
Track record
By then, Barrett had made a name for himself by developing The Moderne, a 30-story luxury residential building at 1141 N. Dr. Martin Luther King Jr. Drive. Many were skeptical that a development like The Moderne could succeed on the west side of downtown Milwaukee. Nothing like it had been built in that area before.
Barrett began work on developing The Moderne in 2006. It was one of several large developments planned in the downtown area at the time, and nearly all of them died when the Great Recession took hold in 2008. But Barrett refused to give up on The Moderne and found a way to get it done. He got two loans from the city for a total of $9.3 million and a $41.4 million loan from the AFL-CIO Investment Trust Corp. guaranteed by the U.S. Department of Housing and Urban Development’s Section 221(d)(4) program. Construction finally began on The Moderne in early 2011 and was completed in 2013. The Moderne was a challenging project and proved Barrett’s ability to persevere and find a way to get it done. But The Couture would be far more difficult.
[caption id="attachment_588409" align="alignnone" width="1280"] “Coming soon” signage adorned the fencing around the development site for years before The Couture finally broke ground. Credit: Google[/caption]
Fight for site control
The first major obstacle for The Couture project was in establishing the right to actually build it on the site.
Parks advocacy group Preserve Our Parks objected to The Couture, saying a private development shouldn’t be allowed on the site because it was filled lakebed and was originally under water and part of Lake Michigan. The group pointed to the state constitution’s public trust doctrine that preserves public access to waterways and severely limits development on filled lake beds.
Preserve Our Parks managed to delay The Couture for three years as it threatened to file a lawsuit, which prevented county officials from obtaining title insurance for the site so it could be sold to Barrett. Numerous attempts were made to clear the issue up.
State Department of Natural Resources reviews in 2011 and 2012 indicated that the site did not fall under the public trust doctrine and could be developed. In 2013, the state Legislature inserted a provision in the state budget establishing an official Lake Michigan shoreline that would allow The Couture to be built. Then in 2014, a similar standalone bill was passed and signed into law.
None of it worked. The county still couldn’t get title insurance for the site due to the Preserve Our Parks lawsuit threat. So, on Christmas Eve in 2014, the county filed its own lawsuit seeking a court ruling that would clear up the matter once and for all.
In 2015, now-retired Milwaukee County Circuit Court Judge Christopher Foley ruled that because The Couture development would not harm public access to the lakefront, it could proceed on the site. Preserve Our Parks could have appealed the ruling but finally gave up.
“We fought because we were right,” said Jim Goulee, president of Preserve Our Parks. “We had definite proof.”
Goulee said the group had surveys done to make its case, but the state changed the law and “created a fictitious shoreline for that area.”
“It is what it is,” he said. “Now it’s there. It’s a nice-looking building but we still feel it was built on filled in lakebed. But there’s nothing we can do about it. Just accept it for what it is.”
“Painstaking” is how Barrett described the site development rights battle.
“It was very, very trying,” he said, adding he felt something ultimately would be done to determine where developers could and could not build near the downtown lakefront.
“This city needed that,” Barrett said.
More than a year after Foley’s ruling, at the end of August 2016, the sale of the Downtown Transit Center site to Barrett Lo was finally completed. The county sold the site for $500,000 – well below its appraised value of $8.9 million – in effect providing a subsidy for The Couture.
Finally, Barrett had site control for The Couture. But the most challenging part of the project still lay ahead.
Financing The Couture
Assembling the $188 million in financing to build The Couture would take five more years. Barrett said he traveled “coast to coast” and spoke to 150 different groups to raise money and equity.
“A lot of them didn’t even know where Milwaukee was, to be honest,” Barrett said. “There’s coastal bias on equity. We’re kind of like a flyover state, a flyover city.”
Meanwhile, major demolition work began at the site in late 2016 and was completed in early 2017. For the next four years, the site sat vacant while many wondered if construction would ever begin; some local officials grew impatient.
“I’m not really interested in what the excuse is. I would just like the project to be done,” Weishan said in September 2018.
Despite the concerns of some elected officials, Abele and then-Milwaukee Mayor Tom Barrett stood behind the project. For Barrett, no relation to the former mayor, that support was critical.
“They never bailed on me,” he said. “They never quit.”
The Couture plans had been updated in 2014 with the elimination of the hotel – replaced by more apartments – and the addition of a transit hub, including a streetcar stop, and a public park. The city agreed to provide $17.5 million in tax incremental financing for the public elements of the project.
The county was required by the federal government to provide transit amenities to the site by the end of 2020 or else it would have to pay back $6.7 million in federal funds provided to build the Downtown Transit Center. County officials worked with the Federal Transit Administration to extend the deadline.
Finally showing some progress in financing The Couture, Barrett Lo announced in November 2018 that it was invited by HUD to apply for the same loan guarantee program it had used for The Moderne.
But then, in January 2019, Barrett Lo missed its deadline to complete the HUD application. The firm was granted a four-month extension, and then another two-month extension, but failed to meet them.
Still, Barrett wasn’t giving up on the project and the firm began working with Milwaukee-based Baird to help secure the final financing.
Then, in October 2019, radio talk show host Mark Belling was first to report that Barrett Lo hadn’t paid its property taxes for The Couture site. The firm was nearly nine months late on paying its property tax bill which, with interest, was more than $400,000. At the time, Barrett said the overdue bill was “an oversight on our part.” Within a few days, Barrett Lo paid the property tax bill, but it was an embarrassing episode and further eroded public confidence in the project.
[caption id="attachment_588401" align="alignnone" width="1280"] Architect Matt Rinka did his original sketch of The Couture in the middle of the night on the back of hotel stationary paper. Credit: Rinka[/caption]
Key milestones in The Couture’s journey1992: Downtown Transit Center opens
2011: Long-Range Lakefront Planning Committee recommends redevelopment of the site.
July 2012: Plans for The Couture unveiled to the public.
July 2012: Preserve Our Parks objects to legality of private development at the site.
June 2015: Circuit Court judge rules The Couture development allowed to move forward.
August 2016: Sale of site to Barrett Lo closes.
August 2016: Demolition work begins.
March 2020: COVID-19 pandemic hits U.S., several financial backers for The Couture drop out.
May 2021: Barrett Lo closes on financing for project.
May 2021: Construction begins.
April 2024: First residents move into The Couture.
COVID curveball
By early 2020, with the help of Baird, Barrett Lo finally had its financing assembled for The Couture.
And then the COVID-19 pandemic hit. Some of the project’s financial backers bailed.
A few firms that planned to invest in The Couture had significant holdings in hotels and senior housing. They were devastated by the pandemic and had to pull out of The Couture project.
“Once COVID hit, we threw all of those cards up on the table and were like, ‘OK we’re starting over.’ That’s how crazy it was,” Barrett said. “From my perspective, we had to pause.”
Barrett Lo needed to find some new investors. The silver lining was the Federal Reserve – in an attempt to prop up the economy during the pandemic – cut the federal funds rate to near zero, helping Barrett Lo get a favorable interest rate for The Couture’s financing and making the project more feasible.
“At that point, we were able to garner a whole different grouping of investors, a whole different grouping of equity players,” Barrett said. “We happened to get a very good rate (3.3%), which helps this building and locks it in for the future and gives it the ability to succeed.”
Asked if The Couture would be feasible in the current interest rate environment, Barrett said, “absolutely not.”
In June 2020, Barrett announced that his firm had secured enough equity to finance construction of The Couture. The firm submitted a new loan guarantee application to HUD, which was approved in November.
New development agreements between Barrett Lo and the city and county were struck in December. A major issue was that the city was required to get the lakefront streetcar line, which runs through The Couture, operational by July 31, 2022, or it would have to pay back a $1.4 million federal grant. Later, an extension was granted until October 2023, when temporary Sunday-only service began for the lakefront line.
There were still a few hang-ups to overcome before construction could commence. Barrett Lo agreed to cover any liability associated with the federal grant for the streetcar line.
In March 2021, recently ousted City Attorney Tearman Spencer refused to sign a modification to the city’s development agreement with Barrett Lo. The change stipulated that Barrett and his partner Tan Lo would donate $100,000 to the city’s anti-displacement fund, which assists low-income homeowners facing displacement caused by rising property tax assessments. Spencer said Ald. Bauman, who requested the change to the deal, had overstepped his authority in doing so. A compromise was struck in which the funds were placed in escrow pending a review of a special counsel. A year later, the Common Council ended its dispute with Spencer and returned the funds to Barrett Lo.
Finally, in May 2021, Barrett Lo closed on the HUD-backed loan for The Couture. The loan was the largest FHA loan amount HUD has executed in Wisconsin, and the largest for its Midwest region since 2000, said HUD spokesperson Gina Rodriguez.
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Construction hurdles
On May 11, 2021, the first piece of equipment appeared at The Couture site, pounding the ground to break up the concrete. Ground was finally broken for the project nearly nine years after it had been presented to the public.
The actual work of building The Couture came with its own set of challenges. In 2017, the city agreed to provide another $2 million for the project to move a 48-inch sewer pipe that was discovered underground at the site.
That wasn’t the only surprise. A We Energies duct box wasn’t where it was expected to be. There were 48 pile foundations on the site, but they were all in different locations than what was expected. Plus, a foundational wall for the 833 East office building and a U.S. Bank Center parking garage were on The Couture’s foundation site, which also had to be worked out.
“Whenever you dig, you’ve got these unforeseen conditions that you try to hedge against, you try to guard against but ultimately you can’t, you simply can’t,” Barrett said. “It’s the biggest exposure to the developer when you are in subsoil conditions.”
None of the issues threatened the project, but in February 2022 Barrett acknowledged that construction was behind schedule.
When finally completed in July this year, the construction project for The Couture will have taken more than three years. And it will be completed about 12 years after it was first proposed.
“Good things take time, extraordinary things take longer,” Barrett said.
[gallery columns="1" size="full" td_select_gallery_slide="slide" ids="588407,588402,588405,588404,588403"]
Testing the market
Now that its construction is nearing completion, the question remains of how successful The Couture will be in the marketplace. Will Barrett Lo be able to fill the building’s 322 apartments and 42,000 square feet of commercial space and operate The Couture at a profit? As of press time, 62 of the apartments have been leased, including the two penthouse units renting for more than $11,000 a month.
The Couture is having “a pretty strong start overall” with its early apartment leasing, said Gard Pecor, a senior market analyst with CoStar Group.
Rents at The Couture, on a per-square-foot basis, are the second highest in Milwaukee, behind the 31-story, 333-unit 333 Water building nearing completion in the Historic Third Ward. Competing against each other, The Couture and 333 Water will test the strength of the downtown luxury apartment market.
“I think we do have demand for more class A luxury (apartment) development,” Pecor said. “It will just be a slower lease-up period than we’re used to. With two of them developing at the same time, we could see lease-up rates run a little bit longer. I don’t think we’ll see structural lease-up problems at all, I just think it might be a little bit prolonged compared to what we’re used to.”
“I hope that (The Couture is) successful,” said one Milwaukee real estate executive who did not want to be named. “I really applaud them for taking that risk and putting that building up. It’s a remarkable achievement. I would have never done that. My cojones are not big enough to do that deal. I just wouldn’t do that deal. The business metrics just scare the s--t out of me. I know too much about what it takes to operate a building over the long haul to know how challenging that building can be as a rental property going forward, just the maintenance costs and operational costs of running that building.”
But after everything he went through to get The Couture built, Barrett says he isn’t daunted by the challenge of making the building’s operations successful.
“The vision was we’re going to lead the market,” he said. “And we will. We will lead the market.”
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