Portland-based real estate investor Felton Properties Inc. has acquired another Milwaukee-area office property, and its second in the Historic Third Ward, with the purchase of the Warehouse No. 1 building.
The 115-year old building sits at 126 N. Jefferson St. It totals nearly 74,700 square feet, according to city records. It is 92% occupied with 12 tenants, according to marketing information from Colliers International | Wisconsin.
The building's tenants include the offices of BizTimes Media.
Felton Properties bought the building for $9.45 million, said company president Matt Felton. It adds to Felton Properties' Milwaukee portfolio that includes the nearby building at 241 N. Broadway and six suburban-style office buildings in Milwaukee's Park Place office park and the Crossroads Corporate Center business park in the town of Brookfield.
The sale of the Warehouse No. 1 building closed on Tuesday.
It was sold by Warehouse No. 1 LLC, which is registered to Patrick LeSage, principal of Pettibone Group LLC. It is assessed at approximately $7.14 million, according to city records.
Tom Shepherd, Dan Wroblewski an Jennifer Huber-Bullock of Colliers represented the seller. Colliers will also continue managing the property, as it had with the previous building owner, Shepherd said.
Felton said he plans to invest "quite a bit of capital" into the property, though he did not specify an amount. Plans include taking a large portion of the vacant 5,300-square-foot space on the building's first floor and creating an expanded lobby and tenant amenity space. The amenity space could include things like lounge-type seating, a large meeting rooms for building tenants to reserve and a small coffee bar.
"At the core, the building has a great old history as an iconic asset in the Third Ward and our plan is to honor that past and keep the legacy of the building going, but perhaps to tell the story in a more authentic (way)," Felton said. "The lobby feels dated but in a way that does not make it feel original from 1906."
He said he also plans to replace the 40-year-old elevator, add keycard security access and provide direct access to the eastern stairwell from the first-floor lobby.
Felton said his interest in the property comes from a number of things. His firm already owns another Third Ward building, and the two don't necessarily compete with each other, he said. It is also located near the Italian Community Center and its massive parking lot and open space, a site Felton said is prime for some type of mixed-use development.
"If we were to wake up 20 years from now (the ICC site is) not going to look like it does today," Felton said. "My guess is someone much smarter than me is going to build a big project there."
Also, the Milwaukee office market should perform well in the coming years, Felton said. He said his expectations come from the number of young people living in the area, the diversity of businesses and the good credit companies located there.
"We own roughly 4 million square feet of office buildings in 7 states, and our model has been not to spread too thin in too many geographic locations but to spread in enough geographic locations to create adequate diversity," he said. "The Milwaukee metro area was the most recent market we selected, and our plan when we select a market is to create an anchor there and grow around it, and really have a stake in the community and have a long term vision with the real estate."
Felton continued, "We’re bullish on Milwaukee as a place to do business in the Midwest, we think the market notwithstanding COVID-19 … is poised over the medium to long haul to be a very prosperous market."
Shepherd called Warehouse No. 1 "a beautiful and iconic asset," and shows there is still a strong market for quality real estate even the during economic downturn caused by COVID-19.
"It goes to show that strong buildings and good real estate sells in every market cycle," he said.