Real Estate: Finally, some signs of life in the Park East

It was now been about 6 years since the Park East freeway was torn down. City officials hoped the freeway’s demise would attract development that would revitalize the north side of downtown Milwaukee.

For the most part, those city officials are still waiting for that development to happen. Most of the Park East corridor remains vacant and is compared to a “moonscape” by some.

The Great Recession, which had devastating effects on the real estate and financial markets, has only added to delays in attracting development to the Park East corridor.

It is clear that it will take many years for the Park East corridor to be fully developed.

However, there are finally some signs of life brewing in the corridor. One new development was completed this year, another is nearing completion, a handful of others are in the works and redevelopment work continues for the former Pabst brewery property on the west end of the corridor.

The next Park East development that will be completed is the Aloft hotel, which is being built at 1230 N. Old World Third St. The 160-room hotel, which is being developed by Milwaukee River Hotel LLC, is expected to open on Dec. 17.

The five-story hotel will have 5,000 square feet of meeting space, a fitness center, an indoor pool on the first floor overlooking a new riverwalk segment and the Wxyz Bar in the lobby/lounge area. Previous plans for retail space in the building were eliminated, replacing it with the meeting space. About 35 to 40 employees will work at the hotel once it is fully staffed next year.

The Aloft hotel will be the first new hotel to open in downtown Milwaukee in several years. The Iron Horse Hotel opened last year and a Days Inn Hotel of the Arts opened earlier this year. Both of those hotels are located near the downtown area, but are not located within the downtown.

The Park East corridor location is a major asset for the Aloft hotel, said general manager Lisa Aldrich. The hotel is located only one block northeast of the Bradley Center and one block south of the Manpower Inc. corporate headquarters. Bars, restaurants and shops along Old World Third Street will be appealing to hotel guests, Aldrich said.

“I think we are in a great location,” she said. “I feel the city center is moving north, and a little west.”

In addition, the hotel’s location along McKinley Avenue will makes it easy for out of town visitors to find off the freeway.

“People are so glad when they hear they don’t have to zig-zag through downtown to get here,” Aldrich said.

The Aloft hotel is located northeast of Old World Third Street and Juneau Avenue. A major development is expected to break ground in January at the southwest corner of the intersection.

That’s where investors, led by developer Rick Barrett, plan to build The Moderne, a 30-story building with 203 apartments, 14 condominiums and 7,230 square feet of retail space. The building will be constructed by J.H. Findorff & Son Inc. It will take about two years to build. The $55.24 million Moderne project has a $41.4 million loan from the AFL-CIO Investment Trust. The loan has received a preliminary guarantee by the U.S. Department of Housing and Urban Development (HUD)’s 221(d)4 program. The project also received a $9.3 million loan from the city of Milwaukee.

Barrett says he is bullish on the Park East corridor, which is why he wanted to build The Moderne there.

Like Aldrich, Barrett says a major asset for the Park East corridor is that McKinley Avenue has become a major route into downtown.

“I’m so excited about the Park East because it is now the main entrance to downtown Milwaukee,” Barrett said. “I just firmly believe there is so much opportunity here. I just feel it is going to be such a big corridor for our city. I just love this area.”

Barrett is so bullish on the Park East corridor that he says he would like to do another development on a Milwaukee County-owned property there in the future. He says he has no specific plans for that project at this time.

Two other projects are under construction in the Park East corridor.

Dan Druml, the Milwaukee franchisee for Paul Davis Restoration, is redeveloping the block northwest of North 6th Street and McKinley Avenue. That project, called Haymarket Square, includes renovation of a building at 1311 N. 6th St. About 45,000 square feet of space in the building will be occupied by Santa Ana, Calif.-based Corinthian Colleges Inc., which plans to open its first Wisconsin campus there. Corinthian Colleges provides post-secondary education, primarily for career-oriented students. The Milwaukee campus is expected to open in time for next fall’s school year. The college will have 35 employees in the first year and plans to add another 58 employees during the next four years.

Meanwhile, work continues on Zilber Ltd. founder Joseph Zilber’s massive project to transform the former Pabst brewery, located just past the west end of the Park East corridor, into a mixed-use urban neighborhood. Construction of an 880-space parking structure was completed recently. Redevelopment of three buildings, one for apartments and two for office space, has been completed in the project. In addition, Astronautics Corp. of America is considering the Pabst complex as a possible location for its new corporate headquarters. And, plans are progressing for the proposed University of Wisconsin-Milwaukee School of Public Health to occupy space in the former bottling house building at the Pabst complex.

Another Park East corridor project was completed this year, and was a big success.This summer Milwaukee-based Mandel Group Inc. completed One, an 83-apartment building, which is the first phase of its North End development along the Milwaukee River at the former Pfister & Vogel tannery site. All of the apartments in the building have been leased, according to Mandel Group executives. The building also has 12,000 square feet of retail space.

Meanwhile, the developer for a long-delayed Park East is moving forward with the project. Oak Park, Ill.-based RSC & Associates is seeking up to $30 million in bond financing through the city of Milwaukee for the development.

The tax-exempt redevelopment revenue bonds would be issued through the city’s Redevelopment Authority, providing a low interest financing source for RSC.

According to documents filed with the city, RSC plans to build a 250,000-square-foot development with 121 apartments, five townhouses, a parking structure and 7,800 square feet of retail space on a two-acre vacant site bounded by East Lyons Street, East Ogden Street, North Jefferson Street and North Milwaukee Street.

Later, RSC plans to add two hotels, a 128-room Hyatt Place boutique hotel and a 102-room Hyatt Summerfield Suites extended stay hotel, to the project.

RSC owns the property and the project was approved by the city, but it has been delayed since 2008 because it could not obtain financing after the financial industry meltdown.

RSC purchased the site from Milwaukee County. If the project proceeds, it would be the first Park East corridor property sold by Milwaukee County that has attracted development. All of the Park East developments that have occurred so far have been on sites that were privately owned, except for one site that was previously owned by the city of Milwaukee.

However, a review of the RSC project by the Redevelopment Authority was delayed recently because design issues for the project need to be addressed.

Another development has been proposed for the Park East corridor block between Ogden Avenue and Broadway, Water, Milwaukee, and Lyon streets. Developers Robert Schultz and Harry Drea want to build a $76 million development on that site with about 400 residences and 10,000 square feet of retail space.

However, that project has been placed on the back burner while Schultz and Drea focus on their efforts to obtain financing for their Rivianna development in Walker’s Point, spokesman Evan Zeppos said.

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