Real estate spotlight: Lessons learned from adaptive reuse projects that transformed Milwaukee-area communities

The former Pabst Brewery in downtown Milwaukee sat vacant for years after the 21-acre complex closed abruptly in 1996.

It is now known as The Brewery, a vibrant city neighborhood, complete with housing, offices, restaurants, hotels, a university building and two public parks. It boasts a total assessed property value of $148.9 million, according to The Brewery Neighborhood Improvement District No. 1.

The massive undertaking was led by Joseph Zilber, founder of Milwaukee-based Zilber Ltd.

“The first thing you would see coming off the freeway to downtown Milwaukee was a collection of crumbling buildings, (and) the streets weren’t connected to the city grid, which is not the image Joe thought the city should have,” said John Kersey, executive vice president of Zilber. “He took it upon himself to try to rectify it. The motivation was he wanted to give back to the city of Milwaukee.”

The Brewery is just one of a number of high-profile adaptive reuse projects in southeastern Wisconsin from the past 25 years.

Others include the Summit Place office complex in West Allis, the Mayfair Collection mixed-use project in Wauwatosa and The Avenue in downtown Milwaukee.

There is potential for more of these types of projects, but they’re not easy for developers to execute. The most successful adaptive reuses of recent memory show how to achieve them.

“Each one is its own work of art,” said Josh Jeffers, president and chief executive officer of Milwaukee-based J. Jeffers & Co. “The adaptive reuse process cannot be made into a cookie-cutter process, and there’s so much thought and creativity that goes into each of these projects that when we’re done, it really is a work of art. And it’s rewarding.”

These projects also show the huge benefits they can provide to communities.

“(Summit Place) did have a major influence on the image of West Allis, and it helped spark the rest of the development that has occurred in that older industrial corridor,” said John Stibal, former West Allis director of development. “It probably has somewhere around $250 million to $300 million in new development in that corridor.”

For its part, the former Pabst brewery was very difficult to redevelop. A group of developers failed to transform it to “PabstCity” after the city rejected a hefty public financing proposal to facilitate the project.

Later, Zilber stepped up to the plate when he purchased the 21-acre complex in August 2006, Kersey said.

A Zilber Ltd. affiliate served as master developer and went about preparing the site for redevelopment. Working with the city, it connected the site to the street grid, replaced infrastructure and cleaned out the buildings that would be saved. Some were demolished to make building pads for new construction.

It then sold off properties to individual developers. Zilber developed a parking structure that serves the whole site.

“That’s what I would consider the genius of this project,” Kersey said. “We did not have the ego to decide what goes where and what uses were going to come into the project. Joe wanted to create this blank slate, do the heavy lifting so it could be redeveloped but let the market determine what should go into those buildings.”

J. Jeffers & Co. has made historic rehabilitation and adaptive reuse its specialty. It is working on three major projects: the redevelopment of the Horlick Malted Milk Co. complex in Racine, the conversion of the former Journal Sentinel offices in downtown Milwaukee, and the redevelopment of the Milwaukee Athletic Club building, also downtown.

Jeffers says he sometimes refers to the Horlick project as the Pabst Brewery of Racine, due to the similarities. It is a $100 million multi-year, multi-phase mixed-use project involving both adaptive reuse and new construction.

One building is being converted into 60 units of affordable housing. It should be done in May, said Jeffers. Then in April, work will begin on rehabilitating another building into 86 units of market-rate housing. Construction is also slated to begin on another 172 units of new construction next door to the 86-unit building. That will be new construction, unlike the first two buildings. Commercial uses are also planned at the site.

The pieces are also coming together for the Journal Sentinel building conversion. A part of the building is being turned into 195 beds of affordable student housing. That work could finish in July, Jeffers said. Construction is also slated to start this summer on 141 market-rate units in another part of the building. The southern end of the complex will be turned into a new high school for local charter school system Seeds of Health Inc.

Jeffers & Co. has already performed such rehabilitation and adaptive reuse projects as the Mackie and Mitchell buildings in Milwaukee and the Gold Medal Lofts in Racine.

Although each project has its own set of challenges, they all tend to require a similar set of skills. These are skills Jeffers has honed through experience.

The financing can get complicated, he said, requiring developers to find some non-traditional funding sources. They also present design and construction constraints.

Addressing these and other challenges requires a good team behind the developer. Jeffers & Co. uses a historic-rehab consulting firm out of Portland in each of its projects. It also relies on architects and contractors that have experience with adaptive reuse.

“As a developer you may have the best vision in the world of what this building could be repurposed for, but if you can’t convey that to the architect, then you’re stuck,” Jeffers said.

A major portion of these projects involves figuring out how to retrofit old buildings with the latest mechanical, electrical and plumbing systems. It could wind up being 35% to 45% of total construction costs.

“Half the battle with adaptive reuse is just getting a good MEP retrofit plan,” Jeffers said.

Sometimes developers will also be tasked with selling their vision to stakeholders and the community. This was the case of the Horlick redevelopment. Jeffers said some people had trouble understanding how the buildings could be saved to start with, let alone converted to new uses.

“Getting people to rethink those buildings was a real challenge,” he said.

The Summit Place projct also required creative financing. It was developed by Whitnall Summit Development Co. on the former Allis-Chalmers campus. The complex has 650,000 square feet of rentable office space. Approximately 2,500 people work there, according to the development’s website.

The developer started the project in 2003, Stibal said. The collection of three buildings got a four-story addition, along with a large new atrium, new windows and modern mechanical systems.

The project received a brownfield grant at the start and later tax incremental financing to act as near equity, which made the project profitable and allowed the developer to recruit investors, Stibal said. 

The development also needed land to build a parking structure. Stibal said the free parking was needed to make Summit Place competitive with western suburban office buildings, but also an attractive alternative to downtown offices.

The project ended up with a Department of Natural Resources grant to turn a huge stormwater pond into a smaller and more efficient one. This in turn freed up enough land to build the parking structure, Stibal said.

It was also designated a local historic landmark, allowing the developer to use historic building codes versus modern ones and saving the project about $250,000.

Stibal said West Allis has been asked about Summit Place’s success by a number of other cities in the region. One lesson, he said, is to seize opportunity. But if opportunity isn’t there, help create it.

“The secret to success is to be ready when opportunity comes,” Stibal said. “And if opportunity doesn’t knock, build a door.”