Josh Krsnak, a co-developer of The Avenue redevelopment in downtown Milwaukee, said he was recently informed of another large mall up for auction. This one is in Topeka, Kansas, and it totals nearly 1 million square feet.
Krsnak, president and chief executive officer of Minneapolis-based Hempel Cos., has experience with this sort of project. The Avenue is a remake of the former Shops of Grand Avenue mall, which has been turned into a mix of uses, including offices, apartments and a soon-to-open food and entertainment hall.
So, what was his reaction to this latest opportunity in Kansas?
“I’m never doing this again. It’s too hard,” he said.
But Krsnak and other developers active in the Milwaukee area have their sights set on other, new opportunities. Those opportunities include real estate investments with high return, building up sites that have excess land and developing in communities and neighborhoods with potential.
Developers think they’ll find success in suburban office markets.
Hempel Cos. is buying existing suburban office properties because the market is “mispriced right now” due to the excess land that comes with it in the form of expansive surface parking lots, Krsnak said.
“What we’re doing in all of our suburban office (properties) is we’re building apartment buildings, hotels, (and in) one project we’re building an industrial building on the excess land,” Krsnak said at BizTimes Milwaukee’s recent Commercial Real Estate and Development Conference. “We think the parking ratio has gone from four to five cars per 1,000 square feet, down to like two to two-and-a-half cars per 1,000 square feet.”
Milwaukee-based Irgens Partners LLC has a full pipeline of suburban projects of its own.
In Wauwatosa, it plans to develop two office buildings at the UWM Innovation Campus. It also plans to put up more buildings at the site of the old UnitedHealthcare office site in the Milwaukee County Research Park.
In Brookfield, Irgens Partners is constructing two new office buildings at Golf Parkway Corporate Center. Mark Irgens, CEO and manager of Irgens Partners, recently revealed plans to demolish the former Boston Store building at the Brookfield Square mall and develop in its place potentially 400,000 square feet of new commercial space.
Frank Cumberbatch, vice president for engagement at Milwaukee-based Bader Philanthropies Inc., said he is bullish on neighborhoods just outside of downtown, such as Walker’s Point and the Harbor District.
The Harbor District, for one, has major new corporate development projects, such as Michels Corp.’s R1VER mixed-use development and the new Komatsu Mining Corp. headquarters and manufacturing campus.
Walker’s Point is home to established businesses, including Rockwell Automation, and will soon add Rite-Hite Holding Corp. to the list. The neighborhood is also seeing a number of new apartment buildings going up. And, there’s still a lot of room to grow in Walker’s Point, Cumberbatch said.
“I’m really bullish on it because I think it’s one of those spaces that could really (address) our segregation issues,” he said. “It’s such a strong Latino community, but it’s just right there to blend everybody into one. And it could be a beautiful space.”
Krsnak compared what he’s seeing in the Harbor District to what he witnessed with the North Loop neighborhood in Minneapolis. He said development there started moving from a Third Ward-type area northeast along the river.
According to the North Loop Neighborhood Association website, the neighborhood has turned from a largely abandoned section of Minneapolis into one of the city’s most vibrant and walkable neighborhoods.
“We’re seeing the same things kind of start to lay out here,” he said. “So, I think that’s a really interesting area.”
Developers also see potential surrounding sports and entertainment. Cumberbatch is developing an athletic facility, called The Opportunity Center, which is designed to serve people of all ability and income levels. The 300,000-square-foot project is planned for 4206 N. Green Bay Ave., near the Milwaukee-Glendale border.
Cumberbatch said sports tourism is now a $4 billion dollar industry. He pointed out that Wisconsin Dells, known for its waterparks, has become a destination for youth sports like baseball, volleyball and basketball. He said more of those tourism dollars could be brought into cities like Milwaukee if more venues were created here to host youth sports.