Several development projects will bring more than 1 million square feet of new retail space to Brookfield and Wauwatosa during the next couple of years.
The projects will bring several new stores and restaurants to the market, which will delight shoppers and diners in the area. But can the western suburban market absorb such a large influx of new retail real estate that in size is the equivalent to adding another Mayfair Mall?
The projects that are getting built have tenants in place and are not being done on speculation, said Ross Koepsel, a partner with Commercial Property Associates. That shows that the market should be there to sustain the projects, he said.
“Banks are very careful these days,” Koepsel said. “By and large, these projects are not coming out of the ground before they are 60 to 70 percent leased. It’s not going to get built if the market will not support it.”
However, the new spaces could result in reduced occupancy rates at existing shopping centers as some existing tenants could move to the new spaces.
“It’s natural that there’s going to be some re-situating occurring,” Koepsel said.
The new retail developments coming to Wauwatosa and Brookfield include some high-end stores that will raise the bar for fashion retail in the metro Milwaukee area, and some additional discount and general merchandise retailers.
The biggest splash could be made by The Corners development, which will be built at a 19-acre site at I-94, Bluemound Road and Barker Road. A partnership of The Marcus Corp., CarVal Investors LLC, a subsidiary of Minneapolis-based Cargill Inc., and Chicago-based M&J Wilkow will develop The Corners, which will consist of a 140,000-square-foot Von Maur department store, 250,000 square feet of additional retail and restaurant space and 150 luxury apartments, which will be developed by Mandel Group.
The Marcus Corp. recently announced several retail tenants for The Corners, including: Arhaus Furniture, BRIO Tuscan Grille, a Lowlands Group grand cafe, Chico’s, Colectivo Coffee, CRAVE Restaurant, Grimaldi’s Pizza, Hot Mama, Kilwins and White House Black Market. Except for Chico’s, all of the tenants announced for The Corners will be new to Waukesha County and some, including Von Maur, will be new to the state.
Construction for The Corners could begin in the spring of 2014 and could be complete in the fall of 2015.
The other major retail game-changer coming to the area is the planned 138,000-square-foot Nordstrom store that will be built at Mayfair Mall in Wauwatosa. The store will be built on the east side of the mall and is expected to open in the fall of 2015.
Davenport, Iowa-based Von Maur and Seattle-based Nordstrom are high-end department stores that will offer a higher level of products and service than what is currently available in the region said Bruce Westling, principal with NAI MLG Commercial and a leasing agent for The Corners project.
“We really haven’t had (a high-end department store in the Milwaukee area) since the days of Marshall Fields,” he said.
The Corners plans to attract other high-end fashion retailers, such as White House Black Market, to go along with Von Maur. A consultant hired by Marcus Corp. to study the area’s retail market determined that the region lacks high-end retail, compared to other metro areas, and that many area shoppers go to the Chicago area to have an upscale shopping experience, Westling said.
“We know there are hundreds of millions of dollars of sales that leak into northern Illinois,” Westling said. “That’s been the shopping destination (for many Milwaukee area shoppers) for any kind of fashion. (The Corners is) going to keep more consumer dollars in the state. We’re creating a shopping environment that doesn’t exist in this market.”
The upscale retail market in the Milwaukee area has been, “historically underserved,” Koepsel said.
Commitments by Von Maur and Nordstrom to open stores in the Milwaukee area has gotten the attention of other high-end retailers and helped to sell them on the region, Westling said.
“(High-end fashion retailers) all talk to each other,” he said.
The increased interest that retailers are showing in the area is helping shopping centers improve their tenant lineup, which is necessary to compete with others in the area, Westling said.
Last year, Indianapolis-based Simon Property Group Inc. completed a $52 million remodeling of Southridge Mall in Greendale, which included the addition of a new Macy’s department store.
CBL & Associates Properties Inc. plans to add nine stores, with a total of 70,000 square feet of space, at Brookfield Square.
“Everybody has been out there making the most of tenants’ increased interest in this market,” Westling said. “All of these properties are very healthy. All of this reinvestment begets more reinvestment because you have to compete.”
The Corners could provide serious competition for Brookfield Square, but Koepsel predicts they will co-exist and succeed.
“I think long term there’s a place for both (The Corners and Brookfield Square) in the market,” he said. “I think long term Brookfield Square will be fine as long as they adapt, evolve, do the right deals and continue to invest in the property. It’s well located. They’ll be fine. It has a lot going for it.”
Two other yet-to-be announced retail projects could begin in 2014 in Brookfield: Chicago-based HSA Commercial Real Estate’s redevelopment plans for the 92,000-square-foot Plaza 173 shopping center Plaza 173 at 17300 W. Bluemound Road and Wauwatosa-based Irgens planned mixed-use development of the Ruby Farms property, located north of I-94 west of Calhoun Road and south of Bluemound Road, Koepsel said.
Other retail development coming to Wauwatosa will offer general merchandise and off-price shopping opportunities.
HSA is building the first phase of its Mayfair Collection development, which will have 270,000 square feet of retail space at the site northeast of U.S. Highway 45 and Burleigh Street in Wauwatosa. Tenants announced for the project include Nordstrom Rack, the off-price division of Nordstrom; Saks Fifth Avenue OFF 5th, the off-price division of Saks; Dick’s Sporting Goods, Old Navy and Ulta Beauty. The first phase of the Mayfair Collection project is expected to be complete in April.
HSA is investing in the Bluemound Road corridor and Mayfair Collection is near the Mayfair Road corridor. Despite a significant amount of existing retail along both corridors, they could support more said Tim Blum, executive vice president and managing director of HSA’s retail brokerage division.
“I don’t see that there’s an over-supply of retail space, certainly not in the Mayfair Road corridor or in the Bluemound Road corridor,” Blum said.
Grand Rapids-based Meijer Inc. plans to build a 157,000-square-foot store on the south side of Burleigh, across that street from Mayfair Collection.
Despite the prominent Nordstrom and Saks names, since Mayfair Collection will have off-price versions of those stores that development will not compete with The Corners, Westling said.
“That is a very creative project, but what they are doing over there is apples and oranges to what we’re doing at The Corners,” he said.
“I don’t see what The Corners or what CBL is doing (at Brookfield Square) as primarily competitive (with Mayfair Collection),” Blum said. “We’re not targeting the same kinds of tenants that The Corners or CBL is seeking.”
Renderings of The Corners indicate that it will provide a similar shopping experience to the outdoor portion of Bayshore Town Center in Glendale. Baltimore-based DDG is the architect for The Corners and also designed Bayshore Town Center.
However, Westling says the parking plan for The Corners will set it apart from Bayshore Town Center. Most of the parking spaces at The Corners will be located in a structured parking area underneath the town center. Some stores, including Von Maur, will have access directly from the parking structure. Otherwise, shoppers will be able to park and take stairs, escalators or elevators to the rest of the stores in the main town center area.
The Corners will offer a living, shopping and dining environment that will be particularly attractive to young professionals working in Waukesha County, Westling said.
“It will truly be a place where there’s a 24-hour vibe,” he said. “We think there’s a huge market for that in Brookfield. There’s a lack of (bar and restaurant) options of young professionals. They aren’t going to be drawn to an Olive Garden.”
The addition of popular local businesses Colectivo and Lowlands Group should appeal to young professionals and have impressed national retailers, Westling said.
“We think they are the best in class of our locals,” he said. “When national retailers come in to town and we take them to Colectivo or a Lowlands Group restaurant they say, ‘This is phenomenal.'”
“It looks like (the developers of The Corners) are trying to establish a nice blend of national and local, existing and new-to-market tenants,” Koepsel said. “I think what they’re trying to create is a destination for everyone.”