In December, Milwaukee-based Mandel Group Inc. released plans for a three-building, 275,000-square-foot development along the Milwaukee River in Walker’s Point.
The renderings were slick. They showed a lot of glass, riverfront views and 40-foot ceiling heights.[caption id="attachment_156416" align="alignnone" width="770"] A rendering of Mandel Group’s “Overlook” building at its planned office development in Walker’s Point.[/caption]
What came as a bit of a shock was that Mandel, one of the city’s most prolific apartment builders, was not planning an apartment development at the site, which happens to be across the river from the firm’s DoMus apartment project that is currently under construction.
The renderings were for office space.
Mandel’s original plan for the site was 175 apartments, said Robert Monnat, a partner at Mandel Group Inc., but the firm thought the project would not attract the target demographic it has been going after the past few years.
Luxury apartments in the Historic Third Ward and Walker’s Point typically attract millennials. While apartments are still in high demand, that sliver of the market has been overbuilt, Monnat said.
Mandel Group decided about three years ago to shift its focus to baby boomers and empty nesters. With the exception of the fifth phase of the North End development on North Water Street, Mandel Group has pulled back on its developments targeted to millennials.
So instead, the firm decided to revisit the Walker’s Point site and create a plan for waterfront office space.
“We were finding anecdotally and through our own search for office space, there are no office buildings that will support a larger, single floor plate for companies in the 25,000- to 50,000-square-foot range,” Monnat said.[caption id="attachment_156418" align="alignnone" width="770"] A rendering of Mandel Group’s “Vista” building at the office development.[/caption]
Mandel Group is planning to move from its current office at 301 E. Erie St., to make room for HGA Architects at 333 E. Erie St. to expand.
Mandel looked at about 15 spaces downtown before deciding it could build its own office space and also attract suburban office users who want to come downtown, but have not found the right space.
The proposal repurposes a warehouse building on a 7-acre site near East Florida and South Water streets, including the former Wisconsin Cold Storage Co. property. It also requires the demolition of the 12-story dormant grain elevator at the southern end of the development site.
In the end, there would be two new buildings. “Vista” would be a 100,000-square-foot office building that includes a 65,000-square-foot main floor and a 35,000-square-foot mezzanine.
A second structure where the grain elevator now stands, named “Overlook,” would be a seven-story mixed-use building with parking, first-floor commercial space and four floors of office, each containing 15,000 square feet. And a third mixed-use building is planned on the adjoining former Wisconsin Cold Storage Co. property, combining repurposed portions of the existing historic buildings with new construction.
Monnat said without marketing the project, he has gotten a lot of calls from interested tenants, including one person who believes he can consolidate his space from 50,000 square feet to 35,000 square feet because of the floor plates.
“I don’t know where all of this will go – talk is talk – but I think we have definitely hit a nerve,” Monnat said. “We’re not getting into the office business; we were interested in this. If an opportunity comes up in office or retail space, we have the latitude and the bench strength here.”
Another area Mandel Group continues to be asked about is the condominium market.
While the company has increased its focus on baby boomers, many of those people are looking to lease or purchase a three-bedroom unit in downtown Milwaukee. Three-bedroom rentals currently are in short supply.
The problem is, they only want to spend $300 per square foot to purchase a condo, and it would cost $400 to $475 per square foot to build and develop a condo, Monnat said.
“And that is only if a developer could secure a loan and control all of the complexities of a condominium development,” he said. “It is the complexity of building a single family home, but building an entire neighborhood of single family homes at once and satisfying every neighbor as to their custom requirements.”
For now, condo development is best left to the large single-family builders, Monnat said.
David Belman, president of Belman Homes, currently is working on Woodland Hills, a side-by-side ranch-style condo project in Waukesha. The project has drawn a lot of interest from baby boomers looking to stay in their communities but leave behind the hassles of homeownership.
Still, Belman, who is president of the Metropolitan Builders Association, has heard from other home builders who never want to get back into condo development because of the complexity of the work.
“It is more challenging, but the good thing is you are not competing as much as you are with single family,” he said.