For the Milwaukee-area commercial real estate industry, 2007 could be the year of the hotel. There are at least 11 hotel developments that are being planned in or near downtown Milwaukee. In the suburbs, at least 11 hotel projects are in various stages of development. Plus, several existing hotels in southeastern Wisconsin have already completed, or are planning, renovations to keep up with the new competition.
The recovery of the nation’s travel industry, more than five years after the Sept. 11, 2001, terrorist attacks, and lower hotel vacancy rates locally are encouraging hotel development in the area.
Downtown, developments such as Manpower Inc.’s new corporate headquarters also are attracting hotel developers.
“Hotels are hot currently,” said Michael Mervis, assistant to Zilber Ltd. chairman Joseph Zilber.
Zilber has begun work to redevelop the former Pabst brewery into a mixed-use neighborhood. “There are a lot of investment groups investing in hotels. There weren’t a lot of hotels built (in the country) for three to four years,” Mervis said.
Zilber’s brewery redevelopment could include a hotel.
“The hotel guys we’ve been talking to are telling us that a location on the freeway has a big advantage because of the signage,” Mervis said.
Nationally, more investors are putting their money behind hotel developments, said Greg Hanis, president of Pewaukee-based Hospitality Marketers International Inc. Investors are attracted to the hotel industry because it has seen dramatic improvement in recent years. However, that improvement is deceiving, because the industry is really only getting back to where it was before 9-11, he said.
The national interest by investors in hotel development is contributing to the interest by developers in building more hotels in the Milwaukee area, Hanis said. Interest in downtown hotel development is also growing because the occupancy rates of the major downtown hotels is almost 70 percent, he said.
However, hotel industry observers say many of the proposed hotels will never get built, especially downtown, where there are so many hotels proposed for the same area.
Hanis predicts that only “two or three” of the proposed downtown hotels will be built. The downtown hotel market simply cannot support a large number of additional hotels, he said.
“A lot of the hotels that have been announced in Milwaukee, I hate to say it, are unrealistic,” Hanis said. “A lot of them are announcements, but there’s not a lot of substance behind them.”
Since downtown will only be able to support a handful of the hotel projects that have been proposed, the hotel developers are in a race to see who can get their projects approved, financed and built first. The other projects will then likely be dropped. Some of the hotel announcements may be done to try to scare off competitors, but that hasn’t happened yet, Hanis said.
“Until they put the shovel in the ground, then that might scare them off,” he said.
DOWNTOWN
Here is a rundown of who is in the race to build hotels downtown:
• Fort Myers, Fla.-based Development Opportunity Corp. is building a 14-story mixed use building with a 135-room Staybridge Suites hotel, 30 condos and 17,000 square feet of retail space just north of Bar Louie at 1114 N. Water St. Construction is expected to be completed next year.
• Chicago-based RSC & Associates plans to build two hotels between Broadway, Ogden Avenue, Lyon Street and Jefferson Street in the Park East corridor.
• Mequon-based Ruvin Development and Dallas-based Gatehouse Capital Corp. plan to build a 180-room upscale, boutique hotel northwest of North Old World Third Street and West Juneau Avenue. The hotel would be operated by San Francisco-based Kimpton Hotels. Construction could begin later this year, and be complete in 2009.
• Weas Development Co. plans to build a 165-room Renaissance ClubSport by Marriott hotel at the southeast corner of Broadway and St. Paul Avenue in the Historic Third Ward. Weas hopes to begin construction early this year.
• Charlotte-based Ghazi Co. has proposed a 32-story building, which would include a hotel, for a city-owned lot at Fourth Street and Wisconsin Ave.
• Badger Pacific Equity Partners plans to redevelop a vacant, 65,106-square-foot, 136-year-old building at 625 N. Milwaukee St. into an upscale, boutique hotel. Craig Stoehr, co-founder and managing partner of Badger Pacific, said his group’s project has an advantage over the other downtown hotel projects because they have an existing building. “We can be open six months to a year before any of these other projects,” he said.
• Asif Rana, the owner of Rana Enterprises Group, plans to submit plans for a mixed-use development that will include a 175-room hotel, for property owned by Milwaukee County in the park east corridor. Rana submitted a similar proposal for another site in the park east corridor, but the County Board selected the Ruvin Development project instead.
• Dixon Development plans to build a 100-room Harley-Davidson themed boutique hotel in a former Coakley Bros. Inc. warehouse at 50 W. Florida St. in the Fifth Ward.
• Developers Steve Stewart and Brian Kliesmet plan to build a 76-room boutique hotel on a pair of parking lots just north of the U.S. Bank branch at 2303 N. Farwell Ave., near the North Avenue entertainment district on Milwaukee’s east side. Currently, there are no hotels on the east side.
Most of the proposed downtown hotel projects are part of mixed-use developments. Lenders prefer those projects because then the hotel does not have to carry the entire burden of the development, Hanis said.
Several other hotel developments are in various stages of development in the outlying Milwaukee neighborhoods and the suburbs.
Hanis said the suburban projects appear to be more realistic than many of the downtown proposals, because the suburban projects are serving specific areas and are not trying to appeal to a limited, upscale market. The suburban hotels typically serve an area with a five- to seven-mile radius, he said.
Beyond Downtown
Here’s a rundown of hotel developments in outlying Milwaukee neighborhoods and the suburbs:
• A 100-room Hilton Garden Inn hotel is under construction in the massive Pabst Farms development in Oconomowoc. The hotel is expected to open later this year.
• Russ Kaloti, president of Kaloti Enterprises Inc., is building a 200-room Crowne Plaza hotel at the southeast corner of North Mayfair and West Watertown Plank roads in the Milwaukee County Research Park in Wauwatosa. The hotel is under construction and is expected to open in 2008.
• Oshkosh-based WHG Companies LLC plans to build a 120-room Comfort Suites hotel at 10831 W. Park Place Drive on Milwaukee’s far northwest side. Construction is expected to begin in March and be completed in early 2008. “We really like the strong corporate base over there,” said Brian Wogernese, owner of WHG Companies.
• Franklin-based Icon Development Corp. is planning a mixed-use development at Burleigh Street, just east of U.S. Highway 45 in Wauwatosa, that would include a 20-story condominium building and a hotel.
• Badger Pacific Equity Partners and a group of local investors, which took over management of the Milwaukee Mile racetrack in West Allis, plan to develop 9.5 acres adjacent to the racetrack along Greenfield Avenue. The development will include a hotel.
• Bricton Group Inc. plans to build a 100-room Staybridge Suites hotel at 9527 S. 27th St., Franklin.
• Oak Creek-based Ener-Con Cos. LLC plans to build a mixed-use development at East College and South Howell avenues in Oak Creek that would include a hotel.
• Brown Deer-based Trunk Bay Investments plans to build a 59-room Microtel Inn and Suites hotel at 9611 S. 13th St., Oak Creek.
• West Bend-based American Design & Build and North Liberty, Iowa-based Kinseth Hospitality Companies plan to build an 82-room Hampton Inn & Suites hotel at the southeast corner of South 18th Avenue and West Paradise Drive in West Bend. The site is near the West Bend Mutual Insurance Co. headquarters.
• Lee Barczak, the president of Greendale-based Morgan Kenwood Advisors LLC, and his wife, Jane Schilz, plan to open a 12-room boutique hotel at 5133 S. Lake Drive in Cudahy in March. Barczak and Schilz are also planning to redevelop the Avalon Theatre in Milwaukee’s Bay View neighborhood. That project could include a 20-room boutique hotel. Barczak and Schilz said their boutique hotel projects will appeal to travelers looking for something different. “Some people don’t want to stay in another Comfort Suites,” Barczak said. “There’s a trend of people looking for an alternative place to stay. They’re looking for something a little more interesting.”
UPGRADES
Several existing hotels are planning upgrades to keep up with the competition from the new hotels. The Holiday Inn at 611 W. Wisconsin Ave. in downtown Milwaukee is being renovated and will change its brand to Doubletree, Hanis said. The Hilton Hotels Corp. Doubletree brand is a step up from Holiday Inn, he said.
Milwaukee-based Marcus Corp. recently transformed the Wyndham Milwaukee Center hotel at 139 E. Kilbourn Ave. into an InterContinental hotel, a high-end brand of United Kingdom-based InterContinental Hotels Group PLC. The InterContinental hotel will provide a boost to the downtown hotel market, he said.
In addition, Marcus is planning renovations to its downtown Hilton and Pfister hotels, Hanis said.
“There has been so much focus on these new hotels coming into the downtown area,” he said. “But our hometown hotel company is investing a lot of money in its existing downtown hotels.”
Leases
Apex Commerical
Great Clips Inc. leased 2,400 square feet of office space at 150 S. Sunny Slope Road, Brookfield, from 150 Sunnyslope LLC.
CB Richard Ellis
Dinner by Design leased 1,800 square feet of office space at 2121 S. Kinnickinnic Ave., Milwaukee, from BBD Bay View Commons LLC.
St. Francis Bank leased 7,600 square feet of space at 3670 S. Moorland Road, New Berlin, from New Berlin Associates.
EFUNDS Corp. leased 5,862 square feet of office space at 2222 S.162nd St., New Berlin, from VM #1 LLP.
The Mortgage Guys leased 3,689 square feet of office space at N14 W23777 Stone Ridge Drive, Waukesha, from Stone Ridge 11 LLC.
Answerport Inc. leased 2,220 square feet of office space at 241 N. Broadway, Milwaukee, from Lokre Preferred Broadway LLC.
Shorehaven Behavioral Health Inc. leased 1,831 square feet of office space at 3900 W. Brown Deer Road, Brown Deer, from Diverse Interests.
Century 21 Savaglio & Cape
Goodwill Industries leased 17,917 square feet of space at 5626 21st St., Racine, from Racine Durand LLC.
Racine Journal Times leased 8,364 square feet of space at 1715 20th St., Racine from Wagner REI LLC.
Warren Industries leased 55,200 square feet of space at 2801 Carlisle Ave., Racine, from KHK Holdings LLC.
Colliers Barry
Majic Enterprises leased 1,904 square feet of office space at 2836 N. Brookfield Road, Brookfield, from Gregory and Steven Smith.
Dickman Company
Right Way Industries Co. Ltd. leased 6,646 square feet of additional industrial space at 400 W. Bell Ct., Oak Creek, from K&Z Partners LLC.
Inland Companies
Nationwide Homebuyers LLC leased 490 square feet of office space at West Allis Center, 1126 S. 70th St., West Allis.
Moorehead Communications d.b.a. Cellular Connection leased 1,500 square feet of retail space at the Shoppes at Janesville Commons, S74 W16865 Janesville Road, Muskego.
Patterson Medical leased 31,040 square feet of warehouse space at Brown Deer Business Park V, 9151-81 N. Deerbrook Trail, Brown Deer.
Rothbauer Destiny LLC leased 2,775 square feet of office space at the Artasia Building, 181 N. Broadway St., Milwaukee.
Holoubek Studios leased 12,008 square feet of office and warehouse space at Stadium Business Center II at 4500 Burnham St., Milwaukee.
Platinum Community Bank leased 6,987 square feet of office space at Mayfair Crossing at 1123 Mayfair Road, Wauwatosa.
Sports Clips leased 1,002 square feet of office space at the West Allis Center, 1126 S. 70th St., West Allis.
Mid-America Real Estate
UPS leased 1,447 square feet of space in Schmit’s Pavilion at Highway 60 and Port Washington Road in Grafton from Rick Schmit Rentals Inc.
Bruegger’s leased 2,838 square feet of space at 757 N. Water St., Milwaukee, from 757 North Water LLC.
Sales
Apex Commercial
Qazek Investments LLC purchased 12,864 square feet of retail space at 840-44 N. Plankinton Ave., Milwaukee, from Kilbourn Town LLC.
CB Richard Ellis
Phil Jones/Pegasus purchased 115,499 square feet of space at 4404 52nd St., Kenosha, from Inland Real Estate Investment Corp.
CWK LLC purchased the 50,179-square-foot industrial building at 11725 W. Fairview Ave., West Allis, from GWH LLC.
Adoptive Micro Systems Holdings Inc. purchased the 26,664-square-foot industrial building at W209 N17145 Industrial Dr., Jackson, from Custom Machine & Technology LLC.
Michael Pranke purchased 32,332 square feet of space at N95 W18169 Appleton Ave., Menomonee Falls, from Ronald Gehrman & Germaine L. Gehrman.
Glen Gorus Land Co. LLC purchased the 5,500-square-foot industrial building at 5834 N. 97th St., Milwaukee, from Midwest Tops Inc.
Colliers Barry
Rock Dam LLC purchased the 12,000-square-foot industrial/warehouse property at 2020 S. Calhoun Road, New Berlin, from Schwan’s Inc.
Dickman Company
Mukwonago Property-ASB LLC purchased 3,900 square feet of commercial space at 707 N. Rochester, Mukwonago, from Cheryl A. Berg.
Olson Capital Investments LLC purchased 18,339 square feet of office space at 9004 W. Lincoln Ave., West Allis, from Cornwell Family Limited Partnership.
Embree Asset Group Inc. purchased 0.67 acres of retail land at 6126-36 N. Port Washington Road, Glendale, from JBK North Bay Holdings LLC.
Inland Companies
Waste Management of Wisconsin purchased the 210,400-square-foot former Smith & Nephew building on Donges Bay Road in Germantown.
Adaptive Micro Systems Holdings Inc. purchased a 26,664-square-foot industrial building on 5.3 acres at W209 N17145 Industrial Dr., Jackson.
Rock Dam Dreams LLC purchased the 12,264-square-foot industrial building at 2020 Calhoun Road, New Berlin.
New construction
VJS Construction Services, Pewaukee, is the general contractor for Kramer Lofts, a 79,000-square-foot, four-story, mixed-use retail and residential building that is under construction in the Fifth Ward in Milwaukee.
Lagina Plumbing has been selected to provide plumbing services for the Crowne Plaza Hotel being built at the Milwaukee County Research Park in Wauwatosa. The $28 million hotel is being built at the southeast corner of Mayfair Road (Highway 100) and Watertown Plank Road, with M.A. Mortenson Co. as the general contractor. The eight-story, 199-room hotel will contain a mix of conventional guest rooms and suites, a restaurant, conference space, a swimming pool and other amenities.
Briohn Building Corp., Brookfield, was contracted to design and build a 25,016-square-foot new multi-tenant building for Hansen Storage Company at 5821 S. Pennsylvania Ave., Cudahy. Briohn has also been contracted to design and build a 29,500-square-foot new building for Jabez Real Estate Ventures LLC at 1320 Walnut Ridge Dr., Hartland. RC Insurance and AQS Inc. will be tenants in the building.
Inland Construction, Milwaukee, was hired by SBC II LLC to provide tenant improvements for a 12,008-square-foot industrial space at Holoubek Studios at Stadium Business Center II, 4512 W. Burnham St., West Milwaukee.
