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For years Milwaukee officials have sought to improve the downtown’s lakefront access, enhance transit options and further link downtown with nearby neighborhoods, especially the Historic Third Ward. They have also tried desperately to build up Milwaukee’s national reputation as a place where people should reside, companies should locate their workforce and investors should put their dollars.
Since 2012, many have looked to The Couture development to help achieve all of those goals. After nine years of hope, doubt, hand-wringing and arguments but no construction, the much-anticipated project is finally underway.
“It will be a beautiful skyscraper that will truly be the long, long-time missing puzzle piece,” said Beth Weirick, chief executive officer of Milwaukee Downtown Business Improvement District No. 21. “It will be indicative, I think, of Milwaukee’s next chapter.”
Once construction finishes in fall 2023, The Couture will be the tallest residential building in Wisconsin.
The project has overcome several major challenges, from a lawsuit over the developability of the land to a heavy lift in raising enough investment.
And it may draw some new attention to Milwaukee.
“I think it is going to spur more development – and not just in the downtown area – as outside investors and investors that may have overlooked or just passed by Milwaukee may now take a second look, and say, ‘Wow, Milwaukee’s got a lot going on,’” said Matt Rinka, partner at Milwaukee-based project architect Rinka. “I think the secret of Milwaukee will hopefully be discovered by the rest of the world.”
Creating a landmark
The Couture is certainly not a typical apartment tower development. Milwaukee County released an RFP about a decade ago seeking a project that would redevelop the Downtown Transit Center site, at 909 E. Michigan St., and include a transit component.
Rick Barrett, founder and CEO of Barrett Lo Visionary Development, and Rinka pitched their idea of The Couture.
With Barrett’s project, Milwaukee would get much more than a transit center. It also promised a 44-story tower containing 322 residential units and 42,000 square feet of commercial space. It would also include a public park and a series of pedestrian bridges that would connect the site to the lakefront and its surroundings.
“It’s like the Leatherman (multi-tool) of a building,” Barrett said.
A tower this significant needed the architectural character to match. Rinka said his firm wanted to create something unique to the market, something that stood on its own as a landmark building.
“To be perfectly honest … it’s something that was designed through a lot of iterations,” he said. “Whether I was awake or asleep, I was always thinking about it.”
Rinka woke up one night with an idea. He sketched his idea on the back of a piece of hotel stationery, which turned out to be the impetus for The Couture design.
“The excitement the next morning between he and I was incredible,” Barrett said. “He’s a supremely talented architect, and we needed that vision and we needed that piece.”
Chad Griswold, partner at Rinka, said crews were to soon begin driving piles into the ground. To support the tall and slender building, the project team will be using the highest-capacity piles the city has seen.
“From a technical standpoint, it is a very advanced building,” particularly due to its height-to-width ratio, he said.
Rinka likened The Couture’s design to sticking a pencil in the sand.
A key feature of The Couture will be its transportation and pedestrian connections.
The transit concourse will serve The Hop streetcar lakefront line and will be the turnaround point for Milwaukee County’s bus rapid transit line.
There will be 364 underground parking spaces for residents. A 550-stall parking garage above ground will be used for overflow resident parking and the retail space. It could also be used for people who are visiting nearby attractions such as Henry Maier Festival Park, Discovery World and the Milwaukee Art Museum.
It will also contain a series of pedestrian bridges connecting The Couture with the lakefront to the east, O’Donnell Park to the north and the Wisconsin Department of Transportation-owned site to the south. The so-called MKE Gateway site, at 815 E. Clybourn St., is for sale. It is being marketed as a prime spot for a corporate office tower.
“Typically, a real estate developer doesn’t allow for transit to spin right through the heart of the project,” Barrett said. “But that’s such an integral part of what we’re trying to accomplish here. We want to be a multi-modal hub so that the building itself is like a lung. It breathes people in and breathes people out.”
The transit-oriented nature of The Couture is new for Milwaukee, said Donna Brown-Martin, Milwaukee County’s director of transportation. It also promises to be a vast improvement over its previous use as a bus barn known as the Downtown Transit Center.
“The design of the original structure that was there before, we would have buses come in and stop,” she said. “But except for a few meetings that might get set up there from time to time, it wasn’t engaging with the community.”
The incorporation of the BRT line into The Couture itself should change how people think of transit, especially in a city the size of Milwaukee, said Aaron Hertzberg, Milwaukee County’s administrative services director.
“You can think about getting off the L (line) in Chicago and coming into a larger building, or New York’s subways that run under buildings and access to buildings directly,” he said. “But for a city the scale of Milwaukee, I think things like this are rare if they do exist.”
Welcome to the Lakefront Gateway
The Couture’s construction has turned attention again to two key sites around it. One is the planned Lakefront Gateway Plaza site to the east. The other is the MKE Gateway parcel to the south, at 815 E. Clybourn St. Officials have revealed grandiose plans for the sites, but not much has happened over the past few years. That’s because they were heavily reliant on The Couture being built.
“I think we’ve always felt the key to unlocking the potential of 815 Clybourn, or the MKE Gateway site, is The Couture,” said Lyle Landowski, managing director and soon-to-be president and CEO of Colliers International | Wisconsin.
Colliers is marketing the site to potential users and developers on behalf of the property owner, the state of Wisconsin.
“The real key to that (MKE Gateway) site is it does bridge the Third Ward, downtown east, the Lakefront Gateway Plaza all together in one site. But without The Couture, it just doesn’t work the same,” Landowski said.
The MKE Gateway site was freed up for development after the Wisconsin Department of Transportation moved a pair of I-794 ramps in the Lake Interchange and, working with local leaders, reconfigured city streets. It created a generational opportunity to develop a new downtown lakefront site. Conceptual renderings by Rinka depict a 50-story corporate office building at the site. Landowski said he’d spoken with “a handful of national developers” about the site. Two had been courting corporate users, though neither had secured those users to follow through with their interest, he said.
This interest was all mostly before the COVID-19 pandemic. But with rising vaccination rates and a recovering economy, Colliers is dusting off its marketing materials for the MKE Gateway site.
City officials announced in 2015 it had selected a design team led by Milwaukee-based GRAEF-USA Inc. for the Lakefront Gateway Plaza. Since then, the team gave presentations of their plans and gathered feedback from residents, said Pat Kressin, GRAEF principal and vice president of business development. The presentations finished up in 2018. Some of the ideas it took from that period include ensuring the plaza has a regional impact, making connections with local schools and libraries and reinforcing Milwaukee as the “Fresh Coast” capital.
Kressin said the plaza has the potential “to be more than just a place.” It could provide the community with more than just another spot to gather and socialize.
Even if the ideas for the plaza are plentiful, the funding isn’t. The Lakefront Gateway Plaza project still needs to raise tens of millions of dollars.
Much like the marketing of MKE Gateway, fundraising efforts for the plaza really depended on The Couture moving forward.
“We were getting all of that stuff started, we were working with the city and the Greater Milwaukee Committee on trying to figure out a fundraising strategy,” Kressin said. “Then everyone kind of realized, without The Couture, what are we going to fundraise for?”
People needed to know The Couture was real. They needed to see shovels in the ground.
“And now, we’re there,” Kressin said. “And now that’s going to be our next step here, let’s get our fundraising campaign plan in place and start executing it.”
Kressin said he expects a major public announcement on the fundraising strategy for the Lakefront Gateway Plaza by the end of the year, and possibly by the end of the summer. Once the fundraising plan is in place, the GRAEF-led team can start detailed designs and work out agreements with Barrett Lo for the public pedestrian connections.
The original fundraising campaign sought to raise $26 million. The team has to update the estimated cost, but it will likely be larger.
A complex financing puzzle
The fundraising required for the Lakefront Gateway Plaza is nothing like what Barrett Lo had to accomplish with The Couture – with a price tag of nearly $190 million.
For months on end, it seemed as if Barrett was not making any progress in his quest to raise enough money for the project, including numerous delays in his application for a federal loan guarantee. Some local leaders began to get anxious. They called for the city to reroute the streetcar and for the county to take back control of the site.
All the while, Barrett was pitching Milwaukee as a place where investors should do business.
In July 2019, Barrett announced he was working with Milwaukee-based investment bank R.W. Baird to help secure the remaining needed financing.
Baird managing director Jim O’Brien connected with Barrett through a colleague on the private wealth side. Baird’s real estate team viewed The Couture favorably because of its location, capital structure and its transit-oriented nature.
“There were a lot of components that could make it an attractive opportunity for an investor,” O’Brien said. “So that’s when we decided to move forward.”
The Couture has investors from across the country.
Its chief funding source is a $104.7 million loan from JLL Real Estate Capital LLC, backed by the U.S. Department of Housing and Urban Development. Once it received its HUD guarantee, the loan was immediately acquired by the AFL-CIO’s Housing Investment Trust.
The development also has $70 million in equity.
New York-based MidHudson LLC is investing $24.5 million in preferred equity, including $11.7 million from its HUD reserve funding program and $12.8 million of additional preferred equity. It also has a joint venture equity investment of $17 million from Boca Raton, Florida-based WhiteStar Advisors LLC.
The remaining equity comes from Barrett Lo and other investors, who are located across the U.S., Barrett said.
There’s also a syndicated loan of $13.8 million, specifically for additional parking and transportation costs that HUD did not want included in the mortgage it backed. Old National Bank is the primary bank for that loan, while Incredible Bank and Commerce State Bank have invested in smaller pieces of it, Barrett said.
The Couture is additionally receiving $19 million from the city for infrastructure work.
Chang Suh, CEO and chief investment officer of the AFL-CIO’s Housing Investment Trust (HIT), said his group was interested in The Couture from “day one.” HIT ended up playing an important role in getting the project financing to the finish line. Suh said he wrote “a couple dozen” letters of interest to local leaders, HUD and investors. This was to help build confidence in the project.
“People want to know, if I take the time to get involved in this deal, if I give you my money, can you really show up with that investor in the loan? And with him going to all these potential partners and saying, ‘I already have the buyer of a $100 million loan,’ that means a lot,” he said. “You go shopping for a house they’re going to say, ‘Are you preapproved?’ Basically, Rick got preapproved from HIT.”
The HUD guarantee, in turn, enabled HIT’s involvement. Without that guarantee, Suh said HIT would not have been able to buy the loan. JLL processed and underwrote the loan, but does not have the capital. HIT, which has about $7 billion in assets, does.
Baird and Barrett Lo were selling the city of Milwaukee to national investors about as much as they were selling the project itself.
“I love Milwaukee, but Milwaukee’s not the top of everybody’s list of cities people are looking to invest in,” O’Brien said. “There was a bit of a learning curve associated with Milwaukee that we really had to address in our materials.”
In large metro markets like New York City, there are versions of The Couture all over. This is not so in Milwaukee, meaning the city has a limited track record of success for investors of this product type.
This is why another downtown luxury apartment tower, Northwestern Mutual’s 7Seventy7, played a vital role in making The Couture happen. O’Brien said Baird could point to the success of that project when pitching The Couture to investors.
“One of the (cases) we had to make from an investors standpoint is we could get them comfortable with the concept once this was built and stabilized, the location and all the different attributes … are going to make it a long-term investment to where someone will come in and buy the asset, and create the liquidity that you as the first investor would need,” he said.
Before The Couture started construction, Barrett dove into the city’s archives. He found that in April 1972, permits were pulled for Milwaukee’s last 40-plus-story tower, now known as the U.S. Bank Center. The Couture team pulled permits this April, 50 years later.
This is why he calls The Couture a once-in-a-generation project.
It also comes at a time when Milwaukee is clawing out of the depths of the COVID-19 pandemic and the ensuing economic freefall of 2020.
Landowski said he feels the city is regaining the momentum it lost from the pandemic. The Couture’s construction is a big part of that.
“I think we’re just starting to attract the attention, hopefully, of more national site selectors, corporate users and national developers,” he said.
There’s evidence of that happening already. Houston-based Hines is proposing a $140 million apartment tower in the Third Ward. And Brookfield-based Milwaukee Tool targeted downtown Milwaukee as its next location for expansion.
Weirick said companies the BID and others try to lure to Milwaukee are looking for quality-of-life aspects The Couture offers, such as quality housing and public transit.
“On so many levels, it checks the boxes,” Weirick said. “But it’s also, I don’t know how many cities across the country are able to boast of a Milwaukee Tool (expansion), much less boast of a groundbreaking for a tall high-rise skyscraper along their beautiful freshwater coast.”
Barrett admitted there were “probably a lot of points” in the nine years leading up to construction that he could have given up and said The Couture won’t happen. But it was when he got a second invitation letter to HUD, after his first application expired, that the project felt inevitable.
“From my perspective, I never had a doubt,” he said. “It’s kind of like an athlete: I believe the team that I have and the teammates we have, I knew for sure we could win a championship. … It’s a once-in-a-generation (project). We haven’t built one 40 stories and above in 50 years (in Milwaukee). I said, ‘I want to win this championship for this city.’ And that’s how I viewed it.”