Two hotels totaling 300 rooms planned in downtown Milwaukee

Johnson Controls sold vacant buildings to Minneapolis-based developer

433 E. Michigan

Last updated on May 15th, 2019 at 04:50 pm

Two hotels totaling 300 rooms are planned at the site of two long-vacant buildings formerly owned by Johnson Controls International plc in downtown Milwaukee.

433 E. Michigan

Bloomington-based JR Hospitality is planning a dual brand Home2 Suites by Hilton and Tru by Hilton at the southwest corner of East Michigan and North Jefferson Streets and a Holiday Inn Express at the northwest corner of East Clybourn and North Jefferson Streets, said Roshan Bhakta, managing partner with JR Hospitality.

JR Hospitality purchased the buildings at 433 E. Michigan St. and 517 N. Jefferson St. on Tuesday from Johnson Controls for an undisclosed price, said Fraser Engerman, a Johnson Controls spokesperson.

The five-story, 80,525-square-foot class C office building at 433 E. Michigan St. was built in 1909 and has an assessed value of $1.27 million, according to city records.

The 0.4-acre property at 517 N. Jefferson St., which is used for parking, has an assessed value of $1.15 million, according to city records. There is a two-story, 10,760-square-foot building at 501 N. Jefferson St., built in 1970, that has an assessed value of $523,000, according to city records.

No information on the sale prices of the buildings was available on Thursday. Official record of the sales has not yet been filed with the state.

Bhakta said the buildings will be demolished and the hotels will be built from the ground up.

Construction will likely begin in fall or winter with an opening date of late 2019 or early 2020, Bhakta said.

Johnson Controls purchased the former Universal Foods Corp. (now Sensient Technologies Corp.) headquarters in 2008 with plans to expand its downtown facility. That never happened.

Engerman said the properties had been obsolete and on the market for some time.

“Now was the right time to sell,” Engerman said. “We felt this was a good way to help revitalize downtown Milwaukee.”

JR Hospitality and Coralville, Iowa-based Hawkeye Hotels are currently building a Holiday Inn Express & Suites and a Fairfield Inn & Suites by Marriott at The Corridor development along I-94 in Brookfield, which will add 132 and 137 rooms, respectively.

Since December, both the 94-room Homewood Suites by Hilton at 500 N. Water St. and the 150-room, six-story Hyatt Place Milwaukee Downtown hotel at The Brewery complex have opened. Also, construction recently began on the four-story, 132-room Cambria Hotel at 503 N. Plankinton Ave.

The additional inventory has not yet effected the occupancy rate of downtown Milwaukee’s hotels. During the first half of 2018, the occupancy rate was 65 percent, up from 62.6 percent compared to the first six months of 2017, according to market data from Hendersonville, Tenn.-based STR Inc.

The occupancy rate during the first six months of the year was also higher than it was in 2015, despite there being four more hotels that have opened in downtown Milwaukee since then.

Demand for downtown Milwaukee hotel rooms is also up 6.8 percent for the first half of the year, compared to the first six months of 2017, according to STR data.

Greg Hanis, a hotel industry analyst and president of New Berlin-based Hospitality Marketers International Inc., said if you were to add the 300 hotel rooms planned on the former Johnson Controls properties, plus the Cambria to the market today, it would take two years and seven months to absorb all of the new rooms.

Developers typically want to see an absorption rate under two years, and never longer than three, Hanis said.

“With all of these new hotels, Milwaukee’s growth rate would be substantially faster than the demand, reaching maximum levels,” Hanis said. “I don’t want to dampen anyone’s excitement, but this might be the tipping point.”



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