But inner city business development is not without its problems. Real estate often is plagued with environmental ills, recruiting and retaining quality employees can be difficult, and the typical perception of the inner city is unfavorable. Nonetheless, some Milwaukee firms have found ways to develop – and sustain – business in the city’s urban markets.
America’s first cities were established based on their ability to conduct trade. But as the United States evolved from city to suburbs, cities became less vital as centers of commerce.
Today, after a century of urban sprawl and the never-ending exodus to suburban areas and beyond, cities across the country are rediscovering urban core areas as viable business markets. Cheaper real estate, accessibility and proximity to neighborhoods with disposable income make some inner city areas attractive to business and development.
Milwaukee is among those U.S. cities starting to see early signs of an urban business renaissance.
North of downtown in a once-thriving commercial area, the Historic King Drive Business Improvement District is Milwaukee’s signature urban reclamation project. Established in 1992, the King Drive BID is an area of roughly 250 businesses and 384 commercial properties which acts as a facilitator by soliciting developers, securing tenants and applying for funds.
Since the formation of the BID, property values in the area have increased more than 42%, says King Drive BID director Randy Roth. Over the last three years, the BID has received approximately $25 million in mostly-private investments.
“There is a national trend of rediscovering urban markets,” says Roth, the virtual one-man show who has been in charge of efforts to bring back the historic street north of downtown. “The suburban markets are saturated. King Drive is part of that national trend.”
The King Drive redevelopment strategy consists of four phases aimed at bringing new businesses to the resuscitated commericial strip immediately north of downtown Milwaukee.
“You must understand markets and what a neighborhood can be,” Roth says. “Not every neighborhood is going to be a Brady Street or a Downer Avenue, but that doesn’t mean business won’t be successful there,” he notes, referring to two East Side Milwaukee retail corridors. “Bring in the types of business your market wants and needs, and those businesses will be successful.”
The average income of an urban neighborhood may be lower, Roth explains, but disposable income can be spent at businesses that service the needs of the neighborhood’s residents.
The first phase of the King Drive redevelopment plan focuses on attracting national retailers to the area, especially around the King Drive-North Avenue intersection, as research shows that corner to have high retail potential, Roth says.
In the last three years, six national retailers – Foot Locker, Simply Fashions, One-Price Clothing, Family Dollar, Trak Auto, Foot Apparel and an undisclosed video store – have entered and remained in the market. The King Drive trade area, which reaches to McKinley Street, Capitol Drive, Holton Street and Interstate 43, posts $140 million per year in consumer expenditures, Roth said.
But national chains are not the only businesses targeted for King Drive. The second phase of the redevelopment strategy capitalizes on King Drive’s proximity to downtown Milwaukee and a regional freeway system, as well as its historic quality and pedestrian-friendliness.
In its former life, the street, then known as Third Street, was a popular shopping area which included a Schusters Department Store – a huge building which now serves as a storage facility.
The focus is now on commercial office development and establishing “destination retail” shops and other retail establishments that, due to their uniqueness, draw customers from outside the area’s immediate market.
Driving business
to the drive
Ann Brown’s Devonshire Victorian Tea Shop falls into the destination retail category. In business on King Drive since April of 1997, the shop features a variety of imported teas, homemade pastries, a lunch menu and various tea pots, books and handmade dolls. The atmosphere is tranquil, the decorating – clearly of Victorian influence – was done by Brown herself, and Brown claims natives of England and Ireland attest to the authenticity of the tea shop.
Atypical of inner city businesses, Devonshire Victorian Tea Shop caters to downtown white collar professionals seeking respite from the hustle and bustle of the 9-to-5 workday. Brown’s customers have asked her to open shops in places such as Mequon, Cedarburg and even Door County, and she draws customers from as far west as Waukesha and Madison.
“I’ve never thought that I might lose clients because of the area where this business is located,” says Brown, an African-American anglophile who visited England every year from 1984 to 1994 to research British culture. “I’ve had a few people ask me if I’m concerned about the area, but I’ve never seen any activity that was questionable.”
Brown chose to locate her business on King Drive because she liked the building in which her tea shop now resides. She considered properties on Prospect Avenue on Milwaukee’s East Side and on Capitol Drive in Shorewood, but the traffic on Prospect Avenue is too fast and neither location provided ample parking.
The storefront at 1835 N. Dr. Martin Luther King Jr. Dr. caught her eye, and has seemed to work out well, Brown says. The shop experienced two thefts since it was opened, and the business has not yet broken even, but Brown says business is progressing nicely. She plans to rent the property next door to the tea shop so that she can house a catering business she has owned since 1990. Brown says she will apply to the King Drive BID for a grant to help fund the expansion.
Just south of the tea shop, King’s Deli is a lunch spot known for its fresh sandwiches, salads, soups and homemade cookies. Since opening in September 1996, King’s Deli has catered to a niche market – that of healthful eating-out alternatives – neglected by national fast food chains, says deli owner Marigold Hughes.
“People today want to eat well but don’t have a lot of time,” says Hughes, whose business is the only deli in the King Drive area. “A deli provides quick service and healthful, fresh food. Rather than opening another fast food restaurant, this provides a healthful alternative to what can easily come to this area.”
The deli features a sandwich bar that allows customers to watch their food being prepared, something Hughes believes is an important aspect of her business because customers can see for themselves that their food actually is being prepared freshly when ordered.
Although it is true that a fast-food chain probably could be quite successful on King Drive – there is a Kentucky Fried Chicken franchise about six blocks north of King’s Deli – Hughes says she is not concerned that any national chain franchise will come into the area and take business away from her deli.
“A fresh sandwich bar is a unique niche service that no national chain provides,” Hughes says. “You can’t really compare the two, even in terms of a chain like Cousins.”
Hughes stumbled upon the building that houses her deli while helping her husband, an electrician, work in the apartments above the storefront. At the time, the store was boarded up, but Hughes says the space just felt right for a deli. She never even considered another spot.
King’s Deli has never had any crime-related problems, nor does Hughes believe her location hurts her customer base. In fact, she currently is negotiating to rent space in a next-door building so that she can expand the deli.
“There are wonderful opportunities down here for creative businesses,” Hughes says.
Madison’s Designer Shoes, a retailer of high-end women’s shoes such as Via Spiga, Kenneth Cole, Donna Karan and Coach, opened for business on King Drive three months ago with the intention of filling a void in the high-end shoe market in Milwaukee, says store owner Travis Belcher, who also is president of First Night Dining, a company that owns Emerald City, a nightclub on Old World Third Street just south of Juneau Avenue.
Belcher says he considered locating the store – which with shoes of the latest, hippest styles and an atmosphere of fashion chic brings a piece of New York City’s Seventh Avenue fashion district to southeastern Wisconsin – in Shorewood, Whitefish Bay and Mequon, but found that those communities already had high-end shoe retailers, while Milwaukee did not. He chose King Drive because of its history.
“I believe King Drive in a few years is going to be Milwaukee’s key garment district like it was in the past,” Belcher says. “This area has a lot of potential and I think its really going to develop as a major retail area in Milwaukee. I would encourage more businesses to locate here because more businesses means more traffic will be brought to the area.”
Belcher, who received a $2,000 state grant from the King Drive BID to help start his business, plans to expand his business to include the selling of purses and accessories.
“King Drive originally was primarily retail, but when the customer base moved on businesses couldn’t compete with suburban malls, the area became distressed,” Roth observes. “We are trying to establish a diverse base of businesses to ensure long-term stability in the area.”
And again, the point is to know an area’s market and bring in businesses that fits that particular market.
“You have to play off your trade area,” Roth says. “We’re not necessarily focusing on bringing in customers from Wauwatosa or the East Side. Some businesses here do, but the main focus is to bring in businesses which will provide services for the surrounding neighborhood.”
Roth notes one benchmark the BID is using to measure development success: The ability to develop real estate without public subsidies. The first non-subsidized development for King Drive – a real estate development with State Farm Insurance as a tenant – broke ground in April at the corner of King Drive and Reservoir Street. Furthermore, Roth views the proposed demolition of the Park East Freeway as the removal of a barrier that currently separates King Drive from the rest of downtown Milwaukee. Attractions such as the Harley-Davidson Experience Center and the Riverwalk, Roth believes, will facilitate the reintroduction of King Drive to downtown.
“The removal (of the freeway) redefines what’s possible for King Drive,” Roth says. “Without that physical barrier, we’ll be a downtown neighborhood.”
Because a business district needs a viable residential neighborhood to support it, the King Drive redevelopment strategy includes the renovation and development of residential properties in the neighborhoods around King Drive.
According to Roth, 23 homes in the area have been renovated, and the City of Milwaukee has been involved in developing residential properties such as King Heights, King Place, Vineyard Terrace, City Homes, New Covenant and Hillside Terrace. The city provided a construction subsidy to City Homes, a residential development at 21st and Walnut whose properties currently are selling for approximately $90,000. The city also invested $44 million worth of federal grants in the Hillside Terrace housing development located between Galena, Vliet, Sixth and Seventh streets.
“Our philosophy is that anything we do should add value to the city,” says Milwaukee Department of City Development commissioner Julie Penman. “Residential developments enhance business development by bringing more people to the area. And if people come to the area, there needs to be commercial services for them. We work to aid the development of the whole mix because that’s what works.”
30th Street Industrial Corridor
Across town from King Drive, the 30th Street Industrial Corridor Corp. (ICC) is a coalition of businesses and business-related organizations dedicated to promoting and retaining manufacturing jobs in central city Milwaukee. The coalition concentrates its energy on businesses and properties situated within the boundaries of 20th, 30th and Highland Streets, and Capitol Drive.
According to Linn Elliott, executive director of ICC, for about the past four years the organization’s efforts have been focused on brownfields redevelopment, a problem all too familiar to inner city neighborhoods across the country, including Milwaukee.
Metal Processing Co., Inc., a 50-year-old, 25-employee operation located in the corridor at 3257 N. 32nd St., faced closure after a brownfields lawsuit nearly drained the company’s finances, which are estimated at about $1.5 million in annual sales, says Bob Becker, general manager of the firm. Back in 1967, Metal Processing bought property including about two acres and a small warehouse on 32nd Street from Standard Oil. From 1935 to 1967, the land had housed bulk petroleum storage tanks. When Metal Processing purchased the property, it converted the warehouse into a heat treating plant but never used the plot of land on the north end of the property.
But vinyl chlorides were found in the land on the north end of the property, and remediation costs were estimated at more than $1 million per acre. But because Metal Processing had never used the land, it sued Standard Oil for the cost of clean-up. Metal Processing lost the suit.
“We were ready to close our doors and shut down the business,” Becker recalls. “We couldn’t believe we lost the suit, and we didn’t have enough money to appeal. The DNR was super to work with – they didn’t want to put us out of business – but we just couldn’t afford the costs of clean-up or more legal bills.”
So Metal Processing took its case to ICC, which in turn received $400,000 from the state and $50,000 from Milwaukee County to be used for cleanup of the Metal Processing facility.
In spite of brownfields problems, Elliott believes businesses located in the corridor are there to stay.
“Businesses are committed to the area,” Elliott says. “Their employees, and in some cases, their clients are in the area, so businesses have much reason to stay here.”
One of those reasons is the inner city’s labor pool. While suburban companies are hard-pressed to find employees – in some cases busing inner city Milwaukee workers to their suburban plants – firms in urban areas have an often untapped labor pool at their fingertips. While a portion of that labor pool consists of unskilled workers, some businesses in the area have implemented training programs to make local workers employable at their firms.
Interstate Forging Industries, located at 27th and Capitol, has had an in-house apprenticeship program since 1967, part of which sends employees to Milwaukee Area Technical College or Waukesha County Technical College one night a week to be schooled in math and reading skills. The company also has an education reimbursement program.
“There is an abundance of people here for the general labor force,” says Interstate Forging’s Norm Duszynski. “Our programs address the need for skilled workers and develop members of the general labor force for employment at our company.”
Hiring from the local population also cultivates relationships between businesses and residents, says Duszynski, and fosters loyalty which in turn becomes a form of crime prevention.
“If neighborhood residents also work at the businesses in the area, they will feel loyal to those businesses and want to watch out for and protect the facilities,” Duszynski says.
Duszynski says the businesses in the corridor work with neighborhood block watch groups and police on anti-crime initiatives. According to a report from Milwaukee Police, last year the area had 170 fewer personal robberies, 205 fewer house, business or garage burglaries and 318 fewer incidents of auto theft.
North Avenue –
a main street through Milwaukee
North Avenue is a main East-West arterial from Milwaukee’s East Side to suburban Wauwatosa and into Waukesha County, cutting through Milwaukee’s central city. Proponents say its central city section is ripe for business activity.
The North Avenue Community Development Corp. was formed in December to encourage business development along North Avenue between I-43 and 46th Street, says Kathryn Cairney, program officer for the Helen Bader Foundation, a Milwaukee non-profit organization which aids economic development in minority, especially African-American communities.
Cairney admits that bringing new businesses into the area will be difficult at first. The neighborhood is generally perceived as crime-ridden and poverty-stricken, but Cairney refers back to the notion of market knowledge. For example, the Popeye’s chicken franchise on North Avenue at 24th Street is one of the biggest sellers of all Popeye’s franchises in the country, Cairney says. And large businesses such as Popeye’s and the controversial Jewel-Osco at 35th Street and North Avenue are anchor businesses off of which smaller businesses can feed, Cairney says. Furthermore, those businesses provide jobs, which in turn provide income that can be spent locally.
“North Avenue is a well-traveled street in an area with a high concentration of people,” Cairney says. “If business owners see an investment in an area, it makes that area a more attractive place to locate a business.”
Several months ago the City of Milwaukee was instrumental in bringing a Boys and Girls Club to Metcalf Park in what has become known as the Metcalf Park Community Center, in the 46th and North area. It will include a new elementary school. From a business perspective, these two developments bring more consumers to the area, DCD’s Penman says, adding that the city has used the presence of the Boys and Girls Club to recruit businesses to the area.
Milwaukee’s central city is fertile ground for growing a business, as King Drive’s success demonstrates. But the inner city still deals with a significant image problem that not only can deter businesses from locating there, but also can cause difficulty in recruiting and retaining employees.
Environmental issues, such as brownfields remediation, may cause relocating or new businesses to look elsewhere rather than setting up shop in the inner city.
Still, those who understand the nature of urban markets stress the potential for business success in the inner city. As public and private entities continue to work together to build up Milwaukee’s inner city neighborhoods, the hope is that businesses will recognize the potential of these markets and take advantage of them.
“It’s an untapped area with a lot of business opportunities,” adds Carla Cross, manager of MMAC’s Business Network Resource Program, owner of Cross Management Services and this year’s Small Business Administration Minority Business Advocate of the Year. “The biggest detriment to business development in the area is lack of knowledge about the area and its purchasing power. Dollars can be made in the central city.”
