Last updated on July 2nd, 2019 at 09:20 pm
The Water Council is pulling back on plans to expand to a second building after not finding enough tenants in need of larger amounts of space.
A development group including The Water Council and HKS Holdings LLC, a Milwaukee-based real estate development firm, had planned to renovate a 46,000-square-foot warehouse at 326-332 Florida St. to create Global Water Center II.
Dean Amhaus, president and chief executive officer of The Water Council, said leases had been secured for almost 50 percent of the building, but the organization was having trouble finding tenants to occupy larger portions of the building.
“We were finding that we were getting more interest from the small-, medium-sized companies,” he said, indicating that many were looking for 1,000 or 1,500 square feet and more tenants in search of 5,000- or 6,000-square-foot spaces were needed.
Amhaus said The Water Council faced a decision of whether to drag out the search for tenants or attempt to accomplish some of the features planned for the new facility in the original Global Water Center building at 247 W. Freshwater Way.
The Water Council board voted Friday to go with the latter. Amhaus said that might mean the planned Oasis co-working space could include eight desks instead of the 40 originally planned.
The decision also leaves the Florida Street building with an uncertain future. The Water Council partnered with HKS to purchase the building in 2015 and Amhaus said The Water Council has a 25 percent stake in the building.
“We are not going to go further with it,” he said, suggesting it would be up to HKS to either buy out The Water Council or seek other buyers for the property.
Representatives from HKS did not immediately respond to requests for comment.
The project also had the support of a $750,000 grant from the Wisconsin Economic Development Corp. Amhaus said The Water Council hadn’t formally accepted the money and would be able to withdraw the proposal from the agency.
“We are aware of the council’s decision to not move forward with development of Global Water Center II and instead focus on other ways to advance the state’s water technology sector, including continuing to attract world-class companies to Reed Street Yards,” WEDC spokesman Mark Maley said in a statement. “In March 2016, WEDC supported the development of Global Water Center II with a $750,000 Targeted Industry Promotion grant that would have helped subsidize office space leases for eligible water technology companies. None of that funding has been dispersed and we expect to receive formal notification soon from the council seeking to terminate the award.”
The decision to not pursue a second building is certainly a setback for an organization that has grown steadily in recent years. Amhaus said The Water Council is still planning to move forward with efforts to foster commercialization of federal research and if anything, the decision will allow more resources to be focused on those plans and the original Global Water Center.
Part of the challenge in finding tenants for the new building was that many of the graduates of The Water Council’s Brew startup accelerator have outgrown the space they used in the original building but aren’t yet large enough to command the larger spaces needing occupants in the Florida Street building, Amhaus said.
Amhaus said there are some area companies he would have liked to attract to the new building, but when it comes to attracting national or international tenants, those organizations are primarily interested in smaller spaces.