Seeds of growth are taking root west of the river

But Wisconsin Ave. faces big challenges
By TOM DAYKIN
tdaykin@journalsentinel.com
Posted: March 14, 2004
Downtown developer William Orenstein admits he wasn't sure how a new Borders Books store would perform when it opened on W. Wisconsin Ave.

"I was scared to death," said Orenstein, a partner in the redeveloped former Marshall Field's department store building where Borders signed as an anchor tenant.

Orenstein was a partner in Harry W. Schwartz Bookshops when that local firm in 1997 closed its downtown store at E. Wisconsin Ave. and N. Water St. because of declining sales. Five years later, in 2002, Orenstein was betting that adding Borders as a tenant would help him convert the former Field's store into offices, a hotel and retail businesses.

He bet on the right horse. The 19,000-square-foot Borders store, which opened in November 2002, has rung up sales beyond expectations, said a spokeswoman for the chain. It joins a series of new developments along W. Wisconsin Ave. near The Shops of Grand Avenue.

"We see a real vibrancy west of the river," said Tom Capp, executive vice president of Madison-based Gorman & Co., which is spending $16.8 million to convert a former office building at 231 W. Wisconsin Ave. into 135 apartments.

But W. Wisconsin Ave., like the Grand Avenue itself, still faces challenges. Among the new housing and retail developments are underused office buildings, as well as the former Grand Cinemas building, a hulking, empty edifice.

The future of that area will be affected by the success of the new stores at Grand Avenue, said Michael Mervis, assistant to the chairman of Zilber Ltd., which owns several downtown office buildings.

"If people start getting comfortable with shopping, they feed off each other," Mervis said. The future of W. Wisconsin Ave. could be either "terrific" or a "disaster," said Mervis, who added he's "slightly more optimistic" than he was five years ago.

The avenue "still needs lots of improvement," said Jerry Franke, president of Wispark LLC, the development subsidiary of Wisconsin Energy Corp., which is busy with redevelopment at the other end of the avenue.

"It's probably on a path out of its lowest point," Franke said.

The biggest development on that stretch of Wisconsin Ave. over the past few years was the $59 million conversion of the former Field's store - the former east anchor of the mall - into ASQ Center, 101 W. Wisconsin Ave. Besides Borders, it includes the headquarters of the American Society for Quality, several other offices and a 131-room Marriott Residence Inn hotel.

Orenstein and his partners, including developer Mark Irgens, received a $6.4 million low-interest city loan, a $3 million city grant and $8 million in federal historic preservation tax credits to help finance the building's two-year conversion. The 390,000-square-foot project has been a success, Orenstein said, even though it still has 44,000 square feet of unleased space.

"It's just a matter of waiting out what has been a slow period," said Orenstein, who said the growing number of downtown residents has helped make Borders a success.

At the avenue's other end, Wispark did a $36 million redevelopment of the Boston Store building, 331 W. Wisconsin Ave. Aided by $10 million in city and state funds and $9 million in federal historic preservation tax credits, the project created a smaller but brighter Boston Store, improved offices for Carson Pirie Scott & Co., which owns the Boston Store chain and other department stores, and 74 luxury apartments on the upper floors.

Wispark partner Mandel Group Inc. began marketing the apartments, known as Boston Store Lofts, last summer. Just three units remain unleased, Franke said.

Two other buildings adjacent to the Grand Avenue also have been redeveloped.

The upper levels of the former Woolworth store building, 321 W. Wisconsin Ave., now house offices for Wispark; We Power, another Wisconsin Energy subsidiary; and the Greater Milwaukee Committee. Wispark spent $3.8 million buying and converting the space.

Also, the Majestic Building, 231 W. Wisconsin Ave., is being converted into apartments by Gorman & Co. Around 80% of the one- and two-bedroom units will rent for $730 to $875 and will be available only to people whose household income doesn't exceed 60% of Milwaukee County's median income. In return, Gorman received federal affordable housing tax credits totaling $6.5 million.

The apartments will be available starting in September and are being marketed to downtown employees, Capp said.

Other new developments include the $1.5 million Mo's Irish Pub, 142 W. Wisconsin Ave., which opened in August. The 4,900-square-foot pub, which replaced a St. Francis Bank branch that moved to the Grand Avenue, has added to the sparse night life scene along the avenue west of the river.

Meanwhile, a $32 million, 255-room Sheraton Hotel is planned for just west of the Boston Store, on W. Wisconsin Ave. between N. 4th and N. 5th streets. The city would sell the land, now a parking lot, for $1, to help subsidize the hotel, which would be developed by an investors group led by Brookfield-based Hunzinger Construction Co.

Construction is to begin in fall, with the Sheraton to open by winter 2005. The new hotel is expected to help draw more conventions to the Midwest Airlines Center, which is just across the street.

Finally, the city recently spent $5 million on street, sidewalk, landscaping and lighting improvements along W. Wisconsin Ave.

Amid those developments, however, four underused office buildings remain: the Posner Building, 152 W. Wisconsin Ave.; a former back office for U.S. Bank, 201 W. Wisconsin Ave.; the Centre Building, 212 W. Wisconsin Ave.; and Reuss Federal Plaza, 310 W. Wisconsin Ave.

The 108,000-square-foot Posner Building is about half-empty. Owner Gene Posner said he's negotiating with prospective buyers for the building, which could be a residential redevelopment opportunity.

Towne Realty, the owner of the 105,000-square-foot former U.S. Bank office, is hoping to lease some of that space to the Internal Revenue Service. The IRS said last year it plans to leave Reuss Federal Plaza and lease 75,000 square feet at another downtown location.

The Centre Building is adjacent to the vacant former Grand Cinemas building, 214 W. Wisconsin Ave., and the two buildings together encompass 105,000 square feet. Plans to develop housing in the Centre Building and to create a new performance center for the Milwaukee Symphony Orchestra at the former movie theater never got off the drawing board and completely faded when the economy tanked in 2001.

Owner Marcus Corp. is now marketing both buildings, said Greg Marcus, senior vice president of corporate development. The office building is still a strong residential conversion prospect, Marcus said.

Obsolete theaters, however, are notoriously difficult to convert into new uses. The $50 million cost estimate of creating a symphony performance hall at the former Grand Cinemas was a major roadblock on that project.

Meanwhile, the future of the 540,000-square-foot Reuss Federal Plaza is a growing concern, said Franke and others.

The building, known for its twin 14-story towers, houses several federal agencies but has struggled to find private-sector tenants for the remaining space.

With the Forest Service gone from the Reuss building since last year and the IRS looking to bolt, the building's federal agency tenants are shrinking. The building has around 100,000 square feet available but could face even more vacancies. Investor Mark Gleischman, whose investors group owns Reuss Federal Plaza, didn't return telephone calls seeking comment.

Concerns also have been raised about some of the retail businesses near the Grand Avenue.

The liquor license for Pure, a nightclub at 162 W. Wisconsin Ave., was suspended in January for 45 days by the Common Council after neighbors and managers of nearby businesses complained of gunshots, noise and other disturbances.

But former Mayor John O. Norquist said it would be a mistake to "unclutter" the avenue. Some of the retailers are "shabby," Norquist said, but he added they're better than a row of vacant storefronts. They also add to the ambience, he said.

"I think Wisconsin Avenue is cool," said Norquist.