Palomar Canceled?
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Haven’t found an official announcement yet, but we’ve heard from a credible source close to the project that The Residences at Palomar project has been canceled. We’ll update this article as we learn more. At the moment, calls in to the project are going unanswered.
The project has been quite a story to follow with bait-and-switch designs, a change in lead developers (from Ruvin to Gatehouse), and lately an attempt to get a TIF.
At what point do we begin to discuss breaking apart the super blocks that impede Park East development?
Categories: Real Estate
How about the county sells them to the city and stops messing with the city? Scott Walker and the other people in the county can just deal with the suburbs — where they have always had more interest in anyways.
I am sad, but honestly I expected this to happen. It was too good to be true. That land will continue to be vacant until the economy recovers, and perhaps even longer. It’s time to at least seed the area for grass or put in a temporary park of some sort.
For one I am happy that it was canceled… How many million dollar condos can this city actually support???
The County should be embarrassed on how they handled the Park East land… I agree with Jeramey the super blocks need to be broken apart, it will allow for smaller and more controlled developments that will attract a larger number of developers.
Two Thumbs Down for Scott Walker
Next to fold will be the Catalyst
Oh, and what will happen to the former Gipfel brewery that is sitting on a trailer at the site?
@Dan As someone who generally supports development within the city I’m glad this project isn’t moving forward as well. Mainly because the design radically changed from what was originally sold to the public and the latest design wouldn’t of saved the Sidney Hih building.
That said I don’t understand what is wrong with million dollar condos. While the economy was good they were selling and the city was bringing residents back into its core, which is a good thing. Would I like to see more high density apartments (think yankee hill,JVT with better designs) built, most definitely but I bringing wealth back into the city isn’t a bad thing either.
@TRR I know the Catalyst project has been scaled back (that was in the press awhile ago) but I’m still hoping they can pull that project off, even if scaled back. My hope is they continue to delay until the economy picks up (next year hopefully) and then move forward. Ghazi’s project in Charlotte, despite the loss of the residential portion, seems to of been pretty successful and looks pretty good.
@Dave… Its not that I am against Million Dollar Condos, but that is a tough neighborhood to push them.. I am all for New Land’s Transera Project. If I had the opportunity I would definitely choose a unit in the New Land building over a unit in the Palomar… Did the Transera kill the Palomar???
@Dan ahh I get you now and I agree that neighborhood seems like a stretch for million dollar condos. Maybe one day but you’re right why buy there when you could buy at the Transera . My guess is the Transera didn’t kill the project, the Palomar was a struggle from the start.
What is stalling the Park East (before the recession) is the how Milwaukee County is handling the land. Selling huge parcels, using land sales to prop up their budget instead of creating economic development, and not working with the City of Milwaukee very well.
Hopefully they will learn from this and break the land down into manageable sizes.
I’m sorry to see the project go, but the design left much to be desired. Let’s hope the Moderne has better luck.
What’s the beef against wealthy people living in the city? There’s plenty of money in the area (Upper East Side, North Shore, parts of Waukesha County, Ozaukee County, etc.), and the more of that downtown to boost the city coffers, the better.
@Jeff I’m with you I really would like to see the Moderne built. It is a good looking building that would finish a corner. And yes pulling residents in from all wealth levels is good for the city.
First off let me start off by saying that I have no bias one way or another for the Palomar as a project. Would I like to see it built? Definitely. Will I lose any sleep at night knowing that billionaires from Texas failed to succeed in bringing their high-priced, “coast-worthy” development to a Midwest town by throwing their weight around with the city? Absolutely not! However, it must be noted that this cancellation is a direct result of how close-minded and ignorant county and city officials can be. The bottom line is this…quality projects that change the dynamic of a city for the better take years to plan. When county officials were flaunting the Park East property to developers two years ago CAP rates were low, banks were offering favorable terms at high debt to equity ratios, credit was easily attainable, and the ability to acquire equity was everywhere- not to mention a heck of a lot cheaper than it is now. Nowadays CAP rates are rising, values are decreasing, equity has dried up, and banks are leveraging their deals a lot less than before. What this means is that these developers are now stuck with one gigantic funding gap…AKA- without city, state or federal assistance these projects just won’t happen. Yet the county and city officials alike, still expects these projects to get off the ground as they were planned and awarded two years ago. TIF is a tool that allows developers to build projects in areas that would otherwise have no chance in becoming anything other than an eye sore for the town they’re in. It allows projects that cannot happen in today’s economy to be built, all while providing the city with a substantial economic impact. This impact creates jobs within the city, eliminates blight-which then reduces crime, and attracts businesses and residents to relocate into these areas creating a significant tax base to which the city greatly benefits. The economic impact that a project such as the Palomar has on a city is a win-win. You can plant grass seed in a vacant lot in the Park East corridor all day long, but the only ones who benefit from that are crime-happy hooligans who now have a place to drink forties and pimp prostitutes, and I can confidently assure you that they aren’t paying any taxes. Government officials can continue to stick to their small-minded stance on TIF incentives, but small minds create no jobs, no tax base, no city growth and Milwaukee officials will get the unique pleasure to sit by and watch other cities across the globe attract (or steal) the majority of their tax-paying industry and residents. The cities that enable development and economic growth are the cities that will prosper during these already difficult times. They are the ones who will attract businesses and individuals that want to relocate to a cool city with a prosperous economy. It’s my opinion that now isn’t the time to squash the accessibility of new jobs for Milwaukeeans in a time of such economic decline.
@Joe Would it not strike you as wrong to TIF million dollar condos? Especially ones that would now sit vacant?
The project they originally presented was not what they were trying to sell us at the end. Originally they presented a unique building, that saved two historic structures. Then they presented a project with a huge parking garage facing the street and no more historic preservation. And going in the City made it clear that the Park East area wasn’t likely to receive additional TIF funds.
This project deserved no TIF, or very little (for site work/cleanup).
PS I do find it funny that “Joe the Plumber” would argue for a government handout.
The agents had million dollars in contracts and more in their pipeline – THINK BEYOND THE CONDOS!
Think about the 850 jobs the hotel would have CREATED. Think about the several hundred thousand dollars that the developers (Gatehouse/Ruvin – WHO CARES? It was a joint venture!) set aside every year to DONATE TO MILWAUKEE NON-PROFITS (yes, folks, this was A BUDGET ITEM!). Think about the fact that they planned on using FINE ARTS STUDENTS to play at their hotel lounge every night. Think about the hotel artwork featuring MILWAUKEE ARTISTS ONLY! Think about Milwaukee becoming a Class A tourism location. Think about the Olympic team that booked the Palomar Hotel for 3 months or Northwestern Mutual that booked it for 15 years for their annual meeting. Milwaukee would have been ranked with other Kimpton hotels like their others in Chicago, L.A., D.C., New York, Dallas and yes folks, MILWAUKEE was next.
The Iron Chef Michael Symon was ready to open his new restaurant and film some of his Cooking channel shows here in Milwaukee.
We missed out on bigger opportunity than the condos – it was a bigger project than just “Million Dollar Condos”. It seems like everyone focused on that portion and blamed the economy but failed to fight for everything the condos brought with it…
850 jobs for the hotel? I think that is high, they have been saying 200.
Also, what everyone forgets is that the Palomar…and every other Park East project has already recieved a TIF. The City did a giant TIF to tear down the freeway and put in new roads and infrastructure. Developers are given an almost greenfield site because of that TIF.
Wow, they finally killed the Palomar. Last I read about the project, buyers were tripping over themselves to reserve Condos. WHAT GIVES?
OK, I’m sorry I was mistaken – it wasn’t 850 – it was 820. Yes, 820 jobs confirmed would have been created with the $150 Million project. I’m sure I can provide detail job descriptions as to what those jobs would have entailed – my guess is construction, engineering, all the way through to hotel staff, restaurant staff, management, sales, so on and so on.
The project was LEED certified for the environment and buyers were tripping over themselves to buy a condo of their dreams. It was a lifestyle change – you could get a sitter for your kids in 30 minutes. The developer bought a suite at the Bradley Center for the condo owners… it was amazing. I’ve been in the center many times as well as went to the spa announcement party and the Iron Chef announcement event.
And by the way, Iron Chef Michael Symon spent hundreds of thousands of dollars designing plans for his restaurant so he is now thoroughly pissed at Milwaukee for re-nigging on their end of the bargain.
Thank Mayor Barrett for that one. At the 11th hour, he changed the playing field by forcing the entire hotel and restaurant to be staffed by union employees – this BLEW the budget.
He also re-nigged on his TIF incentive at the 11th hour.
County Exec. Scott Walker never stepped inside to see what this was about. Barrett was just there last week aanswering questions to the audience about how he was going to create jobs (Again, 820 jobs with the Palomar would have been created along with the tourism bump, but hey – ) and two days later, bye-bye TIF.
THis is an awful way to present how Milwaukee treats potential businesses looking to open their doors here and I think this should be the issue… NOT THE CONDOS!!! Those were selling just fine, even despite market conditions…
Just to clarify, only 200 of those jobs were permanent jobs, the others were temporary construction jobs.
There are also plenty of other luxury condos available for anyone who had a reservation at the Palomar. If anything, this will hopefully help the Moderne, Park Lafayette, Transera, etc.
@ Concerned Milwaukeean
From what I read, the city was prepared to provide $2 million in financial assistance to Gatehouse. The city’s conservative TIF policy is prudent, especially considering the economic climate we’re in, which appears to have been much more of a factor than any hesitancy on the part of the city to contribute even more money. The development appeared wonderful and maybe the project can be revisited when the economy recovers, but I believe it would have set a bad precedent for the city to contribute additional money to a luxury development at a time when so many are losing their jobs.
Until we change the perception of our neighborhoods, projects in this area will continue to fail… I do not care if a huge celebrity chef is opening a restaurant, the general perception is that everything north of Mckinley and west of Water Street is off limits.
People live in the city because of the convenience of walking somewhere, and enjoying what their local community has to offer… THE LOCATION WAS WRONG… If you are going to blame the city or county, blame them for letting the city communities fall into disrepair…
Do not use the argument that building this project would drive money into the local businesses… There are no local businesses… You have the Bradley Center, and bars that do not cater to the demographic that would come along with this project… Didn’t someone get shot there this summer??? The LOCATION and the uncertainty of the area is why this project failed.
THE RECESSION HAS NOTHING TO DO WITH WITH THE FAILURE OF THIS PROJECT!!! IT WAS THE WRONG PROJECT FOR THAT LOCATION AT THIS TIME…
There is a plan called the “McKinley District” where the city wants to re-invent this area in to a beautiful retail and restaurant area. It looks like a “war zone” right now, yes. But with $150 Million HOTEL/Restaurant/Retail area as the anchor, it would have lead to more beautication of the surroundings. In order to move forward, you need a strong presence of something – an anchor – to pave the way for more money, investors, etc. and with a huge name like Gatehouse, it would have lead to more confidence.
WIth regards to jobs, whether or not it was 200 jobs or 800, the fact is that over the next 3-5 years, there were hundreds of jobs created. In this economy, isn’t it worth it?
In Dallas, Gatehouse did a similar project in a similar part of town to that of McKinley and now that area is booming with boutiques and a “destination” and harvesting $1 billion/annually.
The problem is we should start caring about how we treat outside investors and people like an Iron Chef who is on a major cable channel. If we treat outsiders like the way we treated Gatehouse and Michael Symon, what would make any outside developer ever want to come back to Milwaukee?
This project was incredible – it was giving back in the way of non-profit donations, bringing a major boutique hotel to our city and a major restauraneur in to our city. And job creation.
And Gatehouse didnt’ think that the area was the wrong area and they were investing $150 Million…
To each and every person who has written that Palomar had millions in reservations, and buyers tripping over themselves – stop and think about it. If they did, they’d be building. The reality is, they didn’t. Would you spend over $1 million to live in a not too big condo in that location?
As for the creation of jobs: to subsidize a condo project so that it “creates” jobs is along the same lines of economic principle that is currently contributing to the struggling economy. I’m all for subsidy of something that HAS to be subsidized. But subsidizing million dollar condos in the wrong location doesn’t make sense.
Theories like splitting up the blocks, a different approach to managing the park east land, etc. are all valid. But they have nothing – NOTHING – to do with Palomar being canceled.
Occam’s razor – it was canceled due to lack of demand.
@Concerned Milwaukeean
I won’t go into a full response on all the issues here but I just want to clear something up.
The Mayor can not hand out a TIF. A TIF generally goes through RACM, DCD, CPC (I think), 4 taxing authorities, ZND, the Common Council and then and only then the Mayor. Yes of course there is negotiation that goes on and went on but there was never an enforceable deal for a TIF that was actually approved. So lets make that clear.
The project was cancelled because the City et. al. wanted to enforce union labor in the hotel/restaurant, etc. at the 11th hour and then decided not to grant the TIF money.
There were plenty of contracts. The developer was well aware of, and planned for, the economy and was still willing to move forward. Sales wasn’t the issue.
More than that, its the hotel, restaurant, Las Vegas style night club, spa and so on that we also turned down. The condos only occupied a small portion of the entire project. I don’t understand why everyone is focusing on just the condos?
Re: JOBS: Here are the exact stats – 600 full time construction jobs. 230 full time benefited jobs with the operations of the hotel, condo, convention and community service.
So I do think Milwaukee needs to make sure they look at how they treat people, in and out of town, because we do need to attract more businesses to our region in order to move forward. Whether or not its condos, hotels, restaurants or any other business. That is my concern… People need to get off the condo and look at the project as a whole.
Concerned Milwaukeean,
If these things are so great, why couldn’t the private market build it itself?
If union wages are so expensive, don’t use public money.
It is great that they were going to give so much money to local charities and foundations…but if the project wasn’t financially feasible, maybe they should have cut back on that kind of stuff.
A project that claims to be so generous to the community, but needs a subsidy from that community…is either a project that is not so generous as they claim….or a project that can’t feasibly happen (as is the case with the Palomar).
Of course the project sounded so great…because they were adding in all sorts of stuff that they couldn’t afford….Bradley Center luxury box and all of those other crazy amenities. But why should the City have to help pay for those?
Clearly the writer using the alias “Concerned Milwaukeean” was the head of Condo sales for the project. The comments and word usage are identical to her quotes in the many obnoxious articles she was quoted in. Give it a rest, the project failed because not enough units were sold.
I have been involved in many Developed projects such as the one discussed here, the Palomar and the following are clear to me about this failing:
1. The project never would have got off of the drawing board without a Bank approved budget with the only real major variable being the projects ability to pre-sell units at a level commensurate with their projection. Clearly that goal wasn’t met.
2. The discussion of not recieving a TIFF at this late date is nothing more than an excuse as the project wouldn’t have got to this point unless it was pre-approved or wasn’t discussed.
3. Spending a reported $1.5 million on a sales center, purchasing a skybox at the Bradley Center, etc. and then blaming the failure on the city leads me to believe that some are lacking in they’re ability to asses reality.
I wonder how different this would have ended up if the Developers had decided to use a larger, more professional and respected firm to represent they’re sales effort.
Fact, I am not the head of sales nor in any way related or employed by the Palomar. I believed that this project was amazing and would breathe new life in to the McKinley District. So “clearly”, you are mistaken and you shouldn’t assume anything.
Second, it came down to Milwaukee promising TIF money, then pulling it. They allowed the project to be union construction but then wanted the final project to be union, which killed the budget.
Third, tihs developer is far savvier than anyone gives them credit for. They’ve done this successfully all over the country.
Okay, I agree you are no longer associated with the Palomar, however you WERE the Sales Director right up until the project failed-Nice work….Give it up MBGW
Wrong again, Ryan. I’ve worked for the same employer for seven years and never once for Palomar, Gatehouse or Rob Ruvin. Are people always suppose to agree with you? Last I checked, I can have all the facts and formulate my own opinion that may disagree with others. That’s what blogging is all about – the ability to share thoughts, express ideas and stimulate conversation. Those are the facts that I know. I’ve spoken with many different direct channels from this project to get my facts, not just from our news publications. I suggest you do the same.
You’re not a very good liar, Mary, Cybil or whatever name you are using…..
Ryan, get a clue. Get your facts. Unless you are my accountant, you would have no idea who signs my paychecks so it is ridiculous of you to be so confident in your deductions. My name isn’t Mary or Cybil and that is a fact. Due to the nature of my career, I choose to use a pen name. I enjoy sharing my opinion because I am passionate about growth, opportunity and Milwaukee’s success. I am originally from Chicagoland and moved here after college. I thought the Palomar would offer Milwaukee something its never seen before in the art, music, food and space it would have created in a current concrete & ugly space. I liked that it created jobs. I just really liked what it would have added and am disappointed that a major developer in the country was promised one thing and then well in to the development stage, was retracted. To me, as a business person, it didn’t seem like a nice way of doing business. But such is life. We move on.
Iv’e been following this project for quite some time and what’s clear to me is-
**There where only 4 to 6 units presold in a year with expectations of triple that.
**In this environment, I suspect the major Bank lender would not move forward with these numbers.
**The failure had nothing to do with not recieving a TIF, with the Historic Preservation Society or the Mayors mood swings. It simply didn’t meet it’s minimum projection to secure financing.
**The poster going by “concerned Milwaukeean” is most definately the former Head of Condo sales(or no-sales if you’d like) for the recently departed Palomar project.
** A Las Vegas style Hotel is probably not appropriate for Milwaukee..