New 18-Story Downtown Building Breaks Ground

Milwaukee’s newest high-rise office building, 833 East, broke ground yesterday, and everyone couldn’t quit gushing about how teamwork got it done. What was most noteworthy about the teamwork is that it involved little help and relatively scant financing from government officials. It’s a good day for Milwaukee when a $101.51 million, 18-story tower starts rising with less than a half million dollars in public financing. It will be located at 833 E. Michigan St.

Held on the galleria level of the U.S. Bank Center yesterday afternoon, a building to which the new tower will be connected, speaker after speaker praised the team, led by developer Irgens Development Partners, that got the project done. According to event emcee, part-time radio host, and future tenant Steve Palec of the real estate company Cresa, over 100 investors are backing the 358,000 square-foot project with $30 million in equity, with around 50 of them being repeat Irgens investors. Private Bank ($24 million), Bank Mutual ($11.5 million), Associated Bank ($24 million) and Anchor Bank ($11.5 million) are providing financing for the project. The only financial assistance from the government comes from the Wisconsin Economic Development Corporation, which is providing a $495,213 land remediation grant.

The lack of public financing made the list of speakers all the more unusual, but nearly every level of government was still given a chance to praise Milwaukee. Governor Scott Walker had nothing but positive things to say about the city during his remarks, a far cry from some of his campaign statements (Wisconsin doesn’t want to “become another Milwaukee.”). He even stated that the lakefront gateway is in many ways the gateway to commerce in Wisconsin. He concluded with “we’re ready for the next big project.”

County Executive Chris Abele praised the teamwork between everyone involved. Referencing the changing skyline, Abele noted “this isn’t the city you knew, it’s the city you will know.”

Next up was the man that nothing happens in this city without a call to, at least according to Palec’s introduction. Development of City Development Commissioner Rocky Marcoux, speaking in place of Mayor Tom Barrett who is out of town at a conference, stated that “this is what you pay us to do” regarding politicians working together. Marcoux called the project a sign of “progress and confidence in this city.” He also had effusive praise for the man of the evening, Mark Irgens, noting that “if Mark Irgens says something he does it” and praising him for his integrity. He led a round of applause for Irgens’ voluntary minority contracting standards (25 percent on-site hours for minority contractors or Milwaukee County residents and 25 percent percent for small, minority women-owned or disadvantaged businesses).

Also speaking was Nic Wahl, managing partner of anchor tenant Godrey & Kahn, who will relocate from the BMO Harris building on N. Water St. Wahl praised the determined efforts of Irgens to get the project done. Following Wahl was the event’s host, Bill Bertha of U.S. Bank (who is president of its Milwaukee market), who also praised Irgens hard work.

Members of the media were ushered outside for a photo opp of the demolition during Irgens speech, so I don’t have notes from his remarks. Suffice it to say, it’s his day to shine and you couldn’t have paid people to say more nice things about him than at this ground-breaking. He’s managed to do what many have been attempting for years (build an office high rise), and he’s basically doing it with private money. His building, while starting after Northwestern Mutual‘s new tower, will be the first new building done near the reconfigured lakefront (spring 2016).

833 East replaces a one-story parking garage currently used by U.S. Bank for the center’s tenants. Designed by Kahler Slater (see the renderings below), general contractor CG Schmidt is leading construction. The building will include 456 enclosed parking spaces. Irgens intends for the development to be LEED certified.

Why the City Was Right to Not Offer a TIF

Public financing has been a controversial subject in Milwaukee for years. Former Mayor John Norquist avoided using tax-incremental financing almost without exception on individual buildings. Mayor Barrett and Marcoux have been far more willing to use the tool, but have also governed during a recession that decimated the real estate sector. Office buildings have often been the most controversial as they have great potential to rob Peter’s tenants to fill Paul’s building. In this case that’s literally what’s happening.

A number of the tenants of the building are coming from other locations downtown. Godrey & Kahn is moving from the BMO Harris building. Cresa will move from CityCenter at 735. Jason Inc. is moving from the 411 Building. First American Title Insurance Company is moving from the ASQ Building (a former Irgens project). Colliers/Wisconsin and partner-firm Inland will move to the building from the Pabst Boiler House, a building they have an equity-stake in.

Building new marquee office space? Good for Milwaukee. Developers competing for tenants? Good for Milwaukee. Using city resources to shuffle tenants around downtown? Bad for Milwaukee. The city made the right choice to avoid financing the building.

Before you complain that the city did just the opposite with Northwestern Mutual, a few things are worth noting. Northwestern Mutual had a legitimate and cheaper option to move to Franklin. Northwestern Mutual also financed their own TIF district. Since they provide the financing up-front in exchange for a property tax refund, the city has extremely minimal risk.

Other Area Developments

The project isn’t going to stand alone for long. Just to the west, and also connected to the U.S. Bank Center, a 200-room Westin Hotel is planned by Jackson Street Management. Just to the east, the 44-story The Couture is expected to rise. Two blocks north, Northwestern Mutual is building its 32-story tower.

Odds and Ends

• The length of Marcoux’s speeches were good for plenty of sport yesterday. Earlier in his introductions, Palec had held up a massive stack of paper, and when he got to the stage Abele joked that he thought that was a copy of Rocky’s speech. Not to be outdone, Palec delayed Rocky’s introduction while joking about finding the stopwatch on his phone. Rocky took the cracks in stride and had the last laugh. He stated that he would be brief, and then went longer than Walker and Abele combined.
• Some press conferences end up being just the developer and the media. Not this event, which was definitely more party than press conference. Movers and shakers in the room included U.S. Bank Center tenant and MLB Commissioner Bud Selig, MMAC President Tim Sheehy, Greater Milwaukee Committee President Julia Taylor, PR maven Carl Mueller and Moderne and Couture developer Rick Barrett.
• In a post-announcement press briefing, virtually every time Walker referenced Mary Burke it was “Madison School Board member Mary Burke.” The Walker campaign must believe they have a convenient way to label her a Madison liberal and small time school board member at the same time.
• During that press briefing, Bill Glauber of the Journal Sentinel asked the Governor about Barrett’s statement on Interstate 94 (“I’m mystified as to why the Governor has not taken the Stadium Interchange’s double deck option off the table. Not only will this option cost exorbitant sums of money, it will have a negative impact on property values and disrupt the lives of Story Hill neighborhood residents. I continue to oppose the double deck option and will continue to pursue all options to prevent its construction.”). Walker wasted no time firing back saying that it was par for the course for Barrett to take shots at him while he works with the Department of City Development on projects like 833 East, but that his administration would continue to work with DCD. He said the only option they’ve taken off the table is moving graves and that WisDOT would continue to look at all options.
• Godfrey & Kahn has been the rumored anchor tenant in a number of potential office towers downtown. Multiple people have told me off the record that they believed they were never going to move and were just using the threat as a way to get better terms on their lease. The bad news for those attempting to build other office towers downtown is that Godfrey & Kahn is moving, and that makes other developments like the Washington Square Tower a lot less likely to happen anytime soon.
• The news of the new hotel behind the U.S. Bank Center broke on Monday, and within 24 hours Rick Barrett had announced he was dropping the planned hotel from The Couture. The proposed building is still slated to be 44 floors, but will contain only apartments and retail now. Despite recent developments to the contrary, it appears the downtown hotel market does have limits.

Event Photo Gallery

Project Renderings