Johnson Controls Complex Sold, Redevelopment Planned
Plus: A recap of the week's real estate news.
Johnson Controls, 507-525 E. Michigan St. Photo by Mariiana Tzotcheva
Johnson Controls sold its 430,000-square-foot downtown office complex in the past week for $24 million.
The news, first reported by Alex Zank, officially sets in motion a redevelopment project that will take several years. Kenosha-based Bear Development bought the property, a full block bounded by E. Michigan St., E. Clybourn St., N. Jackson St. and N. Jefferson St.
Bear has time to figure out what those unique spaces will be. As part of the sale, Johnson Controls will lease the buildings back for a period of two years. JCI, working with CBRE, must also figure out how it will relocate all of the employees to its Glendale campus.
The location of the complex will give Bear a long list of options. The property is just a couple blocks west of Lake Michigan and next to the US Bank Center office complex. It’s also just north of the Historic Third Ward and along the first extension of The Hop streetcar system. The Milwaukee Federal Courthouse is located immediately north of the complex. The variety of different building shapes and sizes will also give Bear plenty of options.
The tallest building in the JCI complex is seven stories tall. The oldest dates back to 1902. The property, addressed as 507-525 W. Michigan St., is currently assessed for $25.9 million.
Bear has a wide range of development experience. Just a few blocks west, the company led the redevelopment of the Button Block Building, 500 N. Water St., into a Homewood Suites hotel. Going further west, it developed the 700 Lofts in a former office complex, 700 W. Michigan St. It secured low-income housing tax credits earlier this year to construct a new, affordable apartment building across the street. And it’s planning to redevelop the entire Filer & Stowell factory complex, 147 E. Becher St., in Bay View.
JCI announced in January that it would relocate the 1,300 employees in the complex to Glendale.
The suburban relocation marks a departure from the JCI’s public consideration of building a new downtown tower in 2015. But the city-to-suburb move comes after the company has spun off some business lines while merging with Tyco and relocating its corporate headquarters, on paper, to Ireland. It spun off its automotive seat business, now known as Adient, in 2016. It also sold its automotive battery business, now known as Clarios, to Toronto-based Brookfield Business Partners for $13.2 billion. The remaining company is focused on building technologies.
In recent years, JCI sold property immediately west of its downtown complex for $5.15 million. Those parcels now house three hotels that opened in late 2020.
A parking garage used by employees, 535 N. Milwaukee St., is owned by the City of Milwaukee. The company has owned a number of properties in Milwaukee and other suburban communities over its 137-year history. It no longer has any manufacturing in the Milwaukee area.
JCI, in its current iteration, reports having approximately 105,000 employees on six continents. Approximately 2,000 of those employees will soon be working in the Glendale office.
Weekly Recap
Bay View Development Subtly Increases Density Of Area
Developer Ryan Konicek has twice moved to create more housing on a Bay View corner lot, all while not demolishing the house that has stood on it for 111 years.
In May 2019, Konicek bought the two-story bungalow at the corner of S. Logan Ave. and E. Otjen St. for $145,000. A small, one-story building, formerly used by a cobbler, at the southern portion of the 0.17-acre site was demolished and Konicek secured approval in 2020 to construct a new two-story apartment in its place.
The Konicek brothers have now found a clever way to add more housing to the property, 2549-2551 S. Logan Ave., without adding a lengthy approval process: create more property on paper.
Evictions Rising Following End of Moratorium
When the United States Supreme Court struck down the national eviction moratorium a month ago, advocates predicted a “tsunami” of evictions. In many places across the country, the anticipated surge has not materialized.
But in Wisconsin, the situation is complicated.
According to Wisconsin Circuit Court Access data, eviction filings have increased by 55 percent since the moratorium ended.
Foxconn Picks Ohio Over Wisconsin
Wisconn Valley, as Foxconn’s mostly vacant Racine County manufacturing plant is known, will not become an electric vehicle manufacturing center. At least not for now.
The contract manufacturer announced Thursday that it will build electric vehicles in Ohio for startups Fisker and Lordstown at a former General Motors factory.
Taiwan-based Foxconn, as first reported by Bloomberg, will buy Lordstown Motors Corp‘s factory in Lordstown, Ohio. The electric truck startup announced a deal in late 2019 to buy the 6.2-million-square-foot plant, which GM operated from 1966 to March 2019.
Foxconn, as the company confirmed, will now buy the plant for $230 million from Lordstown, which has yet to manufacture a vehicle. The purchase does not include Lordstown’s hub motor assembly line, battery module and packing line assets.
Century City House Factory Inching Forward
Milwaukee Environmental Collaboration Office director Erick Shambarger continues to push forward on a plan to develop a new housing factory in Century City that is intended to create jobs, fight climate change and provide affordable, quality housing.
He’s now receiving backing from the federal Environmental Protection Agency.
“The EPA heard I was working on this and said they wanted to help,” said Shambarger in presenting the plan to the Public Works Committee on Monday. The agency is providing a $25,000 grant in exchange for the city committing $14,600 to develop a demand-side financing plan for low- and moderate-income Milwaukeeans to buy the homes.
Ranell Washington Will Lead WHEDA Board
Joaquín Altoro will see a familiar face when he presents to the Wisconsin Housing and Economic Development Authority (WHEDA) board.
Ranell Washington, Altoro’s former coworker at Town Bank, was named board chair this week.
Washington, who now works as a partnership development advisor at American Family Insurance, first replaced his former coworker on Milwaukee’s City Plan Commission in 2019. He joined the WHEDA board in August 2020. Now he leads it.
How Tax-Exempt Property Hurts The City
Mayor Tom Barrett recalls when St. Mary’s Hospital, now part of Ascension Health Care, was looking to expand and seeking city approval. The city used this as an opportunity to push the tax-exempt non-profit to make an annual Payment In Lieu of Taxes or PILOT to the city.
“They agreed to do it, but insisted it could not be called a PILOT,” he recalls. Instead they made a three-year commitment for a payment to the city and that was it. None of the hospitals and health care organizations wanted to set a precedent for paying a PILOT, Barrett says.
Which means all the hospitals in town, which the city estimates own a combined total of $524 million worth of property, pay nothing for the fire and police and other services the city provides them. Who pays for it? We the taxpayers do.
The average Milwaukee homeowner pays approximately $4,200 in property taxes annually. If Ascension and all the other owners of tax-exempt property in the city were charged their fair share, that bill would go down by about $800.
Greater Milwaukee Foundation Funds Minority-Owned Businesses
The Greater Milwaukee Foundation provided a total of $780,000 in low-interest loans to 17 small businesses in Milwaukee.
The loan amounts range from $25,000 to $50,000. Eighty percent of the businesses are located just north of downtown Milwaukee in the Halyard Park, Harambee and Brewers Hill neighborhoods. All are owned by people of color.
Approximately 40 jobs are expected to be created or reestablished.
Officials Celebrate Tent City Replacement
In less than two years, the space under the Marquette Interchange went from hosting the largest homeless encampment in Milwaukee history to a ribbon-cutting ceremony.
Milwaukee County Housing Division administrator James Mathy said “Tent City,” as the homeless encampment became infamously known, was “a huge tragedy.”
At its peak, Mathy said 93 individuals lived in the camp, which was actually a series of sites spread across six acres.
“All of those individuals are no longer homeless,” he announced Tuesday to applause from the dozens of people in attendance at a press conference.
Plan Commission Okays East Side Project
The City Plan Commission is open to letting a former Catholic school in Milwaukee’s Murray Hill neighborhood be redeveloped. But it’s requesting the Common Council place more restrictions on the proposal.
The project is being developed by Matter Development and Galbraith Carnahan Architects, the latter serving as a co-developer and project architect. The partners are seeking a zoning change to enable a broad range of future potential uses for the property at 2480 N. Cramer St.
“Our goal and objective has been to preserve this building,” said Aaron Matter to the commission on Monday afternoon. “Our challenge as the development team is that the renovation will be very costly, as most historic renovations are.”
Johnson Financial Group Shows Off High-Rise Office
Starting Oct. 1 approximately 100 employees of Johnson Financial Group will occupy the top floors of the Cathedral Place office tower, 555 E. Wells St.
“This for us is a little bit of a statement that we have really good roots in Milwaukee,” said President and CEO Jim Popp during a tour of the space.
The Racine-based bank is leasing 40,000 square feet across floors 18 and 19 of the office building. A bank branch will occupy the building’s first floor. Signage, which Popp said was a critical piece of the bank’s lease, will adorn multiple sides of the glass-clad building’s facade.
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