Milwaukee Tool Readying Downtown Office

The rendering of Milwaukee Tool‘s proposed downtown office undersold the amount of work the building at 501 W. Michigan St. would undergo.

An image released earlier this year, as the Common Council debated an up to $20 million subsidy agreement to bring up to 2,000 employees from the Brookfield-based company to Westown, depicted a large Milwaukee Tool logo added to a windowless portion of the otherwise drab office building. Red paint, matching the company’s color scheme, was to be added to the covered entryway.

But what’s happening to the five-story, 370,000-square-foot building is far beyond just a new logo and coat of paint.

Led by general contractor Mortenson Construction, all of the exterior windows in the building have been removed. A large portion of the facade on the building’s N. 6th St. side (not depicted in the rendering) has also been removed. The 800-stall parking garage at its southern edge is being rehabilitated.

The company’s subsidy agreement called for it to invest $30 million in the property, and it appears the company is well on its way to reaching that mark. It purchased the property for $7.9 million in May from developer Scott Lurie‘s F Street Group, which had bought the mostly vacant building in late 2019 for $4 million and released a conceptual redevelopment plan.

Permitting and bidding records refer to the project as “Red Beacon,” a fitting name for an office building originally built in 1978 for Blue Cross Blue Shield. It was originally designed by Brust & Zimmerman, a predecessor to Zimmerman Architectural Studios.

Stephen Perry Smith Architects is leading the renovation project’s design, which has an emphasis on speed according to Milwaukee Tool.

Company chief financial officer Ty Staviski told a city committee in April that the company currently lacks space for 800 employees in southeastern Wisconsin and is getting by with remote work.

“All of the options that we are looking at for different sites are predicated on that we need a quick turnaround,” said Staviski. “This is a building, that after touring, we could renovate in a fairly quick and phased approach.”

The company, a division of Hong Kong-based Techtronics Industries since 2005, has recorded 22% annual growth since 2009 as its sales have reached $5 billion. It was founded in Milwaukee in 1924, but relocated to Brookfield in 1965 and then relocated most its manufacturing to Mississippi in 1973.

The company had 227 employees in southeast Wisconsin in 2008, but today it has 2,600 and has plans to reach 3,200 by the end of the year. Much of the growth, according to Staviski, can be attributed to the launch of a hand tools product line in 2011.

The company, earlier in 2021, said it envisioned having 650 employees in the Milwaukee facility by the end of 2021. That’s been pushed back, as the scale of the work indicates. The financing agreement requires them to have at least 450 by March 2022 before a clawback provision could be invoked.

It would eventually bring all of the employees associated with a single product line to the downtown facility, augmenting its Brookfield and Menomonee Falls facilities. But earlier this week, it announced a new 70,000-square-foot downtown Chicago office where it could employ up to 150 people.

The Milwaukee Common Council approved a subsidy agreement on May 4 that provides an up-front grant of $12.1 million in exchange for the company investing $30 million and housing 1,210 full-time employees in the building by 2026. A series of clawback provisions and other incentives could bring the subsidy to $20 million if the company brings up to 2,000 employees (an additional 790) to the facility within 20 years.

As part of that future expansion, up to four floors could be added to the building.

The company acquired the property through an affiliate known as Schwer, Pflicht & Werzkeug Properties LLC, the same entity used for at least one other Milwaukee area purchase. The German words, from the native language of Techtronics chairman Horst Pudwill, translate to heavy, duty & tool according to Google Translate.

As part of debating the subsidy agreement, the council considered imposing a community benefits agreement to create union-level job protections for contracted service workers, but settled on requiring detailed, annual reporting requirements on employee residence, pay, race and gender.

Company officials said the average employee at the facility will be paid $75,000 and the contracted service workers would each make at least $15 per hour. But members of the union that organized Fiserv Forum workers, the Milwaukee Area Service and Hospitality Workers Organization, called for more worker protections.

Because the company is receiving at least $1 million in city support, at least 40% of construction work hours on the project must be completed by unemployed or underemployed city residents (the Residents Preference Program) and at least 25% of the contracts by value must go to city-certified, disadvantaged Small Business Enterprises.

The city will recoup the costs of its grant through a tax incremental financing district and increased property tax revenue from the nearly three-acre property.

According to a Wisconsin Economic Development Corporation release, since 2016 the company has pledged to create up to 1,812 new jobs and invest $174.5 million in capital projects in exchange for up to $46 million in tax incentives. That includes new or expanded plants in Sun Prairie and West Bend, but does not include the Milwaukee project.

Photos

Pre-Construction Photos

Spring 2021 Rendering