Northwestern Mutual To Create Second Glassy Tower With $500 Million Investment

Northwestern Mutual will more than solidify its Milwaukee presence and redefine the city’s skyline with a $500 million investment into its downtown campus.

The insurance company will overhaul its 18-story North Office Building to give it a glassy facade similar to its signature 32-story tower and a modern interior to match. It also intends to close a one-block stretch of N. Cass St. to vehicle traffic and, over a period of up to five years, relocate its 2,000 Franklin employees to Downtown.

“We are doubling down on our Milwaukee campus by investing in the future of the workplace for Northwestern Mutual and a thriving downtown community,” said chairman, president and CEO John Schlifske in a statement. “We are expanding our world-class campus so that our teams can best serve our clients and policyowners in helping them achieve financial security by protecting what they’ve already built and creating future prosperity.”

The City of Milwaukee is expected to create a tax incremental financing (TIF) district, structured as effectively a property tax rebate, to facilitate the development. The agreement calls for up to $30 million to be provided to the company across nearly two decades. Northwestern Mutual would need to have at least 5,750 employees at the downtown campus by 2030 to be eligible for the full amount.

“Northwestern Mutual is an incredible community partner and their investment in Milwaukee will signal to the state, region and nation that Milwaukee is the place to do business,” said Milwaukee Mayor Cavalier Johnson. “Their wide-ranging investments in our city have – and will continue – to move Milwaukee forward.”

The proposal comes six years after the company completed its signature Northwestern Mutual Tower and Commons, a 32-story, 1.1-million-square-foot complex that is the second-tallest building and the largest single-tenant office building in Wisconsin.

The North Building, a 540,000-square-foot structure completed in 1990, would be recladded in a style consistent with the 2017 tower. It is currently a gray, postmodern-style building clad in granite.

Similar to the 2017 tower, the first floor would include public space. A company representative said it was too early to say specifically what that use would be, but the Tower and Commons includes a Starbucks cafe and meeting spaces that the insurance company has offered for community events.

The upper floors of the building, 818 E. Mason St., would be entirely reconfigured to optimize their layout and improve the employee experience.

“Ultimately, it’s all about attracting talent,” said Rebecca Villegas, vice president of enterprise compliance, in an interview. The company, under Schlifske, has made a large push into financial technology services, which has involved hiring large numbers of employees for technology-focused roles.

Villegas said the project was too early in its development to identify specific configurations for several options, including a planned plaza on N. Cass St. She said the company began working on the proposal in June 2022. A shift to a hybrid work environment as a result of the pandemic, as well as the aging building, helped prompt the project’s timing. “Obviously we don’t make these types of investments every day,” said Villegas.

The vice president, who is overseeing the development project, said given the age of the building there are necessary maintenance and mechanical upgrades that must be made under any scenario, but the structure is not in the quickly-declining state the East Building was in before it was demolished for the 2017 tower.

Northwestern Mutual hired Pickard Chilton, the same national architecture firm behind the 32-story tower, to design the latest project. According to a press release, the project could be completed by 2027.

The downtown campus will have space for 9,000 employees as a result of the project. The company did not provide a building-by-building breakdown of employee counts.

The North Building is connected via skywalks to a parking structure and to the signature tower, which includes an employee cafeteria, fitness center and several large conference rooms. The Commons structure, a three-story connector building, links the tower with the company’s neoclassical-style headquarters, built in 1914, at 720 E. Wisconsin Ave. A western skywalk connection links the Commons with a seven-story, 162,000-square-foot office building, 727 N. Van Buren St., that the company repurposed in 2013 into a clinic and auxiliary office space.

Renderings

Photos

Public Financing

The City of Milwaukee will need to create a TIF district to facilitate the deal. Structured as a developer-financed TIF district, Northwestern Mutual would front the capital and be repaid if property tax revenue exceeds the current level. The amount the company could recover would be capped as part of the district’s creation and limited by the legal length of the district.

As it did with the district for NM’s other tower, the city intends to use excess incremental revenue to pay for other public improvements nearby. When the company made a $450 million investment in the tower, a $54 million TIF district was formed.

The new agreement would provide $30 million to Northwestern Mutual, plus 4.5% interest, and allocate $10 million for nearby public improvements. The agreement calls for the insurance company’s revenue to be recouped over a maximum of 23 years.

The district encompasses both the North Building, assessed for $62.9 million, and the parking structure to the west, addressed as 777 N. Cass St. and currently assessed at $8.87 million. The TIF district is based on an estimate that the combined properties will grow from $71.8 million to $187.25 million in assessed value.

The TIF agreement requires NM to reach 5,750 employees working downtown by 2030 to earn the full amount. The report says the company has 4,600 employees in the city currently, including 3,958 actively working at the downtown campus.

The city would expend the $10 million on a number of public improvements within a half mile of the district, as state law allows. That includes extending the E. Kilbourn Ave. protected bicycle lane to N. Astor St. from N. Jackson St, improving the pedestrian and bicycle accommodations at the intersection of E. Kilbourn Ave. and N. Prospect Ave., installing an “all ages and abilities” bike facility between E. Mason St. and E. Kilbourn Ave., improving the Oak Leaf Trail, installing a new sidewalk on the east side of N. Lincoln Memorial Dr. where there currently is a well-worn desire path, making lighting and walkway improvements to the interior of Cathedral Square Park as well as removing the fountain and partially funding ($6 million) the reconstruction of E. Michigan St., N. Lincoln Memorial Dr. and N. Cass St. as part of the larger Lakefront Gateway project that was started a decade ago.

The agreement requires the company to expend $2.5 million over five years on youth programs for economically-disadvantaged youth or affordable housing efforts. The company, through its foundation, has recently backed a substantial effort to improve an entire block in the Amani neighborhood.

City ordinance requires any development receiving $1 million or more to have 40% of construction work hours performed by unemployed or underemployed Milwaukee residents and 25% of project contracting, by value, awarded to city-recognized small businesses. The insurance company and its contracting team exceeded those benchmarks in developing the 2017 tower.

The creation of a TIF district requires Common Council approval and the proposal appears to have the support of at least one council member out of the gate.

“Projects like these create opportunities for Milwaukee residents. When world-class businesses like Northwestern Mutual choose to invest in Milwaukee, they create jobs and density, resulting in more people experiencing our great City and all it has to offer,” said area Alderman Robert Bauman in a statement.

Villegas said no decision has been made on parking. As part of the development of the 32-story tower, the company attempted to purchase the O’Donnell Park parking structure from Milwaukee County, but the county board nixed the deal. That decision partially contributed to the company’s decision to build 7Seventy7, a luxury apartment tower with an oversized parking structure that is used by company employees.

Farewell To Franklin

The company, over a period of three to five years, will close its suburban Franklin campus as part of the project.

“The City of Franklin has been an valued partner for more than 20 years,” said Schlifske. “We have invested in the community and transformed 80 acres of land, with 16 acres remaining for future development. It is our hope that our investment will attract another great out-of-state company to call Wisconsin home.”

The campus includes 880,000 square feet of office space. Located at the northwestern corner of S. 27th St. and W. Drexel Ave., the campus is to serve as a southern anchor on the proposed North-South Bus Rapid Transit project.

Prior CEO Ed Zore developed the campus, starting in 2001, on the publicly-stated premise that the company needed a second location on a separate power grid in the event disaster struck. It completed buildings on the campus in 2004 and 2008.

The company said it has no immediate plans to sell or lease the campus.

The news of the insurance company’s investment in downtown was met with praise by area leaders.

“Knowing the high level of due diligence Northwestern Mutual puts behind every investment they make; this is a boost of confidence for the City and the entire region. The addition to the campus benefits policyowners, employees, and the community – it is a triple bottom line win,” said Metropolitan Milwaukee Association of Commerce head Tim Sheehy.

“Northwestern Mutual has made clear that Milwaukee is the center of its culture. That is a huge testament to the downtown experience we’ve collectively created in recent years – and it will only get better with the company’s investment and plan to bring more employees downtown,” said Milwaukee Downtown, Business Improvement District #21 CEO Beth Weirick.

Ten years after its most recent catalytic investment, Northwestern Mutual is again demonstrating its unparalleled commitment to Milwaukee. At a time when our city is challenged on many fronts, this dramatic investment and endorsement of Milwaukee provides yet another example of how Northwestern Mutual puts its people and its hometown first. I am confident this action will encourage other businesses to take note of our great City and all we have to offer,” said Greater Milwaukee Committee CEO Joel Brennan.

At 395 feet, the North Building was the fifth tallest building in the city when completed and is currently the seventh tallest. The Tower and Commons property, excluding any other NM holding, is the most valuable property in the city with an assessment of $308.3 million.

Press Conference

“Ten years ago, we hosted an event similar to this and it kind of feels like deja vu, maybe because it’s Groundhog Dog,” said Schlifske at a press conference held atop the 2017 tower Thursday morning. “Today we take our shared vision one step forward.”

“I couldn’t have asked for a better partner to transform the skyline and the downtown environment,” said the CEO. “We believe that a world-campus campus will foster more connection and collaboration both within our walls and throughout the city. Which will help us attract even more world-class talent to our company and help us attract the next generation of talent right here to southeast Wisconsin.”

Schlifske said he hoped the Franklin headquarters would find a new tenant in the form of an out-of-state company moving to the region.

“What we’re trying to do is unite people and unite culture, and bring them together,” said architect Jon Pickard. “Our north star is how do we create a best-in-class experience.”

He said the revised building would engage Lake Michigan, with which the architect said it has no meaningful connection to today.

“Growth and development in Milwaukee is a top priority for me and my administration,” said Johnson. “Today’s announcement makes a statement, not only about the future of Northwestern Mutual, but their outlook on the future of Milwaukee.”

He said it would help propel the city towards his goal of having one million residents.

“I hope today’s announcement will motivate other businesses, both those that are already here and those that are looking for a new home in the state of Wisconsin, to look here, right here, to the city of Milwaukee for a place to grow next.”

Schlifske, Johnson, Pickard, Bauman and Villegas were joined on stage by  Common Council President Jose G. Perez, Alderwoman Marina Dimitrijevic and Ald. Scott Spiker. Ald. Michael Murphy was also in attendance.

“We certainly have every reason to be happy, to be celebrating this morning,” said Perez, who praised the company’s catalytic impact when it makes big investments. “This is the kind of history we like to see repeat itself.”

“Ten years ago they made a commitment to be here which was really catalytic for other development downtown. Now they’re doing it again. They’re doubling down on office in Milwaukee, which is pretty unique when you look nationwide at what’s happening in other cities,” said Department of City Development Commissioner Lafayette Crump in an interview. “I think that uniqueness is going to send a message.”

He noted that the city is providing a smaller portion of the total project costs this time around. “We are leveraging it in an even stronger fashion than we were previously,” said the commissioner, who worked on the prior project on the hiring side.

How The City Struck The Deal

Crump said, with the mayor, there is routine outreach to businesses in an attempt to create an informal setting to exchange ideas and discuss how things are going. “We want them to know we’re very excited about them being in the city,” said the commissioner.

Crump said Schlifske and NM lobbyist Steve Radke approached the city in 2022 for a meeting. “We didn’t go into it with any specific agenda on our part,” said Crump, who noted that both he and Johnson expressed their support of how the last project went. “Lo and behold, they say ‘we’re interested in doing another one.'”

“We felt that it was a testament to the message we have been sending to the business community on how much value we place on partnerships and working with them,” said the commissioner. “The mayor and I were both excited about the prospect of it, but we needed to make sure the deal made sense from our standpoint.”

He said the city needed to evaluate what would happen if the city didn’t agree to subsidize the deal and if the council would approve what the administration was proposing.

The proposal, said Crump, still needs to undergo a design review from DCD staff and the council. The Commons portion of the 2017 building was added during that process. City officials said at the time it would improve the pedestrian experience, and it also gave the insurance company more space in the building and a larger subsidy.

Johnson, in his remarks from the stage, singled out Crump and the DCD team for their work in bringing the current deal together.

“When Northwestern Mutual succeeds, the city of Milwaukee and our partnership succeeds as well,” said the mayor.