100 East Tower Could Become Apartments
Office building is now mostly vacant, in foreclosure.
The building is currently in foreclosure as its occupancy rate has dropped steadily in recent years. Court records indicate a sale could be approved in April and completed in May.
An affiliate of California-based Hertz purchased the property, 100 E. Wisconsin Ave., and a skywalk-connected parking structure for $78 million in 2016. Located along the river at the intersection of E. Wisconsin Ave. and N. Water St, it was once of the city’s most valuable properties. But the building’s occupancy rate is now below 50%.
Some of the features that make it less desirable for top-tier office tenants, notably smaller floor plates and small windows, make it well suited for a conversion to housing. The tower also has split elevator banks, which could allow for a phased or partial conversion.
The top six floors of 100 East are empty after Michael Best & Friedrich relocated to BMO Tower, a move inspired in part by improved floor plans, more natural light and improved aesthetics offered in the newly-completed building.
Two sources familiar with the deal discussed the Klein family’s involvement in the pending proposal, one was familiar with Vassallo’s involvement. Sean Ryan was the first to report on both parties’ participation in the deal.
Vassallo is an entrepreneur best known to Milwaukee residents for his Mo’s Irish Pub and Mo’s steakhouse. He recently canceled plans for a 28-story tower in Wauwatosa and said he will instead develop a car wash at the site. Vassallo has developed housing in other markets and is also invested in other businesses, including scooters.
The Klein family has partnered with Vassallo before on the redevelopment of the mostly-vacant Posner Building into MKE Lofts. That partnership came via HKS Holdings, which includes Joe Klein as a partner.
Joe’s brother Michael Klein leads Klein Development. Both HKS and Klein Development are currently pursuing hotel projects in the city and have previously developed apartment buildings. Their father, Dennis Klein, is a long-time Milwaukee developer and construction executive currently with C.D. Smith.
Michael Klein declined to comment on the 100 East deal. Vassallo did not respond to a request for comment.
The proposal could be a boon to the downtown office market. The proposal would take a substantial amount of office space off the market and push the remaining tenants into other buildings.
A number of other aging office buildings have been converted to housing in recent years, but none were as large nor marketed as a Class A building.
The office tower is now assessed for $60.2 million, down from $73.7 million. The parking garage is assessed for $4.14 million, unchanged from 2020. When Urban Milwaukee ranked the most valuable properties as of 2020, the complex was the eighth-most valuable in the city.
The building’s conversion to apartments would create an interesting wrinkle in the marketing of Milwaukee’s housing high rises. The Couture was poised to be the tallest residential building in the state at 517 feet, but 100 East would trump it at 549 feet.