Northwestern Mutual’s Glassy Second Tower Is A Go

Northwestern Mutual announced plans to invest more than $500 million in its North Office Building in downtown Milwaukee. Rendering by Pickard Chilton, courtesy of Northwestern Mutual

Northwestern Mutual‘s $500 million plan to overhaul its aging 18-story North Building into a glassy tower and relocate its approximately 2,000 Franklin-based employees to downtown Milwaukee found unanimous support from the Common Council Tuesday, even though the city is contributing $30 million to the plan.

The city financial support, effectively a property tax rebate, will be stretched out over two decades. As part of creating the tax incremental financing (TIF) district, the city is also allocating $10 million in increased property tax revenue toward public improvements. The projects, which must be made within a half mile of the district’s boundaries, include new protected bike lanes, redesigning a major lakefront intersection and improving Cathedral Square Park and Juneau Park.

“Today’s approval kickstart the planning process as we look forward to a fall 2023 start to construction,” said company vice president Steve Radke in a statement. Company officials previously said the overhauled building could open in 2027.

The plan was spurred by Northwestern Mutual’s desire to address the aging building, built in 1990, and create a more collaborative work environment. The building, 818 E. Mason St., is to become a smaller version of its 32-story tower to the south. Designed by Pickard Chilton, the 2017 tower’s designer, the latest redevelopment would create a “consistent world-class experience no matter where you are on campus,” said Rebecca Villegas, vice president of enterprise compliance and the project leader, in February. The 540,000-square-foot tower would gain approximately 80,000 square feet of space as the building is stripped to its steel core and rebuilt with slightly expanded floor plates. The interior of each floor would see substantially more natural light with the glass facade. “Ultimately, it’s all about attracting talent.”

The project would mark the end of NM’s suburban Franklin campus, which the company no longer views as operationally necessary. It was created starting in 2001 on the premise that the company needed a redundant data center on a separate power grid, but cloud computing, said company officials, has eliminated that need. The campus would be closed over a period of three to five years as employees transition to the downtown campus. The company said it intends to sell the suburban buildings, totaling 880,000 square feet, and more than 80 acres of land to another corporate tenant.

The term sheet of the agreement calls for the city, over a period of no more than 23 years, to provide $30 million, plus interest, to Northwestern Mutual if it invests $500 million in the project and ultimately employs up to 5,750 employees at the campus. The $30 million would come from increased property tax revenue from the building and the adjacent parking structure, 777 N. Cass St. 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.

“I enthusiastically support this. The architecture is amazing,” said area Alderman Robert Bauman when the council’s zoning committee reviewed the proposal last week. “From an architectural standpoint, it’s an unbelievable project… It’s the same building, but it looks like an entirely different, brand-new building.” Other council members agreed and spoke in favor of the deal, which was negotiated by the Department of City Development and Mayor Cavalier Johnson. Bauman credited CEO John Schlifske as the driving force behind the company’s 2013 decision to build the 1.1-million-square-foot tower and its most recent move.

Northwestern Mutual, according to a city report, has 4,600 employees and contractors in the city currently, including 3,958 actively working at the downtown campus. A $54 million subsidy agreement for the 2017 tower requires the company to have 4,480 full-time equivalent employees in the city as of 2023. Because the $450 million building is assessed at more than initially expected, that district’s payback is outperforming expectations. The steadily-increasing job benchmark, which expires at the end of 2030, currently maxes out at 5,375 employees. The new agreement would push it even higher, with 5,750 employees required starting in 2030. The company must hit the benchmark to be eligible for the full subsidy.

Northwestern Mutual is estimated to grow from 1.5% to 1.8% of the city’s entire tax base as part of the development.

Tuesday’s approval does not include formal approval of the company’s plan to close N. Cass St. between E. Mason St. and E. Wells St. A separate action to vacant that street would need to be approved to enable that change. The company would like to construct a connector building that connects the redeveloped building with the company’s parking structure and convert the remainder of the block into a publicly-accessible, privately-owned plaza. A skywalk currently crosses the street. The lobby of the building would be publicly accessible, similar to the Starbucks cafe in the 2017 tower. But company officials said during the approval process that it was too early to commit to a specific plan.

For additional information on the proposal, including how the deal was struck, see our Feb. 2 article and subsequent coverage.

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