Johnson Controls’ Former HQ Will Become Modern Offices, Housing

The Patent Block potential signage. Image from Founders 3.

Almost four years after Johnson Controls announced it was ditching Downtown, the future of its former headquarters has become clear.

Bear Development will redevelop the seven-building complex, which fills an entire block, as a mix of modern, Class A office space and housing.

The redevelopment will include 250,000 square feet of modern office space spread over two seven-story buildings. The remaining five interconnected buildings will be redeveloped as housing in a future phase.

“We think it will be a great home to a variety of tenants,” said Bear CEO S.R. Mills in an interview with Urban Milwaukee. “It’s unique in the market where we have very large floor plates that can accommodate big users.”

The 430,000-square-foot complex, addressed as 507-525 E. Michigan St., fills the block bounded by E. Michigan, E. Clybourn, N. Jackson and N. Jefferson streets. Johnson Controls, which built the campus in phases between 1902 and 1999, announced in January 2021 that it would relocate the 1,300 employees based there to its suburban Glendale campus. Kenosha-based Bear purchased the property later that year for $24 million as part of a temporary leaseback agreement and the conglomerate completed its relocation earlier this year.

Now, Bear is going public with its plans for what comes next. It will announce the redevelopment, known as The Patent Block, at an event Tuesday afternoon.

The oldest and newest buildings, which face E. Michigan Street, will become the office space. The plan, being designed by RINKA and marketed by Founders 3, calls for gutting the space to allow future tenants to design their future homes.

“Whether it’s somebody new to the Milwaukee area or somebody repositioning from an existing location, we think it will be a very good fit,” said Mills. “Our plan is to go in and modernize it.”

A key component of the strategy is modern amenities suited for a multi-tenant environment, including coworking spaces, a fitness center and a courtyard.

Tenants that commit early in the development would also play a key role in defining those amenities.

The existing buildings are considered an asset compared to a new office tower. “Part of it is its historic charm,” said Mills. “It has a lot of neat attributes from its windows to the insides.”

There is also the location. The Patent Block is just west of the U.S. Bank Center and Northwestern Mutual campus and just north of the Historic Third Ward. It’s located near Interstate 794 ramps, the lakefront trail network and is bookended by stops for The Hop streetcar line.

“All in all, we think it will be extremely competitive in the marketplace,” said Mills.

Bear is initially pursuing tenants looking for at least 20,000 square feet of space.

Founders 3 broker John Davis, who is leading the leasing effort alongside Ned Purtell, said the available amount of contiguous space is second to none on the market. “I think that’s a big advantage we have over anyone else,” said Davis. The firm will also lean into the immediate availability and the potential to design the space from the ground up.

“It’s a really great building signage opportunity overlooking the highway here,” said Davis. “That’s something that a lot of other buildings cannot offer right now.”

The Patent Block name is a reference to Johnson Controls’ history of innovation, including at least 50 patents originated in the building, but the new project was also designed in a way that allows an anchor tenant to leave their imprint on the development.

The redevelopment mirrors a similar effort Founders 3 was involved in: the redevelopment of the former Boston Store Building into HUB640. Now home to Fiserv’s headquarters and several other tenants, the development was positioned as high-quality new space in a well-located historic building.

It also leveraged an industrywide office space trend known as “flight to quality” where the overall amount of space being leased is shrinking as a result of hybrid and remote work arrangements, but demand is remaining strong for high-quality, amenity-rich office spaces.

Housing To Come Next

“We are still working on that multi-family plan and how we are going to get that to fit,” said Mills. “We are actively engaged in finding the solution there.”

None of the structures are slated for demolition. Mills said his firm continues to explore how historic preservation tax credits could play a role in financing.

Bear is not actively pursuing other public financing sources, said the developer, but it hasn’t ruled anything out. “We are still working through some of those,” said Mills. The firm has a history of securing low-income housing tax credits and tax incremental financing (TIF) to support housing development. The Department of City Development is also considering a change in city policy to allow more liberal use of TIF funding to convert existing office buildings to housing.

Bear has already done a substantial amount of development work on Michigan and Clybourn streets in downtown Milwaukee. It recently completed a new affordable building, Michigan Street Commons, at 915 W. Michigan St. That building is the first of several planned for The Iron District development, which would also include a minor-league soccer stadium. “We are still actively working on it and making progress,” said Mills.

The other Bear projects in the corridor include the redevelopment of the Button Block Building into a Homewood Suites hotel and the 700 Lofts affordable housing development across from the future Iron District.

Renderings and Site Plan

Existing Interior Photos

Exterior Photos

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