Development with a conscience – Sterns

Sterns see mission in filling vacant urban properties
When Sam and Nathan Stern look out over their third-floor office in Milwaukee’s Riverwest neighborhood, two things stand out in the panorama.
One is the distant view of downtown – an area infused with millions of dollars of redevelopment money over the last decade and an area with a seemingly very bright future.
The other scene is of Humboldt Yards across the street, arguably a blighted area where railroad engines and cars of the Milwaukee Road once gathered, and where neighbors once bought gravel and sandbox sand from a corner-lot business operated by Norman Pipkorn. The vacant site is now the center of controversy over the potential establishment of a Jewel/Osco retail operation there, alongside residential development.
But behind those scenes of downtown redevelopment and the highly publicized Humboldt Yards prospects lie scores of properties awaiting attention. The Sterns have made it their mission to bring attention to those sites, to be catalysts in redeveloping what some would say are the less-attractive parts of the community.
The critical difference is, the Sterns don’t see those areas as unattractive. On the contrary, they see the central city as laden with amenities for businesses. And they believe it’s incumbent for business to support the central city.
“We believe it is important that, if the suburbs are going to be strong, the center of the community has to be, too,” says Sam Stern, Nathan’s father and the originator of the duo’s business, Stern and Associates. “You can’t have a strong suburban economy if the head is weak. All the limbs of the body have to be strong.”
But how do you make the head strong? The Sterns believe the ingredients are in place for that to happen. And they don’t see the “head” as being totally down and out.
“Milwaukee has done a great job of holding itself together, “Nathan says. “But where is it going from here?”
Sam adds, “The suburbs have grown at the expense of the head, and it’s time that the head compete.”
The right marketing in commercial real estate dealings can makes things happen, the Sterns say.
“It takes more than putting up a sign on a property; you have to be willing to market your offerings as would any new industrial park in the suburbs, and maybe more so,” Sam says, lauding efforts of the city to do just that in some parts of town, such as the 30th Street Industrial Corridor.
The perceptions of crime, which they’ve noted are misperceptions, have to be dealt with head-on, they say.
“The reality is much better than the perception, in a business sense,” Sam says. Those misperceptions, he says, foster economic depression in central city areas and impose unnecessary costs on businesses. “They’ve allowed their fears to cost them money.”
What business owners will find in city commercial buildings, the two say, are favorable cost-per-square-foot terms, in-place infrastructure, and a nearby labor pool which doesn’t require extraordinary transportation to a plant.
The Sterns don’t say that a city location is the right move for every business.
“While I have lived in the suburbs and while there can be good reasons for a business to be in the suburbs, there are businesses that should be in the city and which would benefit from being in the city,” Sam says.
The Sterns last year – their first year of business – handled close to $2 million in transactions, and they have a number of properties in Milwaukee County which they’re now marketing, including the old Geiser Potato Chip plant at 30th and Burleigh in Milwaukee – a 142,000-square-foot, food-grade facility that now lies vacant after a trucking/warehousing firm declined to renew its lease for the space. They’ve been in talks with prospective tenants about the space.
They’re also marketing space in the building they operate from at the southwest corner of Humboldt and North avenues, a building owned by Damian Zak that was originally built in the 1800s as a Jos. Schlitz Brewing Co. tavern.
Interest in city properties has picked up, they say.
“In the last six months we’ve had inquiries from people who need crane buildings, and who need to save on fixed costs, and who need workers,” Sam says. “And they’re considering leaving the suburbs because the square-foot rate of being west of the beltway is a lot of money in comparison to what it is in the city.”
Marketing properties in older areas of the city can be challenging.
High on the list of those challenges are regulations related to polluted lands -regulations that must be changed if America’s cities are to survive, say Sam and Nathan Stern of Stern & Associates in Milwaukee.
“No one wants to drink polluted water, or to have their children or themselves exposed to contaminants,” Sam observes. “But there are situations where pollution causes no harm.”
In those cases, the two say, redevelopment must be made easier.
It can be made easier by indemnifying property owners from liabilities for past polluting practices, they add.
“The present laws which will not indemnify against future liability make it impossible to transfer title, so lenders won’t touch such deals,” Sam notes.
But the second issue, he adds, is that there are properties that might be polluted but which pose no health threat. The question then becomes, what’s the real cost – to a community’s economic vitality – of not developing those sites?
“Those sites become unbuyable for people who could use them,” Nathan says. Unused, he says, the sites only foster further economic degradation, a point community leaders throughout the nation realize. “City governments realize that, without indemnification, major portions of cities will never have a use.”
May 1998 Small Business Times, Milwaukee