Northwestern Mutual’s plans to move 2,000 jobs from its Franklin complex into a reimagined building on its gleaming Milwaukee campus is being a heralded as sign of downtown Milwaukee’s continued draw.
And while the news has come as a bit of a jolt to municipal leaders in Franklin and Oak Creek, officials there, and at the Milwaukee 7, say the insurance giant’s decision could ultimately end up being a boon for the entire region.
Northwestern Mutual on Thursday announced plans to spend more than $500 million on extensive interior and exterior renovations to the 19-story North Office Building at its downtown Milwaukee headquarters campus – a decision the company expects will result in it vacating its 880,000-square-foot Franklin campus within the next three to five years.
Project construction could begin in the fall of this year and be complete in 2027.
The company’s announcement for the North Office Building project comes almost 10 years since it unveiled plans for Northwestern Mutual Tower and Commons. Combined, the two projects are a nearly $1 billion investment in the company’s downtown Milwaukee headquarters campus.
That’s a major shift from 20 years ago when the company was instead expanding in suburban Franklin, developing a campus northwest of South 27th Street and Drexel Avenue. It opened a five-story office building there in 2004 and a six-story office building there in 2008. The campus is also home to a roughly 2,500 structured parking spaces, as well as 16 acres of land available for future development.
Certainty needed
For Franklin Mayor Steve Olson, the key to helping the suburb weather the loss is making sure that the transition from Northwestern Mutual to a new owner or user of the campus is seamless. He said he has high hopes about the marketability of the campus – especially with so many corporations looking to consolidate their footprints and bring employees together – but having more “certainty” about the process is something he is looking for, he said.
Northwestern Mutual executives informed Olson of the company’s plans to phase out operations in Franklin on Wednesday afternoon – a day before the public announcement.
“Northwestern Mutual has always used the tag line ‘the quiet company.’ They have been good to us, but they don’t release their plans until they are ready,” Olson said. “How this all transpires is as important to me as what (the campus) becomes.”
Olson said he also hopes Northwestern Mutual keeps the city “whole” in terms of its tax base, noting that the company has challenged the assessment on its Franklin campus in the past.
Unfettered by possible property tax impacts, Oak Creek Mayor Dan Bukiewicz said he was confident that Northwestern Mutual would find an outstanding tenant or buyer for the property, especially considering their efforts to develop and sell land they once owned in Oak Creek.
“They are a very strategic company. I’m sure they aren’t planning on just pounding in a ‘for sale sign’ and just seeing who shows interest,” Bukiewicz said. “That is a world class campus, and Franklin will probably find a world class company to back fill it.”
Attracting new users
With employees expected to still be using the Franklin campus for the next three to five years, Northwestern Mutual executives said they have no immediate plans to sell or lease the buildings. At the same time, however, they said they anticipate the buildings to be “highly desirable to a future company seeking class A office space.”
“The city of Franklin has been a valued partner for more than 20 years,” Northwestern Mutual CEO John Schlifske said. “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.”
That’s also the hope of Jim Paetsch, executive director & senior vice president of the Milwaukee 7.
With an uptick in demand for Class A office space across southeastern Wisconsin, Paetsch said the Franklin campus could be a very attractive, especially considering its location along an already very active corridor connecting Milwaukee to northeastern Chicagoland.
“This is a location where we are seeing a lot of growth – that corridor from Milwaukee to the state line. Currently it’s a lot of distribution and manufacturing interest, but there is growing interest in office space,” he said. “And the site is so beautifully positioned – there’s a credible case for drawing people from northeastern Illinois to Franklin.”
The quality of the buildings also makes them easy to market, Paetsch said.
“Everything has been well maintained to Northwestern Mutual’s standards. There’s first-class telecommunications, well planned ingresses and egresses, and multiple interchanges to access the property from the interstate – all of that works in its favor to find a very robust use, and I don’t think it is going to take very long,” he said.
And having a site like the Franklin campus in the portfolio just makes attracting new companies to the region much easier, he added.
“You can talk to (companies) about the fundamentals that will help relocate or expand to your area – workforce, telecommunications, etc. – but if you don’t have an actual building or site that will fit their needs the rest of that doesn’t matter. It’s not the most important. but it is key to getting a deal done,” he said. “The fact that you have a building that is ready is phenomenal."
"Also, if you consider what it would cost today to replicate what Northwestern Mutual did there it’s significant– all of that works really strongly in our favor," Paetsch said.
Other land
In addition to its 80-acre campus in Franklin, Northwestern Mutual also owns a significant amount of real estate on the east side of South 27th Street in Oak Creek, across the street from its Franklin campus, and has been working for years to develop it. The company owns about 116 acres of vacant land northeast of the intersection of 27th Street and Drexel Avenue. It also sold the 29-acre site along the west side of I-94, north of Drexel Avenue, to Ikea for its Oak Creek store, which opened in 2018. Northwestern Mutual also sold the land south of the Ikea store for development of a Homewood Suites by Hilton hotel, which opened last year. Northwestern Mutual is also building an apartment development along Drexel Avenue in Oak Creek.
