The First Financial Centre, located at the northeast corner of Water Street and Wisconsin Avenue, is under contract to be sold to a developer who is planning to convert the vacant office space in the building into a hotel, according to numerous commercial real estate sources.
The 14-story, 154,200-square-foot building, located at 700 N. Water St., currently is only 30 percent occupied.
The new owner is planning to retain the existing office tenants, according to sources.
Greg Hanis, president of Hospitality Marketers International Inc., which has a New Berlin office, said if 70 percent of the building is renovated for hotel space, he estimates it could be converted to a 150-190 room hotel.
One source familiar with the project said the developer is planning a residential hotel, which would mean an extended stay property.
In that case, rooms would be slightly larger so it would more likely be a 150-175 room hotel, Hanis said.
The First Financial Centre has been a distressed asset for years, particularly since the Great Recession. Several tenants have left the building in recent years, including former first floor retail tenant Associated Bank in 2014.
The building was acquired in 2012 in a deed in lieu of foreclosure action by a trust created by J.P. Morgan Chase Commercial Mortgage Securities Corp.
It was then sold at auction for $3.3 million last year, almost half of its assessed value at the time of $6.1 million, to a local investment group. Siegel-Gallagher was hired to resell the property.
If built, the new hotel would be one of many that are being planned or are under construction in the downtown area.
A 200-room Westin Hotel is proposed just west of the new 17-story 833 East office building. Bear Development plans to convert the Button Block building at 500 N. Water St. into a 94-room Homewood Suites hotel.
Since 2012, 422 hotel rooms have been added to downtown Milwaukee – increase that number to 803 rooms if you count the 381-room hotel at Potawatomi Hotel & Casino that opened in 2014.
The area in and around downtown now has 4,772 hotel rooms – up from 3,715 in 2009, with most of the growth happening in the past two years.
By mid-2016, 313 more rooms will be added to the downtown area, with the 158-room Kimpton Hotel at the northeast corner of Broadway and Chicago Street in the Historic Third Ward and the 155-suite SpringHill Suites at the corner of Fourth and Wells streets both scheduled to open next year.
