In an ever-changing world, commercial real estate owners, investors and developers are increasingly finding that the landscape has shifted and the demand for real estate has changed so significantly that they must seek new uses than what they have traditionally relied on to fill their buildings.
A group of commercial real estate executives, economic observers and a municipal leader will discuss these trends at the annual BizTimes Milwaukee Commercial Real Estate and Development Conference, to be held on Friday, Nov. 16, at the Italian Community Center in Milwaukee (click here to register). The panelists include: Dan Ertl, director of community development for the City of Brookfield; Doug Fisher, director of the center for supply chain management for Marquette University; Scott Goldman, principal for Chicago-based Baum Revision LLC; Eric Griffith, vice president of mall leasing for Chattanooga, Tenn.-based CBL Properties; and J. Michael Mooney, principal, chairman and co-founder of Brookfield-based MLG Capital. The discussion will be moderated by Mark Eppli, director of the Graaskamp Center for Real Estate at the University of Wisconsin-Madison School of Business.
Amazon.com as at the heart of much of the changing real estate landscape. It is the biggest reason more people are shopping online, creating less demand for brick-and-mortar retail space while increasing the need for distribution centers and warehouse space for the products that are shipped to the consumer’s front doorstep.
With more and more consumers shopping online, many brick-and-mortar stores have closed, forcing retail building owners to seek new options to fill spaces. CBL, one of the largest mall owners in the United States, is facing this challenge with its properties across the country, including Brookfield Square Mall, where it is adding a Marcus BistroPlex movie theater, a Whirlyball entertainment complex and a Hilton Garden Inn hotel and conference center. CBL is trying a variety of uses to fill vacant anchor stores at its malls, such as the former Sears and Boston Store spaces at Brookfield Square.
“It’s a wide spectrum of uses we are doing across the portfolio,” Griffith said. “We are open for doing totally different things. The stuff we’ve done in the malls is not retail anymore. An entertainment component like at Brookfield square, we’re adding a casino to one project, multifamily, a hotel attached to a mall. A bunch of different uses. We are even looking at industrial with some projects. The mall of the future is not the mall that it is today. There will be a lot of different uses.”
Public-private partnerships are supporting some of the redevelopment projects. The city is supporting the Brookfield Square redevelopment by providing the funds, $24 million, for the conference center at the hotel.
MLG Capital converted the former Brennan’s Market building on Bluemound Road into its new corporate headquarters. The building had wood beam ceilings, similar to historic buildings in the Third Ward in Milwaukee, but modern facilities and ample parking on a busy suburban street.
“It is sort of like an 1880s feel, but it has 1980s electricity, plumbing and it’s got visibility to 33,000 cars a day going by on Wisconsin’s most important commercial street,” Mooney said.
Old industrial buildings continue to be redeveloped into office space, apartments and hotels. Baum Revision, which specializes in redeveloping old industrial buildings, often positions them as creative spaces for artists. An example is the company’s project to redevelop the former Garver Feed Mill in Madison.
“We are going around the country and buying a lot of functionally obsolete 1900s manufacturing buildings that are in areas of town that don’t yet lend themselves as being candidates for being redeveloped into cool offices or restaurants,” Goldman said. “There’s this big question of what do you do with this? We’ve been converting buildings in many of these communities into places for makers, artisans and creators at really low rents.”
Mooney recalled his involvement in the redevelopment of the former Allis-Chalmers complex in West Allis and The Tannery complex in Milwaukee, massive industrial properties that needed a new use and a new life.
“My instinct was to ignore what it is and sort of immerse myself in what it could be,” Mooney said. “I used to go in (to the vacant Allis-Chalmers complex) on weekends and I would plunk myself down, I would just sit there for hours looking around and thinking what this could be. I did the same thing at The Tannery. And stuff would pop out. Pretty soon you have a bunch of pieces together and the whole is bigger than the sum of the parts. They all complement each other. That is so exciting and it’s so fun to watch it evolve. Each of those is continuing to evolve.”
The revitalization of urban areas has attracted more businesses and residents to downtown areas and hip city neighborhoods, while forcing suburban communities to consider new ways to make bland office parks more appealing. An example is the Bishop’s Woods office park in Brookfield.
“We are trying to encourage a diversity of uses there to have that business park compete better with other business parks by introducing alternative uses,” Ertl said.
The importance of dense urban areas is only going to grow, Fisher said, and that will be a major factor in future real estate development and adaptive reuse projects.
“Cities are going to be here and be very important, I don’t care if you call it urban or urban combined with suburban, it’s where the action is going to be,” he said. “It’s incredibly exciting. It’s not a pessimistic future.”
