Racine County powers through industrial slowdown
Racine County’s development scene is pockmarked by craters left behind by manufacturers who have vacated premises here. Economic development leaders scored a major coup with the arrival of Bombardier and 1,000 jobs to the 500,000-square-foot building left by the closing of Artech in Sturtevant’s Renaissance Business Park. The manufacturer of outboard motors took up residency in the building in June of 2001.
While the industrial sector has been difficult in Racine County, the office space front has been fickle as well.
"There was some pretty good leasing activity," said William Bonifas of The Polacheck Co. of the counties to the south of Milwaukee. "In reviewing the projects we handle, it is not a very deep market. You don’t see hundreds of thousands of square feet leased. Most of the projects there are smaller in nature and appeal to smaller users."
Like other geographic areas, Racine County has been hit by a wave of office consolidations.
"American Family had a fairly big operation in Racine and opted to consolidate it into Milwaukee," Bonifas said of the insurance firm’s abandonment of a 30,000-square-foot claims office formerly at 5439 Durand Ave. "New technology can hurt smaller cities. Companies decide they don’t need to be decentralized because of the Internet."
Impending hotel fight highlights action in Racine County
Waterford remains a commercial development hot spot in Racine County. Tax Incremental Financing District #2 — the 78.5-acre Waterford Centre business park, driven by the relocation from Burlington of Runzheimer International — is ready to go with infrastructure and landscaping. And in a depressed hospitality market, the fact that the village will be sprouting hotels two at once is a cause for concern.
A Runzheimer subsidiary will build a 70-unit Wellesley Inn & Suites just north of Runzheimer at highways 36 and 164.
In the meantime, a 53-room Baymont Inn & Suites will go up at the corner of Fox and Forest lanes. Both entities lay claim to having the idea first. Both acknowledge that the local market cannot likely support two hotels. Yet neither plans to stand down.
"We announced the concept that there would be a hotel in the park two years ago," Ron Arthur, managing director of Waterford Centre, Runzheimer’s development entity, said. "The Baymont Hotel was first suggested three or four months ago. Our Wellesley plan — when we assigned a specific franchise name to the hotel in our park — came about two months ago, after the Baymont had been announced."
But Jay Henrichs of Big Bend Development — long active in Waterford — claims that Big Bend Development had begun following the possibility of a hotel in the village a decade ago.
"We started thinking about a hotel on this site 10 years ago," Henrichs said. "We did a feasibility study, and that told us that we should wait until the community grew further. We did another study five years ago, and the results were that conditions were improving, but we should still hold on. In the spring of 2001, another feasibility study suggested we should go ahead."
The first discussions about the Baymont project with village board members took place in June, according to Henrichs.
Henrichs pointed out that the Baymont hotel would be built without any TIF assistance from the city while, paradoxically, Arthur insisted that the Wellesley hotel must be built, because it is essential to the solvency of the TIF district.
"We have no choice but to go ahead with this," Arthur said. "It is a linchpin of the plans that were presented to the village in the formation of the TIF district. We have billions of dollars of infrastructure under way — some of which has already been put in."
Henrichs said inclusion in a TIF district should not give Runzheimer’s project priority.
"We are in a position where we have a property that is vacant," Henrichs said. "We have been carrying debt and paying taxes on that property."
Ground was broken for the Baymont in January, according to Henrichs, and the group is looking forward to a midsummer opening.
"We can’t make them back off, and we don’t want to make them back off," Arthur said. "What they do is certainly subject to their own business judgment. All we can say is we don’t think that the market can support two hotels — at least not for long. We are going to build ours. If they build theirs, only one of them will be viable for any period of time.
"Our site is vastly superior to that site in terms of visibility, surrounding amenities, surrounding land uses. It will also benefit from business from the business park. As that business park develops over time, it is going to generate a certain number of room nights. The business park is being structured such that we expect to capture virtually all the room nights generated by the businesses in that park."
Construction wil commence this spring on the Wellesley, which will be ready for occupancy by the end of 2002, according to Arthur.
In other Waterford action, Big Bend Development also broke ground recently on a speculative commercial building on Fox Lane. It will be the third such building the group has completed, and will put another 5,000 square feet of space on the market. Big Bend is also involved in a partnership to potentially develop a 65-acre tract between Main Street, Highway 20 and Highway 36. A study is currently being completed to determine feasibility of providing utilities to the parcel.
Horsetrading could end sewer freeze
While development east of the Interstate in Racine County has been hobbled by a sewer moratorium forced by disagreement between several municipalities to agree on a cost-sharing arrangement to pay for an expansion to Racine’s wastewater treatment plant, a deal pending between the village of Sturtevant and the town of Mount Pleasant could solve the problem soon.
According to Sturtevant administrator James Henke, an agreement being considered by the two communities would entail the village dropping opposition to Mount Pleasant’s incorporation as a village. Incorporation of the town would leave Sturtevant landlocked — its boundaries would be frozen forever. In return, Sturtevant would annex 600 acres south of Highway 11 from the town as a natural extension to the Renaissance business park. The land would be developed as industrial, commercial and residential property, and the deal would include a revenue-sharing agreement with the town.
Henke said that if the deal comes to pass, the annexation would be final on the same day as Mount Pleasant is officially incorporated. The agreement would funnel $74 million from outlying communities dependent upon Racine’s wastewater services to the city of Racine.
Henke said he hoped to see the 700 acres ready for development by 2004.
The 14-acre former Ruud Lighting property, in the 9200 block of West Washington Avenue, has also been rezoned Multi-Family and Commercial. Development will occur over the next four years, according to a village memorandum, but will require stormwater improvements and roadway upgrades on 92nd Street.
Peter Schwabe of Big Bend Development is involved with the city of Racine on a two-acre redevelopment project at State and Memorial.
"Right now there are about a dozen owners, and a variety of older commercial storefront and residential uses," Schwabe said. "For the most part, some of the buildings are dilapidated and others are maintained but definitely older. The community has been requesting a grocery store for some time — at this point we are negotiating with Save-A-Lot Foods."
Schwabe said he is anticipating that a 14,000-square-foot grocery store, about 6,000 square feet of additional retail — and potentially fast food — will appear on the site.
"McDonalds has expressed interest," Schwabe said. "That would leave room for another tenant — perhaps a salon or other retail."
The timeline depends on a number of factors, according to Schwabe.
"We could begin construction as soon as next fall — but it depends on how long it takes for the city to obtain the property," Schwabe said, adding that construction would begin May of 2003 at the latest.
Space in the new development would be brokered by MLG Commercial.
In the town of Mount Pleasant, additional infill development is coming to the intersection of highways 31 and 20. According to Peter Glaser of Polacheck’s Retail Property Group, a 220,000-square-foot development including a Kohl’s Department Store and a Jewel-Osco will be located behind existing development on the northwest side of the intersection. The project will include 65,000 square feet of small tenant space for which Polacheck has already signed some leases.
"This is one of the highest-traffic intersections in southeastern Wisconsin — and the highest in Racine County," Glaser said.
Vehicle counts for the intersection top 35,000, according to Glaser.
February 1, 2002 Small Business Times, Milwaukee
