Demolition is set to begin this week to clear the former Derse Inc. headquarters site at 1234 N. 62nd St. and make way for a $25 million 152-unit high-end apartment complex.
HSI Properties, developer for the project, paid Derse $2.48 million for the 3.7-acre site earlier this month. The site is just north of West State Street, on the south side of West Martin Drive, between North 60th and North 62nd streets.
The project, called The Enclave, will feature two U-shaped, four-story buildings, said Brett Haney, a principal with the Waukesha-based HSI. Construction will begin in April, with the first building, at the corner of 62nd and Martin, to be completed by May 2012, and the second to follow in August 2012, he said.
Haney said the Enclave fits with roughed out ideas that State Street corridor redevelopment include multifamily housing, like the 231-unit Reserve on the city's eastern State Street border. The Reserve opened in 2002 touting luxury one- to three-bedroom apartments, with its web site showing current rental rates from $970 to $1,710. The Enclave also will feature one- to three-bedroom apartments, Haney said, with rents from $900 to $2,200.
Although "some were scratching their heads" when the Reserve went up, Haney said, the Reserve's developers "had good vision. It was an extremely successful project, and we are trendsetters for the neighborhood."
Neighborly visions for State Street corridor
The city's comprehensive plan, adopted six years after the Reserve opened, describes the State Street corridor, which bleeds into the city of Milwaukee, as an "important extension of the village." Its mention in the plan is brief, urging mixed-use multifamily and commercial projects "that complement village amenities and the charm of surrounding neighborhoods."
The city's tiniest neighborhood association, that of Highland Park, is one of those surrounding neighborhoods, abutting the Enclave on West Martin Drive. Neighbors were quick to chime in on the project when it first was proposed in early 2009, citing concerns with the project's size, design and traffic flow, said Linda McCabe, president of the association.
HSI took neighbors' concerns into consideration, according to McCabe. Although all the neighbors "might not be thrilled with the idea" of the Enclave, McCabe said she believes the project, in its final form, "will be an asset rather than cause for concern."
"Change is always hard, but we know the city is looking to expand and grow," McCabe said. "We want to preserve (the neighborhood) being quiet and quaint and enjoyable for people."
Ald. Dennis McBride, who represents the district, said the Enclave fits with his vision of State Street’s industrial character evolving into a new identity as “an entire neighborhood unto itself.”
The city, however, needs a detailed blueprint for State Street redevelopment, McBride said, so that the corridor develops according to a plan “rather than haphazardly.”
“We need to be deliberate about what we have in there,” McBride said, “so it is what we want it to be, rather than what it turns into.”
New life for 'abandoned' neighborhood
Many of the Enclave’s neighbors hope the project breathes new life into a residential area that now is “kind of like an abandoned neighborhood,” said Jerry Wirtz, who lives across the street at 6010 W. Martin Dr.
“We hope it will be everything they say it will be ... and enhance property values,” Wirtz said.
With a recession and businesses like Derse and the related buzz of activity moving out of the area, Wirtz said, residential property values have plummeted. Wirtz said neighbors recently pulled their house from the market after it failed to sell, and another neighbor who wants to sell can't, as the current market value of her home is less than what she paid for it.
The Enclave, he said, offers the potential for Highland Park home values to perk up, along with the quality of life, as more people mill about on sidewalks to create a neighborhood atmosphere “where people look out for each other.”
Haney expects the Enclave to attract single professionals, young families not yet ready to buy a house, medical graduate students and residents, and empty nesters seeking to downsize. The Enclave's location is attractive, he said, as State Street provides easy access east to downtown Milwaukee and major employers like Harley-Davidson Motor Co. and MillerCoors Brewing Co., and west to Wauwatosa's village, a medical campus that includes Froedtert Hospital and the Medical College of Wisconsin, the Milwaukee County Research Park and GE Healthcare.
“Up and down State Street, to where we are, will be redeveloped and will be a great place that will only get better in the next 20 years,” Haney said, adding that multifamily housing will be an essential element.
"If you look at Wauwatosa, there are so many high-paying, good quality, white-collar jobs within two miles of our site, but there are very few newer multifamily" options, Haney said.
The project’s financing came together, Haney said, due to a Wauwatosa’s shortage of multifamily housing supply, in general, and a shortage of quality, market-rate multifamily housing, in particular.
The project will be financed through a $20 million U.S. Department of Housing and Urban Development (HUD) construction loan, which insures loans for market-rate rental housing, Haney said. The HUD-backed loan will be through Grandbridge Real Estate Capital, LLC, based in Charlotte, NC.
Fleshing out the project funding is $1.5 million in tax incremental financing from the city and $5 million in private equity, Haney said. The project will be owned by a private investor group led by Haney and fellow HSI principal Ryan Schultz.
The timing of the project is near perfect, according to Haney, as construction gets underway while building costs and interest rates remain low, with the apartments to come on line after the economy has another year of recovery under its belt.
The Enclave, he said, feeds into “revitalizing the neighborhood and the quality of Wauwatosa and the bright future the city has as a niche market in the metro area.”