Burleigh Triangle Retail Project Won't Break Ground Until 2012

A $45 million retail complex proposed for the is slated for spring 2012 construction rather than this fall, according to the project developer, Chicago-based HSA Commercial Real Estate Inc.

The city approval process, including that will allow HSA to recover up to $8.67 million in public infrastructure costs, and other approvals required for the project are "taking on more of a glacial pace," said Timothy Blum, HSA's executive vice president and retail division managing director.

Still, Blum said, "We're more optimistic each day."

HSA's optimism resides in a project that Blum says will address pent-up demand, although "we're very concerned about the long-term economic drivers" and the unlikely prospects for "any kind of meaningful recovery."

Among the recent bleak economic indicators: continued high unemployment and household net worth falling along with consumer confidence. Although economists’ early projections called for consumer spending to rise in 2011, new data shows that consumer spending fell for the first time in two years in June, according to IHS Global Insight, an economic analysis and consulting firm.

Despite a down economy, Blum said: “Under just about any circumstances, our plan is resilient. That's the good news. Fundamentally, I think we can move forward."

The project, called , is planned for the southwest portion of a nearly 70-acre parcel at West Burleigh Street and Highway 45. The ability to lease warehouse facilities on other portions of the parcel that are not included in the first phase of development creates options for HSA to "weather the storm" as the project moves forward, Blum said.

The first phase of the plan calls for up to 240,000 square feet of retail space to be developed through adaptive re-use of a quarter-mile stretch of warehouses on the western edge of the site along Highway 45. HSA has projected this phase of the project will generate an additional $900,000 in city tax revenue and generate up to 500 part- and full-time jobs.

HSA is working with the city's TIF consultant, the Chicago-based S.B. Friedman & Co., on details of creating a TIF district that would provide HSA funding support for the project, according to Paulette Enders, the city's economic development director. HSA has said it will pay for public infrastructure costs through private financing, but is asking the city to direct TIF dollars its way once the project is completed.

Creating a TIF district for the parcel would allow increased tax revenue generated by the project to be directed to HSA to pay off its debt related to public infrastructure costs, which HSA projects will be about $8.67 million. Once HSA is reimbursed, the new tax revenue then streams to the city, the school district and other local taxing entities.

Blum said HSA has yet to sign tenants for the proposed retail complex, but the firm is working toward getting commitments. HSA has not named specific potential tenants, saying only that the project will attract best-in-class fashion and furnishings retailers new to Milwaukee. Those familiar with the project have cited Nordstrom Rack and the Container Store as possible tenants, neither of which has a Wisconsin presence.

Blum said the firm hopes to wrap up various approvals required for the project this fall, including a TIF agreement with the city as well as approval from the state Department of Transportation on road redesign elements of the plan.

The project was , after HSA addressed city concerns that centered on the firm's plans to bump up the amount of space dedicated to retail, to nearly triple the retail space projections for the site outlined in a 2005 city master plan. HSA came back to the city with revised plans that will deliver the nearly 1 million square feet of office space initially targeted for the site.

Under presented to the city in May, office space was added to a second component of the first phase. This component could include high-end grocers such as Trader Joe's or Whole Foods in new and adaptive re-use buildings that would front along West Burleigh Street. If market conditions allow, HSA has said development of this portion of the project could occur simultaneously with the nearly 240,000-square-foot retail complex.  

With the construction start moved to spring 2012, Blum said the first phase of the project would track for a fall 2013 opening, rather than spring or summer 2013.