Tower site will make tough sell as business park

Sep 02, 2009 (Milwaukee Journal Sentinel - McClatchy-Tribune Information Services via COMTEX) -- TWRAQ | Quote | Chart | News | PowerRating -- In recent years, most of the major light industrial buildings in southeastern Wisconsin have been built near I-94, in places like Kenosha, the Racine area, Oak Creek, Franklin and Milwaukee's Menomonee Valley.

So Tuesday's decision by the Milwaukee Common Council to approve a $35 million redevelopment plan for the former Tower Automotive site, including the creation of a 60-acre business park, cuts against that market-driven trend.

The Tower site is about 1.5 miles west of I-43, in a neighborhood that has high rates of poverty and crime. Those factors will make the future business park a tough sell when lots become available by 2013, after many of the existing buildings have been demolished and cleared.

Those are among some of the comments from local industrial real estate brokers following the council vote. The brokers earn their pay by bringing together the sellers of industrial land with companies looking to buy parcels on which they'll develop buildings for light manufacturing and product distribution. The brokers contacted by the Journal Sentinel see big challenges with the Tower site, but they also say a business park at that central city location could be successful.

"I think it can be done," said James T. Barry III, president of Colliers Barry. "You've got to make the case why this is the place to go."

Department of City Development officials and others point to the success of the Menomonee Valley Industrial Center, another city-developed business park, which was created on a rail yard east of Miller Park. The center so far has attracted businesses with about 700 employees, but it is next to I-94, one of its strongest selling points.

"Most industrial parks that are high-value are at a freeway entrance ramp," said Robert Dufek, who operates Dufek Realty LLC.

The Tower site, previously used for decades by A.O. Smith, has rail access, which is an advantage over many business parks, said Dufek and others. But the number of companies that ship their products by rail instead of truck is relatively limited, Dufek said.

There's also the safety issue of an area where the crime rate is higher than at suburban business parks, Barry said. Companies considering the Tower site may have concerns about being able to recruit employees, as well as how crime could directly affect their operations, he said.

The Menomonee Valley Industrial Center has land-use guidelines that require companies entering the park to provide certain numbers of jobs, depending on the size of their buildings. Those guidelines have generally barred distribution centers, which are often large buildings with relatively low numbers of employees. Similar guidelines at the Tower site would hurt the park's ability to sell parcels, said broker Jeff Horn of Apex Commercial Inc.

"That's very limiting," said Horn.

The Tower site does have the advantage of being close to a large number of prospective employees, said Terry McMahon, a principal at Boerke Co. He said it also helps that the site is served by bus lines, so people without cars still have a reliable way to get to work.

Other brokers also cited the location near a large work force as an advantage. But Wisconsin has been losing labor-intensive manufacturing businesses, Dufek said.

The parcels sold at the Tower park will need to be offered at "extremely competitive" prices to attract businesses with concerns about the location, Barry said. City officials may have to offer additional financial incentives to attract businesses, said Barry and McMahon.

The park also will need a strong marketing campaign, Horn and Barry said. Horn said the campaign should be global, which would also market the larger Milwaukee area to companies from other countries. Barry said the campaign should include inviting brokers to tour the site.

Despite the challenges, all the brokers contacted said redeveloping the site is the right thing to do. It will be funded by $9 million in state and federal grants and $25.6 million from city taxpayers -- with $15.6 million to be repaid over 26 years by land sales and the development's property taxes.

"You have to do something to try to entice industry back into the city," Dufek said.

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