$32 million project would be first of new development
The Business Journal of Milwaukee – by Pete Millard
A Pewaukee development firm is proposing a $32 million office building as part of the long-awaited development on the highly visible Ruby Farm site along Interstate 94 in Brookfield.
Capstone Quadrangle has a contract to acquire at least 16 acres of the 64-acre site that is owned by VK Development Corp., Brookfield. The property includes part of both the Ruby Farm and the former WTMJ-AM radio transmission tower site, near West Blue Mound Road and North Calhoun Road.
The firm is locating the project, the first new building to be built in recent years along heavily traveled West Blue Mound Road, on the southwest corner of the site so it will be visible from I-94, said Mike Faber, a partner at the development firm.
Capstone Quadrangle is purchasing the land because it considers the Calhoun Road area the central point of the office market along the I-94 corridor from downtown Milwaukee to western Waukesha County. Over time, depending on the office leasing activity in Brookfield, Capstone Quadrangle could build four other office buildings of varying sizes on the site, which is being called Percheron Square.
“This is the perfect location because the number of buildable sites with interstate visibility are diminishing in Brookfield,” said Paul Quick, a partner with Capstone Quadrangle.
Faber and Quick declined to comment on how the project would be financed.
In February, when VK Development presented its initial concept for Percheron Square to the Brookfield Plan Commission, the company’s proposal included 78,000 square feet of retail along West Blue Mound Road, 528,000 square feet of office space, a 150,000-square-foot health club operated by Princeton Club, an 80-unit assisted living center near the Ruby Farm homestead, 212 condominiums and a 128-room extended-stay hotel. The development will include 19 buildings when finished.
VK Development estimates the project could total more than $250 million when completed. The Ruby farmstead, with its yellow horse barn, will be preserved as part of the development. The developers will make another presentation to the Brookfield Plan Commission June 10.
Capstone Quadrangle has hired RFP Commercial Inc., a Milwaukee real estate brokerage firm, to market the proposed office building. The developers do not plan to break ground on the building until they have at least one prominent tenant under contract, Quick said.
“Since this is a premier location and there is a shortage of Class A buildings in the Brookfield submarket, we’re optimistic,” said Ned Purtell, a partner at RFP.
According to office vacancy rates tracked by RFP, the Brookfield market’s office vacancy rate is 12.8 percent. For Class A office space, the vacancy rate is 8.6 percent, said Patti Stevens, a broker for RFP.
Purtell also said there are a handful of major office tenants, including a corporate headquarters tenant, in the Brookfield and Waukesha area that are looking for space.
For more than a year, RedPrairie, a Waukesha-based supply-chain management software company, has been courted by more than a half-dozen developers to move from the Crossroads Business Park to downtown and several other office locations in southeast Wisconsin. RedPrairie’s lease at Crossroads, which is owned by Liberty Property Trust, expires in 2010.
“RedPrairie has still not made a decision about its offices,” Purtell said.
Capstone Quadrangle was formed in 1995. In the past 14 years, the partners have completed more than $250 million in office, health care and industrial developments in a half-dozen states.
The company’s largest Milwaukee-area office projects completed 10 years ago were the One Riverwood Place and Two Riverwood Place developments in Pewaukee, which together have 195,200 square feet of office space. The company’s largest local industrial development is the 102,000-square-foot Capstone Business Center in Oak Creek.
Since 2006, the city of Brookfield has conducted a marketing campaign to retain and recruit new companies, particularly office tenants.
“As part of that marketing process, we recognized we have aging offices,” said Patrick Drinan, an economic development specialist for the city.
Drinan said the city is committed to assisting private developers bring a new supply of offices to the market with an improved review and approval process.
Brookfield’s neighborhood planning process also looks favorably at parking decks, which promote higher density on development sites and better use of green space, Drinan said.
As the planning for Percheron Square advances, Drinan said city planners would likely consider tax incremental financing to defray some infrastructure costs along Calhoun Road and Blue Mound Road or possibly for parking structures. Capstone Quadrangle and VK Development have not formally requested tax incremental financing for their developments.
However, Quick estimated that a parking deck for the proposed 150,000-square-foot office could add $4 million to $6 million to the project cost.
“Blue Mound Road is our commercial lifeblood, and good planning leads to sound investment that supports intelligent growth,” Drinan said.