Deal keeps Bon-Ton downtown 10 years
$1.9 million in city funds part of lease extension
Bon-Ton Stores Inc. would keep operating its corporate offices and the Grand Avenue Boston Store in downtown Milwaukee, totaling around 750 jobs, for at least another 10 years under a new proposed lease extension.
The agreement, which would come with $1.9 million in proposed city funds, marks the latest in a series of new developments proposed for the area around the Grand Avenue mall.
That includes plans by the Grand Avenue’s owners to redevelop their property into offices and other new uses. While the Boston Store building is owned separately from the mall, it is attached to the Grand Avenue and helps anchor that building.
Other nearby projects include the Milwaukee Symphony Orchestra’s planned new concert venue at the former Warner Grand Theatre; the conversion of former office buildings into apartments; and a possible hotel development
with hundreds of new rooms just west of Boston Store.
“This is one of many pieces,” said city Development Commissioner Rocky Marcoux.
The new lease also means Milwaukee would still have a downtown department store — something that has become increasingly rare for even larger cities.
Marcoux said keeping Boston Store open is crucial to keeping the corporate offices of Bon-Ton, which operates such chains as Boston Store, Elder-Beerman and Younkers. Bon-Ton splits its corporate offices between Milwaukee and York, Pa.
Bon-Ton has around 650 employees in its corporate offices, which are located mainly on the upper floors of the Boston Store building, 331 W. Wisconsin Ave. The company has around 100 jobs at the downtown Boston Store, which is on the building’s first two floors.
Bon-Ton’s office and store leases both expire in January 2018. They would be extended until at least January 2028 under the new agreement, Marcoux said.
The city would provide up to $1.9 million to help finance $4 million in renovations at the Boston Store building, which is owned by Wispark LLC, WEC Energy Group Inc.’s development subsidiary.
The city would provide those funds through annual $190,000 payments if Bon-Ton keeps 750 employees at the Boston Store building, Marcoux said. If Bon-Ton falls below that jobs mark, those annual payments would be smaller, he said.
The funding proposal needs Common Council approval.
It comes as Bon-Ton and other department store chains are losing ground to Amazon.com Inc. and other online retailers.
Both Kohl’s and Macy’s last week reported dismal holiday shopping results, with Macy’s saying it will close 68 stores. Bon-Ton posted a $108.1 million loss through the first three quarters of 2016, with fullyear results to be posted in March.
Marcoux said he’s confident Bon-Ton has a longterm future despite the trend toward online shopping. The Milwaukee corporate offices, he said, include employees who help operate the company’s online operations.
Ald. Robert Bauman, whose district includes downtown, said in 2014 he was skeptical about subsidizing Boston Store. He voted for that earlier financing plan because it would help keep Bon-Ton’s corporate offices in Milwaukee.
Bauman said Tuesday he believes the Grand Avenue area is improving.
“Major retailers appear to be taking some structural hits,” Bauman wrote in an email. “But so long as major retailers remain in business they will need a headquarters, so I support making the effort to retain these HQ jobs (and the retail jobs as well) downtown.”
Under the new proposal, underused space in the Boston Store building would be renovated to help accommodate the corporate offices, Marcoux said.
Bon-Ton also would shift corporate employees to the building from additional offices it leases at The Blue/Reuss Federal Plaza, 310 W. Wisconsin Ave., he said.
The city cash would come from property taxes generated by the Boston Store building, which includes luxury apartments on its top floors; the Grand Avenue mall; the Courtyard by Marriott hotel attached to the mall; and the building attached to the mall’s eastern end that includes offices, Planet Fitness and a Marriott Residence Inn.
Those property taxes provide around $2.4 million annually through a tax incremental financing district that is set to end this year. The new financing plan proposed by the city would delay those property taxes from going to the city’s general fund, Milwaukee Public Schools and other local governments until 2020, Marcoux said.
Along with the funds for the Boston Store building’s renovations, the financing plan also would provide a $750,000 exterior facade grant for the Milwaukee Symphony’s proposed new concert venue, he said.
That project would convert the long-vacant former Warner Grand Theatre, 212 W. Wisconsin Ave., and an adjacent 12-story office building into a new Milwaukee Symphony concert hall and administrative offices.
The symphony in December announced plans for the project, saying it has raised more than half of its $120 million goal. That would provide $75 million to $80 million for the concert hall renovations, $20 million for the symphony’s endowment and additional funds to retire a pension liability and meet other expenses.
Finally, the city financing plan proposes spending $5.1 million on nearby street reconstructions and other public improvement projects. They include a Bublr Bikes bike sharing station outside the Grand Avenue’s main entrance, 275 W. Wisconsin Ave.
Bublr Bikes announced last week it will move its offices to the Grand Avenue as part of the underused mall’s redevelopment. The mall’s owners are seeking additional offices and a supermarket to anchor their redesigned property.
Keeping Boston Store and Bon-Ton’s offices open is “obviously very important to our efforts,” said Chuck Biller, one of the investors who bought the Grand Avenue just over a year ago.
Other developments near the Grand Avenue include new apartments, including last year’s conversion of a vacant 11-story office building into The Buckler, with 207 upscale units, at 401 W. Michigan St., and the Marquette University Athletic Performance Research Center, planned for 12 acres bordered by N. 6th, N. 10th, W. Michigan and W. Clybourn streets.
Also, Marcus Corp. and Jackson Street Holdings LLC have submitted competing plans to develop hotels and apartments on the city-owned parking lot at 401 W. Wisconsin Ave., just west of Boston Store. Both proposals depend on expanding the nearby Wisconsin Center convention facility.