Boston Store building owners shift to Plan B

The owners of downtown Milwaukee’s Boston Store building have a Plan B following this week’s news that both the department store and the retailer’s corporate offices are shutting down.

The bankruptcy sale of Bon-Ton Stores Inc. to a group of liquidators “didn’t catch us completely off guard,” said Tony Lindsay, vice president at Urban Innovations, which operates the building, 331 W. Wisconsin Ave.

Chicago-based Urban Innovations and its affiliated firm, North Wells Capital, “went in with eyes wide open” with the April 2017 $25 million purchase of the building, Lindsay said Friday.

So, while the owners planned to keep Bon-Ton as both the retail tenant and anchor office tenant, Lindsay and his partners knew the company has been facing big challenges.

To help cut Bon-Ton’s expenses, Urban Innovations worked to shrink the department store operator’s space.

Bon-Ton has been leasing offices totaling around 170,000 square feet on the third, fourth and fifth floors of the building, as well as 30,000 square feet at The Blue building, 310 W. Wisconsin Ave., according to the Department of City Development.

Bon-Ton planned to combine those offices by June and lease 134,000 square feet of offices at the Boston Store building, with the Boston Store retail space reduced from 123,000 square feet to 50,000 square feet.

Urban Innovations also was seeking other office tenants for roughly 100,000 square feet of remodeled space.

City building permits were issued in November for that project.

Urban Innovations shrank the retail space to roughly one-third of the first two floors on the Boston Store building’s Wisconsin Avenue side, Lindsay said. The firm also cleared the former retail space to prepare it for conversion to offices.

But work stopped in February when Bon-Ton filed for bankruptcy.

Now, the building’s owners have to find office tenants to fill what had been set aside for Bon-Ton’s offices, as well as retail tenants.

Plan B includes roughly 295,000 square feet of offices on floors two through five, and 63,000 square feet of first-floor retail space, Lindsay said. The building also has 74 apartments on floors six through nine.

He said it makes sense to make the entire street level for retail to take advantage of visibility along both Wisconsin Avenue and Michigan Street.

That space could be divided in half, Lindsay said, perhaps landing a smaller urban-format Target Store or other retailers.

Meanwhile, the building’s owners had already hired brokerage firm JLL to seek office tenants. That effort is being led by Dan Jessup, a JLL executive vice president.

Urban Innovations still plans to proceed with other work to make the building more attractive to office tenants, Lindsay said. That includes a new main entrance and lobby facing North 4th Street.

Some of those improvements could come with city funds.

The Common Council and Mayor Tom Barrett last year agreed to provide up to $1.9 million to help finance renovations for Bon-Ton’s headquarters.

The company, in turn, agreed to extend its lease for 10 years, to January 2028. The loan was forgivable if BonTon maintained its roughly 700 corporate office jobs and 50 department store jobs.

The city funds were placed in an escrow accounts and matched by roughly $2 million from the building’s owners.