Behind the Deal: R2 Cos' Plan for Milwaukee's Downtown Post Office
Now that the ink has dried on R2 Cos' acquisition of the downtown Milwaukee Post Office, managing principal Matt Garrison tells us he plans to revitalize it by adapting it for mixed-use, highlighting its modernist design, and developing the surrounding lakefront.
R2 just bought the asset in a JV with Polsky Holdings for $13M. Matt (pictured) says R2 is always looking for opportunities across the Midwest, and the chance to buy the nine-acre, 1.1M SF facility was too good to pass up. But R2 and Polsky had to act quickly, as the site attracted interest from scores of other buyers, including several from Chicago. Matt says the R2/Polsky JV worked on the deal for nearly 60 days before locking it down.
R2 and Polsky are now working with Gensler to draft a reuse plan, one Matt hopes will highlight the 48-year-old building’s Brutalist architecture. He says he finds charm in the style, and would like to open up the building with a lot of glass. Matt views the site as mixed-use, anchored by retail, with new development surrounding the current building. The post office ties in with Milwaukee’s ongoing efforts to revitalize West St. Paul Avenue. City officials are aggressively courting developers to the area. Matt loves the post office’s location. It’s near the trendy Third Ward, across the river from the Harley-Davidson Museum, and the boutique Iron Horse Hotel is nearby.
Before repositioning can begin, however, the USPS needs to vacate the space. It holds a lease on the building through 2020, with a series of five-year extensions. In 2008, the USPS bought land in the Milwaukee suburbs to build a new facility, but the recession tabled those plans, and the post office is now considering other areas to relocate and meet the changing needs of customers. Matt is OK with this, as this covered land play, and any redevelopment plans the team draws up, are covered by the cash flow from rent.
Matt envisions one floor of the building for parking and around 100k SF of office space. Another positive Matt notes is the building has 900k SF in floor area ratio (FAR), which allows even more flexibility for development, including restaurants and nightlife options along the river.