Building boon

The construction and development scene in Madison and Dane County remains healthy even as concerns loom about future workers.

From the pages of In Business magazine.

Stating the obvious, Madison and Dane County are great places to live, work, and play. The most recent unemployment rate in Dane County is an almost unheard of 2.7%; the city of Madison recently ranked third in a list of the country’s friendliest cities according to Travel & Leisure magazine; and among small to mid-sized cities, Madison also ranked third for being one of the best places to live in the U.S., according to Livability.com.

While these accolades do not a city make, they do point to the fact that there exists here an environment worth celebrating. Its trifecta — a state capitol, world-class university, and entrepreneurial draw — helps drive the area’s success, attracts more people, and sparks ongoing development.

In this discussion of the area’s construction growth, we spoke with a few experts to see if they’re just as bullish on 2017 and beyond.

Bird’s-eye view

From his office overlooking the Beltline, Brad Hutter, president, CEO, and owner of MIG Commercial Real Estate, views the potential for commercial development optimistically: The sky is the limit.

The key, he says, is in public-private development, noting that MIG’s Arbor Gate development has succeeded in large part because of such collaboration. “The city gets a bad rap,” Hutter states, “because developers often seize on the frictions. I complain about regulations, as well, but I also know that at Arbor Gate, the number of changes we were required by the city to make were really good changes.”

As for complex and often huge infill projects going up around town, Hutter credits the builders and city planners, saying the bureaucracy and regulations that often come with such projects can be especially difficult, “but at the end of the day you get a better project,” he notes. “Ultimately the bar is set higher. You don’t drive around Madison and say, ‘Hmm, that’s an ugly or cheap project.’”

Looking into the future, Hutter envisions a ring of urbanization encircling Madison, formed loosely by transportation hubs already in place that attract thousands of people from all parts of the state: East Washington at Highways 30 and 151, for example, the Verona Road interchange, Highway 14 and University Avenue in Middleton, Hwy. M and University in Middleton, and, for lack of a better identity, the central Beltline area near Arbor Gate.

“There’s no reason the central Beltline can’t look like Brookfield when you’re driving through on I–94 from Milwaukee,” Hutter says, “with modern office parks employing thousands of people.”

He predicts major changes between John Nolen Drive and Verona Road resulting in a denser concentration of professional jobs in an area where the city is focused on creating tax base, safer areas, and easy on-and-off transportation. “That stretch of the Beltline, I think, will have $300 million to $400 million worth of investment on it.”

That’s because one success breeds another when it comes to developers, he explains. “Developers don’t like competition, but when other developers are building in the same area it definitely creates a momentum and results in higher values not just for them personally but for the community in property tax base, which is the real win-win.” He believes Arbor Gate could be such a catalyst.

“I love what Livesey has done by Hilldale with Super Target,” he adds. “The Shorewood area is changing. Think of that on the Beltline!

“In the next two to three years, I think we’ll see a real upturn on projects that create more density.”

(Continued)

The affordable side of development

A flurry of high-rise housing and mixed-use projects in recent years has been changing Madison’s skyline, but all that glitz and glass has also created a notable need for more affordable housing.

Mayor Paul Soglin announced an affordable housing initiative in 2014 with a goal of creating 1,000 affordable housing units in Madison over five years.

In January 2015, the Dane County Board adopted the Dane County Housing Needs Assessment that identified an immediate need for municipalities to improve affordable housing options.

Several projects have already been built around the area, while many are just beginning to take shape.

Madison recently approved an investment of $4.4 million to move forward on Stone House Development at 134 S. Fair Oaks Ave.; GrandFamily Housing from Gorman & Co. in the Union Corners development; Normandy Square from MSP Real Estate at 6509 Normandy Lane; and CommonBond Communities at 7941 Tree Lane.

In Middleton, the Workforce Housing Task Force recommended the city increase its supply of affordable housing units by at least 295 over the next three to five years.

Jacob Klein, principal at JT Klein Co. Inc., is answering the call with two such projects: Meadow Ridge-Middleton, a 95-unit (76 affordable) multifamily project on track for completion in March; and the recently approved 95-unit Oak Ridge nearby. Klein is also building 8Twenty Park, at 820 S. Park St. in Madison, another 95-unit mixed-income housing project that will also house JT Klein’s corporate office.

But the political winds could soon change with Donald Trump as president. Trump has long considered tax reform a priority, but as of this writing, what that reform will look like or how it will affect commerce remains to be seen.

For construction projects that are dependent on tax credits, such as many low-income housing developments, some reforms could be particularly troublesome, notes Klein. “Typical investors in tax reform are usually large corporations like J.P. Morgan or other large corporations that purchase the credits to offset their income taxes,” he explains.

“If the corporate income tax rate goes down from 35% to, let’s say 25%, it has an immediate impact on the value of the credits because [the investors] need less credits to offset less taxable income. So there’s turmoil in the market right now — whether founded or unfounded — because of the unknown, but I don’t think it will be as simple as changing the tax laws overnight.”

Klein also suggests multifamily development may have leveled out. “Long-term interest rates are going up. I’ve seen construction costs between April and now go up 18%. At some point, subcontractors will have to squeeze their margins down to make deals pencil out, or we’ll come to a screeching halt like we did in 2008. It’s easy to make things work if you have 3% interest rates for 10 years.”

Commercial optimism

Jeremy Shecterle, vice president at JP Cullen, says recently passed school referendums promise future construction jobs. He’s seeing communities compete with each other to attract businesses, as well. “Everyone seems to be hiring,” Shecterle says, “so there is a lot of competition for talent in all areas of construction from tradespeople to college graduates to experienced personnel.

“We are fortunate in Wisconsin to have people with a great work ethic, and a UW system as well as many quality technical colleges, that support many of the roles in the construction industry. We have also found some talented people who fit a role we need but do not have a construction background.”

Jeff Tubbs, vice president of business development at J. H. Findorff & Son Inc., agrees that things are clipping along nicely and he expects more of the same. “All areas of construction will continue to stay busy,” Tubbs states. For Findorff, that includes health care and hospital work and renovations, K-12 education, and apartments. “Vacancy rates are still very, very low and until that number changes and the banks get uncomfortable lending for apartments, they will continue to be built.”

Despite an increase in the mobile workplace, Tubbs says there will always be a demand for office space, whether new or renovated, even as businesses change to accommodate the modern worker.

What keeps him up at night, though, is not a concern that projects will dry up but rather that the workers won’t be there despite ongoing efforts to attract young workers to the trades. “Where are we going to get the workers and skilled tradespeople? Will we be able to keep up to complete these projects?”

(Continued)

2017’s changing landscape

From affordable housing to hotels to retail/office, student housing, and even a baseball academy, greater Madison’s landscape continues to evolve. Below are renderings of some projects scheduled for completion this year. Renderings are current as of this writing.

1. Stone House (mixed-use apartments)

August
1010 E. Washington Ave., Madison
Submitted by: Stevens Construction | Rendering by: Eppstein Uhen Architects

2. Veritas Village (multifamily housing)

Summer
110 N. Livingston St., Madison
Submitted by: T. Wall Enterprises | Rendering by: REDgraphx

 

3. 25 W. Main (office) / The Pressman (apartments)

Parking ramp: March; Office: July; Residential: August
25 W. Main St. / 117 S. Hamilton St., Madison
Submitted by: J.H. Findorff & Son | Rendering by: VDTA

4. GRB Academy (indoor sports practice facility)

Opened in January
6385 North Towne Road, DeForest
Submitted by: Greg Reinhard, owner | Photo by: 1848 Construction

 

5. Riddell-KollegeTown Sports

May
1763 N. Bristol St., Sun Prairie
Submitted by: Sullivan DesignBUILD | Rendering by: Heitman Architects

6. Meadow Ridge-Middleton

March
7625 Lisa Lane, Middleton
Submitted by: JT Klein | Rendering by: JLA Architects-Madison

7. JW Home Design Center

April
537 W. Main St., Sun Prairie
Submitted by: Jennings & Woldt Remodeling | Rendering by: Jennings & Woldt Remodeling

8. Quarter Row Apartments

June
202 S. Bedford St., Madison
Submitted by: Urban Land Interests/J.H. Findorff & Son | Rendering by: Potter Lawson

9. AC Hotel Madison Downtown

April
1 N. Webster St., Madison
Submitted by: North Central Group | Rendering by: Gary Brink & Associates

 

10. The Boulevard (apartments/retail)

July
3326 University Blvd., Madison
Submitted by: Stevens Construction | Rendering by: Knothe & Bruce Architects

(Continued)

11. Hidden Creek Residences

Summer
4603 Di Loreto Ave., Madison
Submitted by: T. Wall Enterprises | Rendering by: REDgraphx

 

12. The James (mixed-use apartments)

June
510 University Ave., 432 W. Gilman St., Madison
Submitted by: J.H. Findorff & Son | Rendering by: Core Campus

 

13. State Archive Preservation Facility

November
201 S. Dickinson St., Madison
Submitted by: JP Cullen | Photo by: JP Cullen

 

 

 

14. The Lodge II (market-rate housing)

June
4600 University Ave., Madison
Submitted by: Stevens Construction | Rendering by: Knothe & Bruce Architects

 

15. Middleton Center – Phase I (mixed use)

Summer
Parmenter St. & Hubbard Ave., Middleton
Submitted by: T. Wall Enterprises | Rendering by: Angus Young Architects

16. 5400 King James Way (mixed use/office)

Summer
5400 King James Way, Fitchburg
Submitted by: Iconica | Rendering by: Iconica

17. State Line Distillery

May
1413 Northern Court, Madison
Submitted by: Supreme Structures | Photo by: Supreme Structures

 

 

18. Esser Place (mixed-use)

June
1820 Main St., Cross Plains
Submitted by: Iconica | Rendering by: Iconica

 

19. Center for Healthy Minds

Opened in January
625 W. Washington Ave., Madison
Submitted by: Ideal Builders | Photo by: ZD Ventures Photography

 

20. 8Twenty Park-Phase II

December
820 S. Park St., Madison
Submitted by: JT Klein | Rendering by: Knothe & Bruce Architects

 

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