Madison’s multifamily housing surge still picking up speed

From the pages of In Business magazine.

To use a worn-out cliché, Madison’s multifamily building boom is a perfect storm, with several converging storm fronts. Those fronts include the need to modernize the city’s building stock and boost its tax base, the need to provide housing for young millennials toiling at Epic and other high-tech stalwarts, and the need to satisfy the cravings of aging baby boomers who want to sell their suburban homes and enjoy a little urban excitement.

A number of multifamily projects are scheduled to come online in the next 12 to 18 months, but the staying power of this building trend will depend on whether long-term homeowners continue to seek other living arrangements — at higher price points. “We think it will continue to be strong for a while yet,” says Mike Slavish, president of Hovde Properties. “The folks are bullish on that market.”

While we wait (and wait) for commercial office construction to make a strong comeback, multifamily housing, with a little street-level commercial, is the order of the day. So in this look at construction and development, we examine the economic impact and key design features of four local construction projects that are scheduled to reach fruition in calendar year 2015 — all of them with a healthy dose of either condominium units, luxury apartments, or other forms of housing.

We’ll start with the Galaxie, which is Gebhardt Development’s encore to the Constellation, the mixed-use complex that is considered a measuring stick for what comes next.

Festival within a Galaxie

Prior to Thanksgiving weekend, Madisonians will have a pretty good idea what they have in the commercial portion of the $90 million Galaxie project on East Washington Avenue. That’s when the new Festival Foods, the centerpiece of that commercial portion, will see its first true test as a neighborhood game-changer.

A rendering of the Galaxie development, with the Festival Foods grocery at street level.

With the promise of locally sourced foods and a Woodman’s-style pricing model, the Madison Festival Foods will be a bit of a departure from Skogen’s Festival Food’s other 20 stores. The Madison store “will be completely different aesthetically, with its urban design underneath a large residential high-rise and attached parking ramp,” says Aaron Aspenson, program manager for Skogen’s Festival Foods. “The layout will be different as well, with perishables on one side and nonperishables on the other.”

The walls of the store will be 60% glass, and the building will be structurally supported by healthy ash trees that were harvested by the City of Madison due to fears of an emerald ash borer infestation. The columns, trusses, and beams will all be constructed of what Aspenson called “environmentally friendly, large-diameter, whole ash trees” shaped by WholeTrees Architecture & Structures.

The mezzanine level will have public spaces, including a community conference room complete with a projector and classroom-style seating that guests can reserve ahead of time for free. An open community mezzanine area, where guests will be able to get food or coffee or access complimentary Wi-Fi, will feature a large seating space that overlooks the store. It will also include an outdoor patio area that overlooks East Washington, with views of the Capitol.

In addition to the 55,000-square-foot Festival Foods, the first commercial phase of the Galaxie will have 33,000 square feet of commercial space, including second- and third-floor offices that will be ready for occupancy in October 2015. Otto Gebhardt, owner of Gebhardt Development, is in negotiations with a couple of local restaurants, and in keeping with the “tech hub” theme for that area of East Washington, he’s also in discussions with information technology companies to take up the majority of the second-floor office space.

The goal, especially with the restaurants, is nearly 24/7 activation. “We’d like to continue what we did at the Constellation and make sure the street activation is done as much as possible by local establishments,” Gebhardt said.

The Galaxie’s 15-story, 205-unit residential tower will be up by year’s end, but work on interior finishes will proceed until units are ready for occupancy in April 2016. Details are being worked out for a second commercial-retail phase (also about 33,000 square feet) that could include a breakfast diner and, synergistically, a sports bar across from Breese Stevens Field.

Gebhardt estimates that between 300 and 600 people will work on the site during the construction phase, with phase I retail (not including the projected 230 full-time Festival Foods employees) accounting for another 50 to 150 full-time jobs.

Given the project’s estimated $90 million value, the city stands to significantly boost its tax base. It is under construction on the old Don Miller site, which was generating under $100,000 a year in property taxes, in contrast to the Galaxie, which should generate upwards of $1 million to $1.5 million per year, Gebhardt noted. Similarly, the Constellation site generated less than $50,000 a year in property taxes predevelopment, and “our tax bill this year is somewhere in the neighborhood of $800,000,” Gebhardt added.

Therein lies the financial case for urban infill modernization. “There is no question that as a landlocked city, urban infill is the only solution to added tax base,” Gebhardt stated.



Hub of activity

One term used to describe the Hub on Campus Madison is “amenity-rich,” and it will attempt to live up to that by adding more than 313 high-end student residences and resort-like features to the corner of State and Frances streets. Developed by Core Campus LLC out of Austin, Texas, and built by J.H. Findorff & Son, this hub of social activity will also have a mix of studio and one-, two-, three-, four-, and five-bedroom apartments, and certain units will include terraces.

An artist's rendering of the Hub on Campus Madison.

With construction costs pegged at $70 million, the 12-story, mixed-use development is student-oriented, complete with a student residence tower. When explaining their living conditions to parents, occupants will no doubt emphasize the private study-room space, meeting spaces, and modern business center. They might gloss over one of the largest rooftop infinity-edge pools in Madison; a 10,500-square-foot rooftop courtyard; two rooftop hot tubs; and a large, technologically advanced fitness center. In addition to that, residents will enjoy a spa complete with a steam room, sauna, tanning beds, and locker rooms.

The 500,000-square-foot Hub will replace three buildings that formerly occupied the site, including the old University Inn, but an original terra cotta façade saved from a retail-commercial building will be installed in the new facility. The project has supported hundreds of construction jobs, and when complete, the facility will have approximately 25,395 feet of retail space that will offer more business development and economic stimulus.

“The impact of bringing nearly 1,000 more students to the campus area of State Street should greatly impact the economics of nearby businesses, which undoubtedly will see an immediate impact,” said Ben Modleski of Core Campus.

Modleski said Core Campus would like to attract a mix of primarily local retailers that will activate the street and be attractive to tenants. The anticipated neighborhood synergy will start with eclectic storefront designs “that pay homage to the look, feel, and scale of State Street,” he stated.



Standing ovation

The marketing pitch says Ovation 309 (309 W. Johnson St.) provides a unique adventure in urban living, and the intersection of State and Johnson streets should be even more lively when it opens in June. Mike Slavish of Hovde Properties, the developer of the 14-story Ovation, plans to attract a diverse mix of tenants.

An artist's rendering of Ovation 309's rooftop garden.

The mixed-use development will contain 248 luxury apartment residences featuring 34 different floor plans and floor-to-ceiling windows to welcome natural light. Amenities like solar drop shades, energy-efficient LED lighting, quartz kitchen countertops, and men’s and women’s saunas will add to its sustainable and luxurious feel.

Rental living isn’t its only purpose, as the Ovation takes a bow with 23,000 square feet of ground-level and second-floor commercial and retail space. The Madison Fire Department will house its administrative offices in 3,100 square feet, and Eppstein Uhen Architects will occupy 6,500 square feet of office space.

While located just a few steps away from shopping, dining, and entertainment, Ovation itself will create activation with a Mr. Brews Taphouse, a Despaña restaurant and wine bar that plans to serve baked goods and coffee at breakfast time, and perhaps a hot yoga studio.

The pet-friendly building will contain an outdoor dog walk, and it’s designed with green roof systems on multiple levels and various grilling stations for residents.

The $45 million Ovation should also help fill local government coffers because it will represent a $42 million increase in tax base for the property, Slavish noted. During construction, roughly 200 people have worked on the job site on any given day, and the retail amenities are expected to add even more jobs.

The demand for such housing is not driven only by young professionals such as Epic employees, noted Slavish. “Interest comes from all age demographics,” he said.



The Residences bring luxury

When the Residences at 306 West (Main Street) open in May, no commercial or retail space will be evident — just 172 luxury units atop a stylish grand lobby and entrance portico, giving downtown Madison shops and restaurants well over 200 potential patrons.

The Residences at 306 will bring luxury amenities and great views of the city.

With its emphasis on luxury apartments, the $38 million Alexander Co. building rounds out the housing cycle of the $120 million Capitol West Master Redevelopment, which also includes the 164-unit Capitol West condominiums and the 151-room Hyatt Place Hotel.

Units range in size from 650 to 1,900 square feet, and Tim Bizjak, project manager for builder JP Cullen, says their architectural flair includes two distinct finish packages (cosmopolitan and modern), large windows, and cantilevered balconies that come complete with gas grill hookups and will allow residents to enjoy lake views. “They are not exactly like the condominium units at Capitol West, but they are similar in terms of the high-end quality finishes,” Bizjak said.

Located two blocks from the Capitol Square, the 12-story facility is also very Madison-centric, with bike-friendly amenities such as extensive bicycle parking and an indoor bicycle service station; pet-friendly amenities like an indoor pet-washing station; and people-friendly offerings such as a 24-hour fitness center, an electric-car-charging station, and a large private courtyard featuring an outdoor fireplace and sunscreen arbors.

Construction employment has fluctuated, but it’s averaging between 80 and 100 onsite workers each day, not including the distributors and material suppliers that have a hand in the work.



Wiring Madison

What does it take to ensure that Madison remains one of the most “wired” communities in the nation? Lots of fiber-optic cable, according to folks at the Madison branch of Faith Technologies, which has provided the high-tech hookups for both the Hub on Campus Madison and Ovation 309.

As new multifamily buildings that tout luxurious amenities, neither can afford to cheap out on technology related to security or Internet service, especially if they expect to house tech-savvy college students or lure people who run home-based businesses. Project Manager Aaron Bizub provided the following tale of the fiber-optic and hardware tape for both structures:

The Hub and its spokes

In this corner, the 518,000-square-foot Hub on Campus Madison, a 12-story multitenant building with a tenant-entry system, network and cable TV, CCTV (closed-circuit TV), and area rescue, firefighter two-way communication, fire alarm, and control systems. It will require:

►    The installation of more than 180 IP closed-circuit television cameras
►    More than 370,000 feet of Cat5 network cabling infrastructure for carrying signals to computer networks
►    More than 9,000 onsite man-hours for a total project scope of $5,140,111 (out of a total construction cost of $70 million)

Ovation and its optics

And in this corner, Ovation 309, a 448,000-square-foot apartment complex that contains a tenant-entry system, network and cable TV, and area rescue, firefighter two-way communication, fire alarm, and control systems. It will require:

► 80,000 feet of Cat5 network cabling
► 45,000 feet of micro-duct fiber (installed as bundles in larger ducts)
► More than 5,000 onsite man-hours for a total project cost of $2,603,603 (out of a total construction cost of $45 million)
And that’s just for two buildings!

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