Standing firm

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In the midst of a crumbling market, a Milwaukee investor sticks with his Pritzlaff project

The sign out front predicts occupancy by late 2008.

More than two years later, less than 10 percent of the historic Pritzlaff building complex in downtown Milwaukee is occupied by commercial tenants.

The remaining 235,000 square feet are empty.

The massive Cream City Brick complex is one of Milwaukee’s historic gems, but its old grandeur is both a blessing and curse in the face of one of the worst recessions on record.

When investor Kendall Breunig paid $3 million in October 2005 for the 260,000-square-foot property, comprised of seven connected buildings, he had multiuse plans for a relatively quick turnaround of the aging beauty, which had languished for years.

But by the time Breunig and his company, Franklin-based Sunset Investors-Plankinton LLC, finished three years worth of sandblasting the interior and power washing decades of grime off the exterior, the condo market had tanked and commercial leasing was practically nonexistent.

“Everyone was scared,” Breunig said of the 2008 market. “I would have liked to have seen it done in three to four years, but that’s not happening.”

Unlike a number of other developers with big plans that fell apart during the recession, however, Breunig is keeping the property and pressing forward with renovating the space, bit by bit.

“It’s a big project. It’s challenging, but you can’t re-create old architectural character like this,” he said. “There’s plenty of old buildings around, but they don’t have this character.”

Breunig acknowledged the property is “still a money-sucker right now.” He already put at least a few million dollars into restoration, he said, though he declined to say exactly how much.

“The tax bill alone,” he said, “feeding that doesn’t leave much left over.”

Milwaukee property records show the 2010 property tax bill for Breunig’s Pritzlaff Redevelopment LLC, which includes more than $12,000 in special assessments, totaled $116,162.53.

But the Pritzlaff project isn’t the only log in Breunig’s investment fire. In addition to 14 other properties he owns in Wisconsin, the Milwaukee School of Engineering graduate has other business ventures such as Franklin-based EZ Self Storage LLP, a metro Milwaukee mini warehouse with truck rentals and packing supplies; Breunig Engineering Inc., Franklin, a contracting and construction company that evolved from Breunig’s former work as a consulting engineer; and Verona-based Coating Place Inc., a contract manufacturing company Breunig owns with his brother Tim that specializes in pharmaceutical coating products.

As a result of his diverse investments, the Pritzlaff burden isn’t threatening to pull him under, he said. He’s eager for the leasing market to pick up so he can get more tenants in place and continue major work on the restoration.

“Across the leasing market right now,” Breunig said, “it’s hard to get a deal finished.”

There have been a number of interested tenants, including a restaurant and law office, said Rick Blommer, project architect with Brookfield-based Cityscape Architecture/Development SC. But so far, the only deals to go through are a 5,000-square-foot lease with The Yes Men Corp., a 3,000-square-foot lease with Ancient Tree Underground Collaborative and a 3,000-square-foot lease with Gravity Marketing LLC. Breunig uses another 15,000 square feet for mini warehouses.

“It’s been really interesting,” Blommer said. “Going into it, I was hoping it’d go really quick. It sounded like it would be developed right away, but then things changed, and now we’ve been working on it piece by tiny piece since 2005.

“Just when you start to forget about it, Ken will call and say he’s got a potential tenant, and you start planning again.

It’s easy to get reattached to.”

If he can get the project completed, the finished property has been valued at $36 million, Breunig said.

“Work on the commercial space won’t proceed until we have enough tenants,” Breunig said, though he said there is no specific goal as far as the amount of square footage leased.

“It’s been a relatively slow process all the way along,” Blommer said. “Ken spends a lot each month to keep the building going. There’s a lot of issues with a space like this. There’s no way anyone’s going to develop this top to bottom right away.”

Even before Breunig cleaned it up, the property had long been a fixture downtown, said Paul Jakubovich, city preservation officer.

“It’s a building that people take notice of. It’s a standout,” he said. “Over the years, there has been talk about developing that property, going back decades even, but nothing ever came of it.”

Milwaukee real estate investor Royal Taxman said he took a hard look at the property six and a half years ago, but plans for the space didn’t work out. He declined to elaborate.

Ogden Development Group Inc., Milwaukee, also considered developing the property several years ago, said Tom Neubauer, an associate at the firm.

“It’s a rare survivor,” Jakubovich said of the preserved building complex. “With that location, (the developer) could really take advantage of the views and the quality of the buildings around there.”

Where others were hesitant, Breunig is content to wait for the payoff, he said. He’s not afraid to take a risk, as he’s been doing since he was 21 when he bought his first investment property, a three-family apartment building, primarily on credit.

He took out second mortgages to keep buying properties, building off that initial investment.

“It’ll happen,” Breunig said of the Pritzlaff project. “It’s just taking longer than expected.”