Apartments planned for Majestic Building
A historic office building that rises above the adjacent Shops of Grand Avenue will be converted into 133 apartments, with most units offered at below-market rents, under a $16.5 million proposal unveiled Thursday.
The 14-story Majestic Building, 231 W. Wisconsin Ave., is being purchased by Gorman & Co., Madison, which hopes to begin renovations this fall, said Tom Capp, executive vice president.
The Majestic project will create new life within an obsolete office building and has the potential to bring new shoppers to the Grand Avenue mall. It also will help satisfy a demand for affordable downtown housing.
All but 20 of the building’s apartments will be available only to people who earn no more than 60% of Milwaukee County’s median income, Capp said. For the building’s two-bedroom units, that would be families with annual household incomes of $31,000 to $40,000, he said.
The 113 units under that program will have monthly rents of about $730 for a one-bedroom unit and $875 for a two-bedroom unit, Capp said. The 20 market-rate units would have rents of about $825 and $1,025, he said.
Gorman will offer below-market rents in return for receiving federal affordable housing tax credits totaling about $6.5 million.
The Majestic development will be marketed largely to people who work downtown who cannot afford many of the two-bedroom apartments now available in that market, Capp said. The typical downtown two-bedroom unit isn’t affordable to families earning less than $45,000 a year.
“There clearly was a hole in the market,” Capp said.
He also said the number of market-rate apartments at the Majestic will be limited because of a weakened demand for such units.
Gorman, which has done other affordable-housing projects in the Milwaukee area, plans to complete its purchase of the Majestic Building from an affiliate of Towne Realty Inc. by June. Construction will begin this fall, with the apartments available by the summer of 2004, Capp said.
Milwaukee-based Towne is selling the building, which is 70% vacant, because it no longer competes effectively as an office property, said spokesman Michael Mervis.
Along with the housing tax credits, Gorman is seeking $2.5 million in federal historic preservation tax credits.
The remaining financing for the $16.5 million purchase and remodeling will come from private sources, Capp said.
Capp declined to say how much Gorman is paying for the building. It has an assessed value of $1.9 million.
The Majestic Building, built in 1908, once housed the Majestic Theater on its ground floor. Originally a vaudeville theater, it later showed movies before closing in 1932. The theater space was replaced in 1935 with retail and office space.
Known for its terra cotta exterior, the building now has a Walgreens drug store on its ground floor and a few office tenants on its upper levels.
The Walgreens space and some space on the second floor is part of the Grand Avenue and will not be included in the sale. Gorman will purchase about 133,000 square feet, including the building’s lobby and upper floors, Capp said.
The building’s loft-style units will feature 10-foot ceilings, hardwood floors and washers and dryers, Capp said. The development would include an exercise room and other amenities.
The apartment tenants will have direct access to the Grand Avenue’s second level, Capp said. That will be an attraction for both shopping and for access to the city’s skywalk system, he said.
“People living here could walk directly to thousands of jobs both east and west of the (Milwaukee) River,” he said.
The Majestic project will be the second housing development that ties directly to the Grand Avenue mall, which is undergoing its own renovations. The Boston Lofts, a 74-unit upscale apartment development, is being created within the upper floors of the Boston Store building.
Gorman has used tax credits to convert other historic buildings in Milwaukee into apartments, but until recently hasn’t focused on the downtown housing market.
However, Mayor John O. Norquist and Department of City Development officials have lately encouraged Gorman to look at downtown, Capp said.
Norquist acknowledged that for the past three years he has discouraged developers from pursuing downtown housing financed through affordable housing tax credits.
“People have been complaining that we’ve been emphasizing the higher end of the market too much,” Norquist said. “But we needed to do that to establish what the market was in order to show that downtown housing was a good investment.”
There is now enough interest in market-rate downtown housing to allow developments with affordable housing tax credits, Norquist said. The Majestic Building probably could not be developed without such credits because of the expense of converting it, he said.