University Square Development Still Underway

Those driving downtown on University Avenue or Johnson Street have noticed little old University Square has undergone quite a makeover--from a humble one-story mini-mall--to a massive, 1.1 million-square-foot facility

Despite some difficulties renting commercial space in the new University Square facility, developers say the trouble on Wall Street hasn’t made its way down University Avenue just yet. In August, Madison development firm Executive Management, Inc., in partnership with UW–Madison and Steve Brown Apartments, completed construction on the massive 1.1 million-square-foot University Square facility. The building features a ten-story apartment tower, a nine-story office tower, a parking garage and two full floors of commercial retail space. Today, the apartment tower is almost entirely rented, the offices await their university tenants’ December move-in and the commercial space...well…it’s ready and waiting. Gregory Rice, CEO of EMI, the company managing University Square’s commercial real estate, said only about half of his company’s spaces are currently leased or up for signature. Rice cited a strained real estate market as a reason for the slow development, but said he is not worried about the future of the investment. “Retailers typically don’t like to start looking at projects like University Square until those projects are farther along,” says Rice. “It was very difficult for the retailers that we were attempting to attract to really understand it until it was fairly close to being finished.” Rice said that early in the process, EMI had close to seventy-five percent of its spaces rented. Some of those tenants backed out of renting during negotiations, others even after signing a lease agreement, and that that has also influenced the growth of the property, Rice says. But patience is key. Rice says EMI wants to make sure it is selective when signing tenants into the building, so that the “right mix” is created for both the residents of the building and the surrounding community. “A project of this magnitude, you don’t snap your fingers and have everything open up at the same instant,” he says. “It takes a number of months to finish the space off and get it all to open up.” For Steve Brown and the Lucky apartment tower, though, that wait wasn’t necessary. Margaret Watson, chief operating officer at Steve Brown Apartments, said the tower is ninety-nine percent rented, leaving only the model unit and two individual bed spaces available. Watson said a comprehensive renting strategy and a good product were at the heart of Lucky’s success. The company used a wide rent scale, varying sophistication of amenities and the availability of individual leases to attract renters of all kinds. A private, dorm/apartment hybrid area called Lucky 101 was also implemented in the plan to create a first-year student living community. Watson says Steve Brown wanted to bring an “urban feel” to their development and says the strategy has worked “better than expected.” Some of Lucky’s residents, however, were disappointed with the lack of development on the commercial end. “It would be nice if it was moving along a little faster,” says UW student and Lucky resident Rajitha Kota, “None of the stuff is open.” Others, though, remain optimistic. “Its good,” says resident Minho Cho. “And if there’s more development, it’s going to be better.” Alan Fish, associate vice chancellor of the Facilities Planning and Management Department at UW–Madison, said the university plans to fill its part of University Square by mid-January. When that happens, the tower will officially become home to over one hundred UW student organizations, several administrative offices and University Health Services. Fish said the university agreed to begin moving into the building later than the other investors so that contractors could develop the apartment tower and commercial spaces in time for the beginning of the fall 2008 semester. Rice says the university’s move-in will bring the project closer to completion, and he hopes to have more retailers signed on by then. “It may take a little bit longer,” he says. “But other than it taking a little bit longer, I think the project will end up being very, very successful.”

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