Northwestern Mutual Life Insurance Co. plans to invest more than $500 million in its Milwaukee corporate campus, a move that will eventually bring an additional 2,000 employees to the Downtown site following the eventual closure of the company’s sprawling Franklin complex.
The eye-popping investment will be focused on the major redevelopment of Northwestern Mutual’s North Office Building at 818 E. Mason St.
The plans include extensive interior and exterior renovations to the 540,000-square-foot building, which opened in 1990, to mirror the architecture of the $500 million Tower and Commons project, the centerpiece of which is the gleaming 550-foot, 32-story glass skyscraper overlooking the lakefront that opened in 2017. There will also be new connecting structures and a pedestrian plaza on Cass Street as part of the new project.
“When we built (the Tower and Commons), the hypothesis was we wanted to be in Milwaukee. We thought Milwaukee had a future. We were optimistic about the future,” Northwestern Mutual Chairman, President and Chief Executive Officer John Schlifske said in an interview. “We spent over $500 million then. So, that’s really when we made the decision to invest in Milwaukee. This next new North Building project is just a continuation of our confidence that it was the right decision that we first made back 11 or 12 years ago.”
The plan is contingent on City of Milwaukee’s approval of a tax incremental financing plan.
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“We are doubling down on our Milwaukee campus by investing in the future of the workplace for Northwestern Mutual and a thriving downtown community,” Schlifske said. “Our strategic investment will further our goal of creating an unparalleled campus experience, fostering connection and collaboration across employees, financial representatives and the community while attracting and retaining the next generation of talent right here in southeast Wisconsin.”
Schlifske and several others spoke to a crowd of more than 100 people who gathered Thursday morning for a project unveiling event on the top floor of Northwestern Mutual’s Downtown office tower.
As part of the company’s plans, nearly 2,000 employees will be relocated from Northwestern Mutual’s Franklin, campus over the next three to five years, adding to the company’s current Downtown workforce of about 4,500. Northwestern Mutual already stands as Downtown’s largest employer.
“Northwestern Mutual is an incredible community partner and their investment in Milwaukee will signal to the state, region and nation that Milwaukee is the place to do business,” Milwaukee Mayor Cavalier Johnson said.
Pending city approvals, construction could begin as early as fall 2023, with potential occupancy in 2027.
“We were proud to partner with city officials to help transform Milwaukee’s skyline and provide an unparalleled experience to thousands of Northwestern Mutual employees with our Tower and Commons project,” Schlifske said. “With this exciting new endeavor, we will extend that same experience to all our employees by aligning our North Office Building to the Tower and Commons experience.”
The transformation of the North Office Building will include a full building renovation to visually complement the Tower and Commons structure, enhanced employee amenities, events space and public engagement. The redesign and more efficient use of the space will result in additional usable square footage and overall Downtown campus capacity.
“Northwestern Mutual’s investment in its North Office Building will extend and expand the Towers and Commons experience to the company’s entire Downtown workforce, creating one consistent employee experience while continuing to welcome the community into its revitalized, shared spaces,” said architect Jon Pickard, principal at Pickard Chilton, the New Haven, Connecticut firm that designed the Tower and Commons project and will oversee the redesign of the North Office Building.
As part of the project, Northwestern Mutual is proposing the creation of a pedestrian plaza at the intersection of Mason and Cass Streets that will better activate the area for the public, employees and visitors. Plans call for the elimination of automobile traffic on a portion of North Cass Street between East Mason and East Wells streets.
While initial design renderings have been created, more detailed designs are expected by mid-2023.
The rebuild of the North Office Building will create some temporary logistical challenges for Northwestern Mutual.
“All those employees are going to move out of the North Building and move into our existing Tower and South Building space for three or four years,” Schlifske said in an interview. “So, we’ll be closer together and we’ll be bumping into each other every now and then. It’s going to be a little crazy but on the other end it’s going to be 10 times better. We’re just going to have to put up with a little bit of a construction hassle.”
More than 20 years ago, Northwestern Mutual developed the first phase of a suburban office campus in Franklin. Since that initial development, Northwestern Mutual has continued its investment in and around its Franklin campus and in neighboring Oak Creek and has helped attract major development in both communities, Schlifske said.
The main motivation for constructing the Franklin complex was to serve as a redundant data facility. Technology advancements, including cloud storage, has eliminated the need for such a facility, Schlifske said in an interview.
The Franklin campus includes two buildings totaling more than 880,000 square feet of office space and an additional 16 acres for future development. Amenities include ample parking, walking trails and ponds.
The company has no immediate plans to sell or lease the buildings, as employees will continue to operate from the Franklin location for up to five years. However, the company anticipates the property will be highly desirable to a company seeking Class A office space.
“It is our hope that our investment will attract another great out-of-state company to call Wisconsin home,” Schlifske said.
Thursday’s announcement comes almost exactly 10 years after Northwestern Mutual announced its 1.1 million-square-foot Tower and Commons project.
“Our decision to build the Tower and Commons Downtown made a huge statement about metro Milwaukee’s attractiveness as a place to live and work and created job opportunities for our broader community that continue to have a ripple effect to this day,” Schlifske said. “We believe in Milwaukee, which has been our hometown for nearly all of our 165-plus year history.”
Three years after Northwestern Mutual opened the Tower and Commons, the world of work dramatically changed with the onset of the COVID-19 pandemic. The company’s Downtown campus became a ghost town with nearly all employees forced to work remotely for health and safety reasons. Employees have been gradually returning to the Downtown campus, Schlifske said. He estimated that about 72% of the company’s workforce is on campus on any given day, compared with about 85% prior to the pandemic.
“It’ll never be at 100% because of vacations, business travel, things like that, but we’re almost back to where we were. That’s what we want,” he said. “We want people to come back with incentives, not through penalties. We think by creating this campus environment, it’s going to make more people want to spend more time on campus.”
Having employees on campus boosts performance, Schlifske added.
“The ability to collaborate drives execution,” he said. “The ability to work together is what makes this culture so special.”
As part of the Company’s 2012 agreement with the city, Northwestern Mutual committed to award 25% of the total value of applicable contracts to Milwaukee Small Business Enterprises. Northwestern Mutual exceeded this goal, awarding $127 million, or 31% of the total value of applicable construction and professional services contracts, to local SBEs, according to the company.
The city’s monetary obligation under the Tower and Commons tax incremental district is anticipated to be fully paid earlier than expected.
As was the case with the Tower and Commons project, the proposed financing would be structured as a developer-funded tax incremental district. Under this method, Northwestern Mutual will initially pay for all the costs of the project.
“Knowing the high level of due diligence Northwestern Mutual puts behind every investment they make, this is a boost of confidence for the city and the entire regions,” Metropolitan Milwaukee Association of Commerce President Tim Sheehy said.