DOWNTOWN
Work-From-Home Ripple Effects
Downtown Milwaukee became, nearly overnight, a ghost town.
The office workers who are the main engine of the Downtown economy took their computers home, leaving the streets devoid of pedestrians and many office buildings – including two brand new, high-profile towers – virtually empty.
Figures from 2019 estimated the Downtown workforce at about 90,000. How quickly they come back – or how many of them do at all – will have profound long-term effects on small businesses who trade on office workers’ lunches, dry cleaning and happy hours. Some business leaders expect work-from-home to become a permanent fixture, in some form.
“Employers have concluded that people don’t have to show up at the office every day to be productive,” says Tim Sheehy, president of Metropolitan Milwaukee Association of Commerce. “My sense is that employers that can are going to keep this flexibility, whether it’s two days a week, three days a week, but they are going to allow their employees to work off-site because they’ve shown that they can.”
Long-term adoption of the strategy isn’t likely to be universal however, Sheehy says. “I’ve heard one company say that they are thinking of communicating to their employees that if you don’t come in at least three days a week, you will still have a place to do your work but you’re not going to have your own office,” he says.
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Any type of long-term adoption of work-from-home will be a game-changer for small businesses and the Downtown commercial real estate market. Sheehy pointed to a Downtown dry cleaner that had been open six days a week but has cut back to two because employees aren’t getting dressed up to go to work. “I don’t think I’ve dry cleaned a shirt since last March,” Sheehy says. “There are all these services that are being impacted.”
The dearth of office workers is offset to some extent by the some 32,000 people who live Downtown. That figure was growing before the pandemic and the trend has continued, Sheehy says. “I don’t think that’s going to change,” he says. “You continue to see new apartment buildings going up.” But with fewer on-site employees, Downtown businesses also are re-thinking their office space needs. “That’s causing confusion,” Sheehy says. “Do I need less office space? Do I reconfigure what I have? Is this short term or long term?”
Northwestern Mutual Life Insurance Co.’s $450 million glass skyscraper, built for 2,400 employees, is the centerpiece of the company’s Downtown campus, which includes three other buildings. But a year into the pandemic, hardly anyone is using the 32- story, 1.1 million-square-foot structure that was finished in 2017. As most of Northwestern Mutual’s workforce operates remotely, a mere 150 to 200 employees arrive each workday at the campus. An additional 100 to 150 employees have been working at the company’s sprawling Franklin campus. “Our employees are as excited as everyone else to get back to ‘normal,’” Northwestern Mutual spokeswoman Betsy Hoylman says.
This summer, the company will welcome back work-from-home employees in small groups, “moving slowly and keeping a close eye on any developments,” she says. “We will prioritize the health and safety of our employees and the community,” Hoylman says. “Although we don’t have a specific timeline, we are optimistic we will increase the number of people on our campuses this year, while being prepared to offer flexibility to people who need it.”
Construction of the BMO Tower, Downtown’s newest office high-rise, finished just as the coronavirus pandemic took hold in April 2020. Well over 500 employees of BMO Financial Group should have moved into the glassy 25-story structure months ago, shifting from a 20-story office building next door, but the pandemic altered those plans.
Roughly 20% of BMO’s anticipated Downtown workforce is currently working at the tower, which serves as the company’s Wisconsin headquarters. But a top BMO executive made it clear in mid-March that the bank expects its workforce to eventually return to the Downtown building in a move away from the pandemic-driven work-from-home solution. “We don’t believe this is the new normal for a lot of reasons,” says Jud Snyder, BMO’s senior executive for Southeast Wisconsin. “There are the psychological effects of working remotely. We know that our people and our clients benefit when our employees work collaboratively. People thrive on that type of interaction.”
BMO management also recognizes a responsibility to support the small businesses in the communities in which it has employee bases, Snyder says. “We support restaurants, coffee shops, dry cleaners and bars,” he says. “We support all sorts of small businesses and their families by our employees being together in hubs, whether it’s Downtown or in our retail branches. We feel that’s important.”
Snyder says that BMO will continue to make employee safety its top concern but is poised to have its workforce return to the office. “We won’t ask a majority of our workforce to return until we feel it is safe to do so,” Snyder says. “Having said that, we think that is coming sooner rather than later. We’ve told our employees we are going to return to work. We think it’s better for our culture, our employees and our clients and for our community.”
The number of employees at the Downtown tower continued to rise over the past few months, especially as vaccines became available and cases declined. “Our young employees are raising their hands as fast or faster than others,” Snyder said. “I think they are craving that in-person collaboration.”
BMO employees will have the ability to work from home a few days a month or so, but the tower is expected to soon be bustling with employees after more than a year of working from home.
“Even prior to the pandemic, we had some level of flexibility,” Snyder says. “I don’t think we see a shift away from that, but I don’t think we will see change to make it much more flexible than that.”
Having employees return to work in an office setting will go a long way toward bringing life back to Downtown, Snyder says. “When our downtown is vibrant and working and everybody is supporting our local businesses, Milwaukee is a better place,” Snyder says. “We view it as our cultural responsibility to support the community.”
HOTELS
Business Travel Remains AWOL
People looking for fun are booking rooms again. People doing business are not – and that’s not expected to change anytime soon.
Milwaukee hotels have been among the businesses hardest hit during the coronavirus pandemic, as demand for lodging has plummeted due to empty convention spaces and massive cutbacks in corporate travel.
“The group meeting market remains the most depressed,” says Greg Hanis, president of New Berlin-based Hospitality Marketers International. “Companies will just not have group meetings, citywide conventions or large trade shows. They are basically nonexistent.”
Companies worry about the liability that could come with large gatherings, he says. Some smaller events like training sessions or sales meetings are being scheduled for later this spring and into the fall at smaller hotels. “Those will be the first to come back, but to get to the citywide conventions with 500 to 1,000 people, that’s going to take until 2023, possibly 2024,” Hanis says. Visit Milwaukee cites industry forecasts that the group market won’t rebound to pre-pandemic levels until 2025.
Occupancy for Milwaukee-area hotels stood at 30% in February, down from 63% for the same month a year earlier, according to market data from STR Inc., though that figure rose to 38% for the week of March 14-20, 2021. Occupancy was just 15% that week in 2020, just as Wisconsin’s pandemic lockdowns began.
The scale of the industry’s losses is staggering. Hoteliers have shed more than 18,000 jobs in Wisconsin, according to the American Hotel & Lodging Association. Milwaukee-based hotel, movie theater and restaurant operator Marcus Corp. reported a loss of $124.8 million in 2020; hotel revenue alone fell 66%.
“Without question, 2020 was the most challenging year in our history, with the COVID-19 pandemic significantly impacting our businesses and the industries in which we compete,” Marcus President and CEO Gregory Marcus said in a statement in March.
It was a cruel change of plans for a sector that staged a construction boom of sorts in 2020 in anticipation of the Democratic National Convention, with openings including the Cambria Hotel Milwaukee Downtown, Drury Plaza, the boutique Dubbel Dutch and three other Downtown hotels. The economic impact of the DNC, originally slated for July and ultimately made virtual, had been projected at $200 million. It turned out to be about just $3 million.
On the bright side, Milwaukee hotel operators are expecting to see a major jump in business among summer leisure travelers as tourist attractions begin to reopen, Hanis notes. Bookings this summer may determine whether some of these businesses survive.
“A lot of these hotel operators are on life support,” Hanis says. “Not only do they have to get back to profitability, but they are also going to have to try to recover their losses.”
On the bright side, Milwaukee hotel operators are expecting to see a major jump in business among summer leisure travelers as tourist attractions begin to reopen, and fans return to Milwaukee Brewers games, Summerfest resumes over three weekends in September and the Ryder Cup is contested at Whistling Straits in Sheboygan County, Hanis notes.
Inside the hotels, many pandemic-inspired safety and cleanliness changes will be permanent. Hanis points to touchless check-in kiosks, sanitized TV remotes, the removal of comforters and the ability to opt out of daily room cleanings for multiple-night guests. “Sometimes people will say that they just don’t want anybody in their room,” Hanis says.
The hotel industry anxiously awaits a rebound.
“A lot of these hotel operators are on life support,” Hanis says. “Not only do they have to get back to profitability, but they are also going to have to try to recover their losses.”
ARTS & CULTURE
‘A Very Dark Tunnel’
Strolling down the RiverWalk Downtown on a Friday or Saturday night can feel a bit lonely these days. Many of the city’s largest, grandest theaters are clustered here within a few blocks of each other. But often there’s no one and nothing in them but the ghosts of old shows.
The leaders of the city’s performing arts organizations are eager to return to their stages. But over a year into the pandemic, the question remains: When will it be safe?
The United Performing Arts Fund estimates that its local member groups will have lost around $22.7 million in revenue between May 2020 and May 2021. And although none of the organization’s members have been forced to shut their doors for good, around 75% of their staff members have experienced layoffs, furloughs or pay cuts during the same time period.
“Private donors really stood up and have continued to support the organizations, and there’s been a lot of government support, too,” says David Lee, chief executive officer of arts organization Imagine MKE. “But our industry is just like any other. If we can’t sell tickets, we can’t make any money.”
It just doesn’t make financial sense to put on in-person concerts until social distancing and capacity caps are a thing of the past, says Gary Witt, executive director of the Pabst Theater Group, which oversees its namesake venue as well as the Riverside Theater, Turner Hall Ballroom and the Back Room at Colectivo.
“There has to be an ability in our industry for all the states to be able to be open and for artists to be able to go out on tour,” he says. “And that’s not going to happen at 50% or 75% capacity. It’s going to happen when we’re back up to 100%.”
At the outset of the pandemic, Witt helped create the National Independent Venue Association. Americans sent more than 2 million emails or letters to their elected officials on NIVA’s behalf, and the organization’s member groups are now eligible for federal relief through the Save Our Stages Act.
It’s an accomplishment Witt is proud of. But he believes that more work needs to be done, and that every Milwaukeean ought to care about the fate of local cultural organizations.
Chad Bauman, executive director of the Milwaukee Repertory Theater, agrees, adding that the sector generates more revenue, and creates more jobs, than many people seem to realize – nearly $2 billion in economic impact and more than 20,000 jobs in Wisconsin, depending on what you count. “We were able to keep 220 people on our payroll, which was incredibly important not only for the business but also for the families of our employees,” Bauman says.
The Rep began putting on small, in-person shows in April, and Bauman is tentatively optimistic that it will soon return to non-virtual performances and events on a grander – more typical – scale. And other organizations, like the Milwaukee Symphony Orchestra, have begun putting on intimate in-person shows for season ticket holders, with plans to welcome larger audiences back again in the fall.
“There is finally a bright spotlight at the end of this very dark tunnel,” Bauman says.
RESTAURANTS
A Step Back, a Reset
Don’t listen to the dining doomsayers. The restaurant industry, although ravaged by the pandemic, is coming back. But not, for some establishments, exactly like it was pre-COVID.
Dan Jacobs, one-half of DanDan in the Third Ward, says a major hurdle he and his partners are dealing with is trying to restore consumer confidence in their environment while also instilling a “semblance of normalcy.” There are a lot of things restaurant owners lost in this long year-plus of the pandemic (hello, income?) and anything feeling remotely normal is going to take time.
Several restaurateurs were interviewed for this story, and all agreed that the protocols in place to make dining safer – partitions, fewer tables, air purification systems – won’t go away, for a while at least.
But they are hopeful for their future. The new federal Restaurant Revitalization Fund, offering debt-free assistance to small and mid-size dining establishments, is part of that optimism.
Several owners spoke of how this incredibly challenging time brought their staffs, though often diminished, closer together and helped solidify a network of local restaurants that support each other. “I’ve been impressed by the resilience and basic goodness of humanity,” says Melissa Buchholz, co-owner of Odd Duck, which has offered only carryout and delivery for more than a year. One key lesson of the past year, she says, was “intentionality.” “Do we need to be as crowded? We’re looking at maybe having less tables, which means less servers and chefs. We got the opportunity to step back. In the past, we couldn’t do that. We wanted to push the limits of what we were doing, always.”
Few restaurants are interested in pushing the limits anytime soon. For the DanDan owners, whose newest concept – comfort food-themed Fool’s Errand – opened April 1, operating less and making equitable decisions that help their staff are more important. “We all come back more rested after three days off. The six-day work week is not sustainable,” says Jacobs.
While many restaurant operators have used carryout to survive, it’s not a model everyone wants to keep doing indefinitely.
Ca’Lucchenzo in Wauwatosa, which specializes in handmade pasta, didn’t offer carryout before COVID, and co-owner Zak Baker doesn’t plan to continue it once things return to “normal.” As of mid-March, he and wife/partner Sarah were thinking about when they could reopen the patio – May, they were hoping – and the dining room at some unknown time after that. Before that happens, they’re making necessary changes, such as installing an air filtration system.
Sanford’s Justin Aprahamian doesn’t know what role carryout will have once he reopens his intimate dining room, where servers anticipate the diner’s every need. “Carryout has helped us stay alive, but it’s not who we are. At some point, we need to get back into the rigors of Sanford,” says Aprahamian, who, like many restaurateurs, was trying to wrap his head around what reopening would look like. Aprahamian has often sought advice from his mentors and Sanford’s founders, Angie and Sandy D’Amato, and they usually have the answers. Not this time. “We have been really nimble. That’s been part of the strategy, keeping things tight,” he says. “But we’ve never been through this, and Sandy and Angie have never been through it. It’s an uphill climb.”
