Hot property

(First published in the June 7, 2018 issue of City Pages)

Dan Weber and Kimm VanDen Heuvel soon will open a distillery in the historic Hiawatha Line train depot building. It’s a trend. As the mall empties of national chains, local entrepreneurs are filling old buildings and downtowns

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Dan Weber and Kimm VanDen Heuvel expect this summer to put the finishing touches on Timekeeper Distillery after renovating the Hiawatha Line train depot on Wausau’s east side. Theirs is one of many projects either finished, underway or planned for many vacant buildings around Wausau

Christine Van De Yacht noticed something interesting. In past 18 months, interest has picked up in a vacant, historic building she owns, once home to the Kleinheinz Dairy plant in Wausau. Van De Yacht has owned the building on Second Avenue since 2005, and has wanted to see the right use for the large, stately brick building.

She even has turned away potential tenants. Van De Yacht says she wants to preserve the historic character of the building, and if she’s going to renovate the building for a modern use, she wants to do due diligence to make sure the business tenant lasts long enough to make the renovation costs worth it. She has turned away tenants who didn’t have the right professional background or proper financing. And she isn’t interested in selling the building.

Van De Yacht says she is weeks away from announcing a project for the building—a large vacant property that has been an albatross around that neighborhood’s neck for 15 years.

And that’s not the only promise for new life to an old building around Wausau. Not long ago, people were alarmed at the number of large, prominently vacant buildings around Wausau. In an article in October 2016, City Pages identified eight of those large-sized empty buildings. Some had uses pending, but the majority were yet unspoken for.

Since then, most of those vacant properties either have new owners or businesses within, or have imminent plans to become something new. Of those eight buildings, only the old Wisconsin Valley Electric building (next to the Wisconsin River dam off Washington Street, near downtown) does not have a new use or planned project. Some are at such early stages that city officials or building owners won’t discuss them; and there’s always the possibility the plans won’t come to fruition.

There’s an unmistakable local trend toward putting new business into old buildings. Plus, commercial/retail space in downtown Wausau and its mostly historic buildings is in such high demand that there are hardly any vacant spaces.

Meanwhile, Wausau’s largest single retail building—Wausau Center mall, taking up eight city blocks—is slowly but surely emptying. The mall now hovers between 40-50% vacant, depending on how you measure it.

Those two different trends are not unrelated.

Economists, consultants and leaders of multiple cities say the economy’s retail shift is being played out visibly in places like Wausau.

Online retail sales have gutted most brick and mortar national chain stores, but locally owned, specialized mom and pop shops have found new footing within that general shift.

National retailers are filing for bankruptcy at a record rate: In 2017, more than 20 big-name retailers filed for bankruptcy, with 662 total retail bankruptcy filings, up 30% from the previous year. According to PNC Real Estate Research, cumulative store closings have been outpacing store openings since 2014, and that gap has widened in 2017-2018.

Analysts say it’s the result of the Amazon effect, in which online sales have hit store retailers like Sears and JC Penney, which struggle to offer the same selection, convenience and price.

But that effect appears to be limited to the big box national chains.

Consider how well the downtown areas of Wausau and Stevens Point are doing. The vacancy rate of commercial space in downtown Wausau is only 3%, and most all street-level storefronts are occupied.

That’s why state-hired consultants contracted to develop a plan for Wausau Center mall aren’t talking at all about the mall’s future. They’re talking about transforming that eight-block space back to a downtown vibe that has survived for a century and is currently thriving.

New uses

The final renovation touches now are being made to the new Timekeeper Distillery, expected to open later this summer in the historic Hiawatha Line train station on Grant Street in Wausau.

This building has been considered an icon of Wausau ever since it appeared in an ad for Wausau Insurance decades ago. The renovation project, estimated to cost more than $1 million, got help from the city to the tune of about $200,000 through its commercial rehabilitation program. That involvement is important, says Dan Weber, who along with his wife Kimm VanDen Heuvel, bought the train depot to open the distillery.

“It’s an excellent program for all businesses but especially for first-time entrepreneurs,” Weber says. “It helps ease your mind making this kind of an investment, knowing that there is a little bit of a cushion, that if you run into something it won’t de-rail the project.”

And old buildings come with their surprises, Weber says. Weber and family and friends did the demolition on the train depot themselves, and found multiple layers in both the walls and ceiling, each built on top of the others. And it meant having experts go though the building to make sure it’s structurally sound and environmentally clean.

The Hiawatha depot was one of the buildings City Pages wrote about in its feature in 2016 that either has new life, has an imminent project or at least is starting to receive interest.

West Side Battery is slated to become Urban Street Bistro’s first full-scale restaurant; the former Wausau Club building is now the Wausau Museum of Contemporary Art; and the Northwestern Line depot on Washington Street is now the home of Bates Legal Group, with additional space available for lease. The VFW building on River Drive is slated to become the home of non-profit Opportunity of Wisconsin. The Masonic Temple building has a potential project for it, says Community Development Director Christian Schock, but it’s too early in the process to announce.

Of the eight empty buildings City Pages pulled out in 2016, only the Wisconsin Valley Electric Building has no planned or imminent project. Even the Graebel Van Lines building on Third Street, not technically empty but more empty than not after Graebel Van Lines closed last year, has developers interested in it, Schock says. A group of businessmen were investigating the building a couple of weeks ago.

The right time


Property owner Christine Van De Yacht soon will announce a tenant for the historic Kleinheinz Dairy building, which has been vacant since 2003.

Experts say it’s no coincidence that entrepreneurs like Weber and VanDen Heuvel are emerging to take on these projects. As large national retailers are filing for bankruptcy at record rates, interest in local businesses is skyrocketing.

“We’re seeing a shift back to the downtown areas,” says Jerome Segura, founder of consultant service The Central Wisconsin Economy, and former chief economist for The Central Wisconsin Research Bureau. “They seem to be booming now more than ever.”

That observation was echoed by consultants of Place and Main Advisors, who were hired by the Wisconsin Economic Development Corp. to help find new life for the site of Wausau Center mall.

Place and Main Advisors pointed out that the stark contrast between the mall’s latency and the downtown’s vibrancy was not lost on them: Plans shown at City Hall Thursday May 31 were really more or less a wish list of possibilities to get an early gauge on how the city council and the community felt about what’s next for the eight blocks of real estate the mall currently stands on. What went unspoken but no one took any exception to: It seemed a foregone conclusion that there will be no mall in the future. Whatever takes it place will be something entirely different.

And maybe that’s best. Stevens Point’s downtown is experiencing a similar boom to Wausau’s downtown, says Stevens Point Mayor Mike Wiza, and a big part of that was removing that dying mall from the equation six years ago.

That mall’s demolition and reclamation in 2012 was much more controversial at the time. The whole project cost nearly $9 million, involved the city tearing down half the mall and renovating the former JC Penney wing into a new campus for Mid-State Technical College. The building that was Dunham Sports is now a call center for Great Lakes Higher Education Services; and Cobblestone Hotel (the same company once slated to build in downtown Wausau) is located in what was the mall’s parking lot.

Bringing the college, hotel and call center into the former mall site was critical to keeping foot traffic in downtown Stevens Point, Wiza says. “We have changed the dynamics here in Stevens Point,” Wiza says. “There’s a lot of good investment in that regard.”

But when it comes to tax incentives, cities should exercise caution, Segura says. One of the methods by which cities encourage investment, especially in troubled areas, are through Tax Increment Finance districts. TIF funding is intended to help troubled areas that otherwise might not see investment. Areas of urban blight or environmental contamination often need incentives attached to them to entice developers to take on difficult projects. Those incentives ideally encourage taxable, private developments that would not happen otherwise.

But TIFs can be overused, Segura points out; government intervention can distort markets, to both good and bad effect. “They’re costing taxpayers $45 billion per year in tax revenue but the effect of this isn’t showing up in the data,” Segura says. “The evidence is that we should be careful in evaluating the impacts of these policies.”

Wiza says Stevens Point has taken a balanced approach to incentives. There are other costs to consider with new projects, such as increases in infrastructure, and police and fire service. Besides, Wiza says, being a desirable place where people want to be is a bigger factor to attracting business investment into the city. Wiza points to a couple he met at the Central Wisconsin Food Fair. The wife told Wiza that her husband got a job where they could live anywhere in Central Wisconsin, and they chose Stevens Point based on a video. That video depicted Mayor Wiza leading other community members, wearing a yellow hard hat and twirling an umbrella, crossing Main Street at the city’s new Creative Crosswalk while kicking his feet around in a goofy manner as he makes his way across the street. “People are moving to Stevens Point because of the quality of life,” Wiza says.

Beyond government intervention, a strong economy with 34 quarters of recovery and record low unemployment numbers are emboldening local entrepreneurs to take a risk to start a business, Segura says, and being immune to the Amazon Effect because of their unique offerings are helping to keep those businesses in business.

For the love of history

The 1980s-era shopping malls might inspire some pop culture nostalgia, but nothing like the sentiment powerful enough to save a century-old building like the Kleinheinz Dairy. That’s why Christine Van De Yacht says she was very picky about what type of business could move in. She wants whoever leases the building to respects its historic nature.

“That’s why I’ve held that building for so long and protected it from people who wanted it to be torn down,” Van De Yacht says. “There is one girl who has saved that building from the wrecking ball and you’re talking to her.”

The Kleinheinz building, technically two buildings, is likely the last standing dairy plant in Marathon County, Van De Yacht says. She has now found those tenants, she says, and while she won’t yet divulge exactly what the business is, she says it will start in one of the Kleinheinz buildings and expand to the second.

Whatever the use might be, the time seems to be right to rehabilitate old buildings. Still, it takes a special kind of person to keep them standing, Weber says. Costs with old buildings don’t end at the renovation. For example, Weber says, they will have to update the brick tuck and pointing yearly, and bricks will continually need replacing as well.

But thanks to entrepreneurs such as Weber and Van De Yacht, along with a shifting economy that supports local entrepreneurs, many of the cool empty buildings of Wausau are becoming simply cool buildings.

For Weber and his soon-to-open distillery, what also comes with it are stories about the train station, including the people leaving for or coming home from war. “When you’re purchasing a 100-year-old building, you have to have a passion for not just the business, but the building itself,” Weber says. “We’re excited to have the opportunity to maintain a piece of history.”