May 8--Tightening conditions in the commercial credit market have led developers to drop plans for two major projects -- one in downtown Milwaukee and one on the city's east side.

Tanesay Development LLC has dropped its proposal for redeveloping the former Gallun Tannery complex, which covers 5.7 acres along the west side of N. Water St., north of E. Pearson St.

Also, Gabaldon Properties LLC is not proceeding with plans to convert the seven-story Posner Building, 152 W. Wisconsin Ave., into a 160-room Holiday Inn Hotel & Suites.

Tanesay, a Denver firm that specializes in redeveloping former industrial properties, ran into difficult conditions in the commercial credit markets, Mark Geall, a Tanesay principal, said Wednesday. His firm envisioned a mix of housing and retail space at the Gallun site.

Geall said demand for housing near downtown remains strong, but there are enough nearby units under construction to meet that demand for the foreseeable future.

Among the projects in the works is the first phase of The North End, with Mandel Group Inc. building 83 apartments on the former Pfister & Vogel tannery site on N. Water St. south of E. Pleasant St. On the river's west bank, Chicago-based Tandem Developers LLC is building 66 condominiums within the first phase of The Edge, at 1890 N. Commerce St., just upriver from the Holton St. bridge

The former A.F. Gallun & Sons Co. tannery complex closed in 1993. The tannery's former offices, at 1818 N. Water St., were developed into 31 apartments. Those apartments were upgraded and converted to condos in 2005.

Geall said he continues to be interested in the Gallun site but is devoting most of his attention to Tanesay's RiverHeath housing and retail project in Appleton.

Also, the Small Business Times reported Wednesday that challenging economic and credit conditions led Gabaldon Properties, a Milwaukee firm, to drop its plans for the Posner Building.

Building owner and local restaurant operator John Vassallo confirmed that Gabaldon Properties has backed away from its proposal to buy the 108,000-square-foot building and convert it into a hotel. The Posner Building is largely vacant except for Mo's Irish Pub, which Vassallo operates.

Charles Gabaldon, who operates Gabaldon Properties, couldn't be reached for comment.

Continued fallout from the subprime mortgage collapse has commercial development firms facing more stringent conditions from banks, insurance companies and other financing sources. That has led to delays in major projects throughout the country.

In the Milwaukee area, at least one other large project has been canceled. Developer Scott Fergus announced in January that he was unable to obtain financing for Pointe Blue, which would have created 434 condos, 90 apartments and commercial space overlooking Lake Michigan just north of downtown Racine.

Fergus filed in April for Chapter 7 bankruptcy protection. His First Place on the River, with 115 condos at 106 W. Seeboth St., was previously taken over by a court-appointed receiver.

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