|By Tom Daykin, Milwaukee Journal
SentinelMcClatchy-Tribune Regional News
Oct. 3, 2008 - An economic slowdown and tightening credit markets are creating delays for yet another proposed development in downtown Milwaukee.
Construction of the 22-story Residences at Hotel Palomar won't begin until the end of 2009, or perhaps early 2010, said Marty Collins, chief executive officer of Gatehouse Capital Corp.
Dallas-based Gatehouse had hoped to begin construction in November on the project, which would have 65 condos and a 184-room Kimpton Palomar Hotel on the block bordered by W. Juneau and W. McKinley avenues and N. Old World 3rd and N. 4th streets.
But Collins, speaking at a Thursday event sponsored by the Business Journal of Milwaukee, said Gatehouse is delaying for at least one year the Palomar project and development proposals in other cities.
"We're not going to go out . . . and try to pretend we have financing when it doesn't exist," Collins said later.
Gatehouse will continue to seek buyers for condos in Milwaukee and other cities, Collins said. The firm has sold six units at the Palomar project, he said. Those sale agreements require buyers to provide nonrefundable earnest money equivalent to 10% of the unit's sale price.
Gatehouse had hoped to have 12 units sold by the end of 2008, Collins said. He said sales have been slow in Milwaukee and at other Gatehouse project locations.
But as Gatehouse continues to sell units in the Palomar project, the firm will be ready to begin construction when credit conditions eventually improve, Collins said.
Gatehouse holds a purchase option for its Park East site, owned by Milwaukee County.
Gatehouse's purchase option expires Nov. 4, and it will be the County Board's decision on whether to extend it, said Craig Dillman, county manager of real estate services.
The Palomar's delay is the latest piece of bad news for downtown developments, especially in the Park East area.
That vacant strip of 16 acres along downtown's northern edge was created by demolishing the Park East Freeway.
Another county-owned parcel, between N. Milwaukee St. and N. Broadway and E. Lyon St. and E. Ogden Ave., was to be the site of 175 apartments or condominiums and 185,000 square feet of commercial space. But Chicago-based RSC & Associates recently dropped those plans and allowed its purchase option to lapse.
In December, the county sold another parcel to RSC. The firm plans to build a 122-room Hyatt Place boutique hotel, a 102-room Hyatt Summerfield Suites extended-stay hotel, 105 apartments and 6,900 square feet of retail space on a block bordered by N. Milwaukee, N. Jefferson and E. Lyon streets and E. Ogden Ave.
But construction, which was to begin this past spring, remains on hold.
"I think it's clear to everyone that the credit markets are frozen," said Richard Curto, RSC president. "We are caught in that logjam."
The nation's economic woes have delayed other development plans, including The Catalyst project, a dining and entertainment complex planned for a city-owned parking lot south of W. Wisconsin Ave. between N. 4th and N. 5th streets; the 80-unit Moderne project, a housing high-rise that would be built at W. Juneau Ave. and N. Old World 3rd St., and a 160-room Aloft hotel planned for a site overlooking the Milwaukee River, north of W. Juneau Ave.
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