Madison, Wis. – The State of Wisconsin Investment Board (SWIB) has signed a lease to relocate in the summer of 2022 to a new building to be developed by Smith Gilbane at Madison Yards on Madison’s near westside. The new facility will provide the agency with the space needed to house its award-winning staff and to increase its ability to manage assets internally. Internal management, using staff in Wisconsin, is a key cost-saving measure that helps grow the fully funded Wisconsin Retirement System (WRS).
According to an independent cost consultant, SWIB saved $54 million over its peer pension plans in 2018 and $1.3 billion over the last 10 years, in part because of its internal management strategy. And at the same time, SWIB has also generated more than $560 million in value added to the WRS above its benchmark for the five-year period ended Dec. 31, 2019. Moreover, as of Sept. 30, 2020, SWIB exceeded its actuarial target of 7% necessary to keep the WRS fully funded over the 5- and 10-year periods, with net investment returns of 8.90% and 7.95%, respectively, for the WRS’ main trust fund.
“SWIB is evolving with the rest of the investment industry. To meet our fiduciary duty, our investment strategy has become more sophisticated and diverse. We need to continue to build the necessary expertise to support the complexity of managing assets in a more challenging market environment and to do so we need to build out our infrastructure and technology to support that expertise,” said SWIB Executive Director/Chief Investment Officer David Villa. “By growing our internal management, we are able to implement a robust investment strategy designed to effectively manage the WRS at a lower cost than external managers. And the more investments we can manage in Madison, the less we have to pay to Wall Street firms.”
Even taking into account emerging work from home practices, SWIB has outgrown the available space at its office in downtown Madison. SWIB has negotiated a competitive lease for approximately 90,000 square feet of space, and its occupancy cost will change by less than a dollar per square foot compared to its current location. The proposed building is part of the 21-acre complex that includes a 600,000-square-foot State of Wisconsin office building that opened in 2018 and houses SWIB’s sister agency, the Department of Employee Trust Funds, which administers the WRS benefits. In connection with the move, SWIB will begin the process to sell its existing downtown office building overlooking Lake Monona, which is owned by the WRS. The pension plan will benefit from the gains expected from the sale of the building.
“SWIB’s strategic approach to invest in highly diversified and complex investment strategies and to manage assets internally becomes even more critical to maintaining a strong WRS during challenging market environments,” said Board of Trustees Chair David Stein. “This new office space will also allow SWIB to attract and retain the talent needed to manage the WRS and enhance its technology to support those strategies.”
Advances in technology design will provide a superior infrastructure that SWIB’s aging building cannot support for SWIB’s technology, network systems, and growing number of data sources. It will also provide enhanced security and flexibility for managing the trust funds.
SWIB manages more than 50% of all funds internally, up from 21% in 2007, with plans to increase that percentage over the next few years. SWIB expects to continue to grow its Madison staff to achieve those plans. The assets managed by SWIB have grown from $84 billion in 2010 to nearly $129 billion in 2019, more than 90% of which is the WRS trust funds.
SWIB’s leadership began looking at future space needs in late 2017. SWIB began the relocation process in early 2019 by conducting a request for information to gather options for existing office space as well as new construction located in the Madison metro area. SWIB’s current office building at 121 E. Wilson St. was purchased by the WRS about 17 years ago. SWIB’s move to its new, more efficient location will also spur the redevelopment of its current premier location for additional growth in the Madison downtown market.
“We are excited to be part of this near westside development project and to be in the same development as the Department of Employee Trust Funds,” Villa said. “At the same time, the planned sale of our building makes a prime downtown location available, which benefits the WRS and its participants.”
For more information about SWIB and the Madison Yards development, download SWIB's New Location Fact Sheet and go to www.madisonyds.com.
SWIB’s strong management of the WRS trust funds has helped fuel one of the only fully funded public pensions in the country on behalf of more than 652,000 current and former employees of state agencies, the university system, school districts and most local governments. The WRS is the 9th largest U.S. public pension fund and 25th largest public or private pension fund in the world. SWIB provides a strong, steady economic pillar for the state of Wisconsin by growing the trust funds under its management, managing risk, and optimizing costs over the long term. As of December 31, 2019, the WRS accounts for approximately 90% of the nearly $129 billion of total assets under management at SWIB. In addition to the WRS trust funds, SWIB also serves the state by investing the assets of the State Investment Fund, University of Wisconsin System Trusts Funds, Injured Patients and Families Compensation Fund and other funds.
Smith Gilbane is a joint venture comprised of developers Gilbane Development Company and Summit Smith Development.
Gilbane Development Company is the project development, financing and ownership arm of Gilbane, Inc., a private holding company in its fifth generation of family ownership and management. Gilbane Development Company provides a full slate of real estate development and project management services. Completed projects incorporate every aspect of real estate including: mixed-use developments; multifamily including affordable housing, student housing, and market rate apartments; single-family residential communities; corporate headquarters and office space; healthcare facilities; operational | data | distribution centers, R&D | manufacturing facilities; and many types of facilities delivered through public-private partnerships. To learn more, visit http://www.gilbaneco.com/development.
Summit Smith Development is a full service, commercial real estate development division of C.D. Smith Construction, Inc. based in Milwaukee, WI. C.D. Smith is a family-owned and operated firm headquartered in Fond du Lac, WI. Founded in 1936, C.D. Smith has grown into one of the State of Wisconsin’s largest general contracting firms with broad construction and development capabilities. Summit Smith Development, develops projects across the country, including a diverse portfolio of mixed-use, medical, and office facilities. To learn more, visit http://www.summitsmith.com.