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Nat Levy
Real Estate Reporter

October 15, 2015

Real Estate Buzz: After the recession and other challenges, Gig Harbor site is now getting developed

Real Estate Reporter

For more than 140 years, starting back when Ulysses S. Grant was president, Pope & Talbot timber company has owned more than 330 acres in Gig Harbor.

Pope Resources was created in 1985 after Pope & Talbot spun off its timberland and development property in Washington, and in the 1990s Pope Resources decided the Gig Harbor land should be developed.

Olympic Property Group, Pope's real estate arm, has worked for years to develop the land and got a big win when Costco opened there in 2007. Then the recession hit and momentum stopped.

But over the last two years, there has been a flurry of activity at Harbor Hill. Lots are selling fast and new houses are going up. A retirement community is under construction, another retail center is planned and more house lots are on the way.

Olympic Property Group has entitlements for 554 house lots at Harbor Hill, which is in north Gig Harbor off Highway 16. Olympic prepares lots, and then sells them in bulk to homebuilders. So far, it has finished 212 lots and sold 208 to homebuilders. Another 53 lots are under construction. Bellevue-based Quadrant Homes has been the most active buyer. Richmond American Homes and Lennar Homes have also bought lots from Olympic, which plans to do another 200 lots next year.

Costco opened a store at Harbor Hill in 2007. Another retail project by Powell Development Co. of Bellevue is expected to start in 2017, probably anchored by a grocery store.

Approximately 100 houses have been built, and 79 of them have sold.

“What we are good at doing is planning the community and the land development, and then we hand it off to someone who is great at building homes,” said Brendan Mason, project manager at Olympic Property Group.

Olympic is working with RV Associates of Port Orchard, Triad Associates of Woodinville and Pyramid Engineering of Auburn on Harbor Hill.

In August, Emerald Communities of Redmond began construction on a 300-unit assisted-living facility called Heron's Key.

Landmark Development Group of Auburn built a 172-unit apartment complex called Bracera Apartments on the north side of Harbor Hill. The complex is almost fully leased, Mason said, and rents average about $1.45 per square foot.

Olympic is preparing approximately 18 acres for another retail development with Powell Development Co. of Bellevue. Local grocery chain Town and Country will likely be the anchor, and construction is set to begin in 2017.

Olympic also sold a parcel to Peninsula School District for a future elementary school and another for a city park. The firm sold another site for a church/community center.

This is not exactly how Olympic Property Group imagined Harbor Hill years ago. It has been a challenging project that forced the developers to be creative with the non-residential land.

The non-residential areas were zoned mostly for office but Gig Harbor has never had much demand for that, said John Chadwell, vice president of land development for Olympic Property Group. As the firm struggled to lure tenants, Jon Rose, president of Olympic Property Group, hit the streets. He did research and met with a lot of people to figure out the best uses for his site. Some people clamored for more sports fields, schools and public amenities.

But before any of these things could be built, Olympic Property Group needed an anchor. Enter Costco.

The Issaquah-based retailer was looking for a spot in Gig Harbor, which historically has resisted big-box retail — even getting national coverage for saying no to Wal-Mart in 1996. Eventually an agreement was hammered out, and Costco opened in 2007.

“We needed Costco here to be the economic engine that was going to turn this thing over,” Chadwell said.

Around the same time the Costco deal was coming together, Olympic Property Group also was talking to YMCA. Having a gym and community center on the site would be a great amenity for homeowners, so Olympic convinced YMCA to walk away from another site in Gig Harbor and build at Harbor Hill.

Then the recession hit, and Gig Harbor didn't recover nearly as fast as Seattle. Little happened at Harbor Hill until recently. When Mason joined the company in spring 2014, the apartments were nearly done but only one single-family house had been built.

Images courtesy Olympic Property Group [enlarge]
Trails, parks and playgrounds are scattered throughout Harbor Hill, helping to attract young families.

Demand started to pick up, thanks to a record-low supply of available houses in the region and rising prices.

“Homebuilders were caught off guard,” Mason said. “Everybody was hunkered down because of the recession, and they didn't have properties like this in the queue ready to go.”

Prices for houses at Harbor Hill start in the mid $300,000s. They range from about 2,200 to 4,000 square feet.

Mason said most Harbor Hill residents come from Pierce County and nearby cities like Port Orchard. Many work in Tacoma, Puyallup and Bremerton. There are a lot more young families than the team expected.

Mason said one of the main draws is all the outdoor activities. The development surrounds a large wetland, that will remain when Harbor Hill is finished. A series of walking trails extend throughout the neighborhood and connect to a nearby regional trail.

Small parks, playground and gathering areas are in each neighborhood.

Got a tip? Contact DJC real estate editor Brian Miller at brian.miller@djc.com or call him at (206) 219-6517.

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