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Real Estate Editor
June 18, 2020
Three years after the hole was dug and the steel skeleton of the city's tallest building went up, that abandoned project has resumed construction.
Where? Tacoma. When? The year was 1924, when a Pittsburgh group bought the stalled construction project out of foreclosure. What had begun in 1920 as the marquee headquarters tower for Scandinavian American Bank — to be second only in height to Seattle's Smith Tower — had its design revamped and ended up as the 18-story Washington Building, at 1019 Pacific Ave.
Flash forward to January 2017, when Unico Properties acquired the poorly maintained, 30% occupied building for $9.8 million, then announced an apartment conversion plan. Another three years pass, during which time Unico landmarked the building and offered to sell the project.
Now it's sold again, for a little over $13.7 million. Pierce County recorded the sale almost two weeks ago. The buyer of record was Washington Building QOZ LLC, a new Unico-related Opportunity Zone vehicle. And the apartment conversion is about to begin, as its chief investment officer Ned Carner recently explained.
The project is one of the few in our region to commence during the current coronavirus recession. Work should last about 21 months, and will yield 156 units.
There will also be about 12,000 square feet of retail/commercial space on the ground floor and mezzanine level. There, “We'd like to do a restaurant or a coffee shop,” said Carner. Unico lists the project size at 120,800 square feet.
Fish Mackay Architects designed the conversion plan, which will include “a full structural upgrade to the building.” Coughlin Porter Lundeen is the structural engineer for that. The team also includes AHBL, civil engineer; WJE, building science; and Northwest Vernacular, historic preservation consultant.
Unico says a general contractor hasn't yet been selected for the $60 million project. City records say that Colvos Construction is doing the demolition.
The ownership structure includes Pinnacle Partners, a new local Opportunity Zone investor group.
In a statement, Pinnacle's Jeff Feinstein said, “This project is a testament to the value the Opportunity Zone program can unlock especially in underinvested, historic neighborhoods.” While smaller commercial buildings in downtown Tacoma have been converted to offices, the Washington Building is by far the largest such project.
“We've done it before with the Cobb Building,” says Carner of that 12-story, 91-unit conversion done circa 2005 in downtown Seattle.
But the Washington Building is Unico's largest such conversion to date. “It was a lot more work and lot more complicated, and frankly more expensive than expected,” says Carner. That was just the planning.
Indeed, after the conversion plan was entitled, CBRE was offering the project for sale last year — before Unico opted to go the Opportunity Zone route.
“Opportunity Zones have gotten mixed reviews. I think this is the poster child,” says Carner. Speaking both of Pinnacle and other real estate investors, he sees Opportunity Zones as being suitable for the “long-term capital minded.”
More generally, the goal is “to create something that Tacoma doesn't have … getting more residents downtown.”
Pioneer Masonry Restoration has completed preservation work on the building's “really irreplaceable terra-cotta exterior,” says Carner. The original bank lobby — with 20-foot ceilings — will also be preserved, including the vault and travertine floors.
The renamed Washington Building Apartments will also have about 165 parking stalls in leased garages nearby. The rooftop amenity areas will preserve the old penthouse, which Unico says was once a medical scientific zoo. The Tacoma Sunday Ledger described it as a research facility during World War II, where rats, mice, guinea pigs and Flemish giant rabbits were used to test treatments for tuberculosis, typhoid, dysentery, pneumonia and syphilis. The building was also once topped with large neon signs for Mobil Gas, Brotherhood Bank and Bank of California.
The Scandinavian American Bank failed in 1921. Its original architect was Frederick Webber of Philadelphia. After the 1924 foreclosure sale, the design was revised by Doyle & Merriam, the Northwest firm behind many historic banks and buildings in Seattle and Portland.
Public records indicate a $25.5 million construction loan from TCF National Bank. Unico's original co-investors, the Agnew Co., of Vancouver, Washington, and the Ashforth Co., of Connecticut also have continued financial stakes.
Says Carner, “We're hoping it's the first of many Opportunity Zone investments. We see this model being replicable in Pioneer Square.”
On which subject, he says the office renovation of the Washington Park Building, at 76 S. Washington St., should commence in the first quarter of next year. It'll end up with about 50,000 square feet of boutique office space. That renovation/addition should take about 18 months. “It's gonna be pretty neat. We'll do it on spec.”
Looking ahead in Pioneer Square, Unico's Grand Central block, now mostly vacant, doesn't have a schedule yet for its office renovation/addition. Nor does the Korn-Walker half block, which includes the Merchant's Cafe. Some kind of mixed-use addition is planned — possibly with apartments on top of the Walker Building (aka the Saveway).
Got a tip? Contact DJC real estate editor Brian Miller at email@example.com or call him at (206) 219-6517.