Apartments, shops, 6-story building planned for Tacoma's Proctor District

A long-discussed plan for a retail and apartment complex in the heart of Tacoma’s Proctor District has new life – and is causing some to worry – after a conceptual drawing appeared online.

“Proctor 28” could bring 135 apartments, 12,000 square feet of street-level retail space and parking to most of the square block near Proctor and North 28th Street. It’s the latest iteration of a project pushed for years by Bill Evans, owner of the Pacific Northwest Shop and one of the founders of the thriving business district.

The latest project, first rumored about a year ago, would displace four businesses currently leasing space in an old commercial center. At six stories, the new building could be the first development under Tacoma’s new mixed-use center regulations, designed to encourage dense development in certain areas of the city by allowing buildings to rise higher. It would become the tallest building in Proctor.

The owner of Knapp’s, a longtime Tacoma restaurant across the street, loves the idea of hundreds of new potential customers but knows such a project would change the neighborhood dramatically.

“I have two heads: One says ‘Woo hoo, new people across the street!’ ” Tim Tweten, president of South Sound Restaurant Group, said Tuesday. “But the other says, ‘Where in the world will those people park?’  ”

Most businesses in the Proctor District are in wait-and-see mode, said business district president Harold McMillian. But, understandably, the small businesses that would be displaced are distressed.

“We’ll have to move,” said Shannon Mueller, who owns Babblin’ Babs Bistro with her husband and chef, William Mueller. “Proctor and Tacoma have been good to us, but we can’t afford to pay our lease now. We definitely can’t afford to rent in a new building.”

Evans and his business partner, Erling Kuester, were in the early stages of developing a smaller mixed-use building on the block in 2004 – plans that stopped as the recession hit. Now the men have brought in California-based developer Rick Moses, who most recently tried to create a mixed-use building to complement the downtown McMenamins Elks Temple.

“Things are very preliminary,” Moses said last week. “We just don’t have a lot to add to what’s already on the website. We’re in the very very early stages.”

Evans is out of the country and unavailable for comment. Kuester referred comment to Moses, who said there is no timeline for construction. He also declined to discuss Proctor 28’s financing – the key to whether a development is more than an idea.

“I don’t really want to go there with that,” Moses said. “I don’t mean to be coy, but it’s just an awkward thing to get into at this point.”

Still, Evans and his partners are laying the groundwork. Except for the Qwest building on the corner of North 27th and Madison, they now own or control all the property on the block. That includes three single-family homes on the north side of the block, as well as the land under the commercial strip where Babblin’ Babs, a teriyaki shop, a nail salon and a locksmith now operate.

The Muellers and the operators of Happy Teriyaki Wok both said their leases are on shorter terms than a typical traditional lease. They both have been aware for more than a year that the landlord, who lives in New Mexico and is a silent investor in the development, could ask them to move with little notice.

“We found out a year ago that they’re not doing lease renewals,” Shannon Mueller said. After nine years in the Proctor location, “it’s so hard to even think about moving the business. We’ve been strategizing how to start over.” The couple have been scouting existing restaurant locations in Pierce County, because building a new one is prohibitively expensive.

But Bob Corcoran, who owns Corcoran’s Lock & Safe next door to Babblin’ Babs, could stop the project in its tracks.

Corcoran has run his business from 2726 N. Proctor St. for more than 20 years. He has options to renew his lease through 2018, something that usually can be broken only by a negotiated buyout. He said the developers made an offer last fall, and Corcoran agreed to accept it, if they would pay in 30 days. He wouldn’t disclose the sum but said the money never arrived.

“I don’t think this project will happen,” Corcoran said. If they can’t buy out a single lease, he said, how can they build such a high-end project?

“Plus I don’t think people will let it (happen),” he said, citing concerns about additional traffic so close to Mason Middle School, which is on the next block, and the overall tight parking situation in the district.

Beyond community reaction, the project simply may not pencil out. While the estimated cost of the project is unclear at this early stage, generally developers need to be able to charge around $20 a square foot to justify the cost of construction. Statistics from the commercial real estate firm CoStar show retail rents in the Proctor District average about $17 per square foot now. In 2011, that average hit $24 but has since fallen.

However, the district also has no vacancy, so any new space might be able to charge more based on pent-up demand.

Given those factors, the Proctor District has the best chance of sparking new construction, said David Boe, an architect who worked on a previous version of a mixed-use center with Evans and Kuester. He is not involved in the current project, though he said he supports it fully.

Now a city councilman, Boe was on Tacoma’s planning commission years ago when the new mixed-use center regulations were being developed. He recalled that at the time, representatives from Proctor were the most vocal against new rules allowing higher residential density.

People in the area wanted the benefit of density – more feet on the street, more retail choices – without the reality of higher buildings, he said in an email.

“Yes, with any construction development some of the businesses will be displaced,” Boe said. “And with new construction comes new rate structures for rent.”

Tacoma’s low rental rates are affordable for local businesses, but new construction – and the possibility of attracting even more businesses – won’t happen until they rise.

The Muellers and Corcoran believe that few local or start-up businesses would be able to afford the new retail space. Boe said they might be right.

“It is inevitable that with new development, some businesses will not be able to afford the new rents – and (that’s) why we have different businesses in different business districts across the city,” he said.

The Muellers and Corcoran also are put off by what they characterize as a lack of communication both from their landlord and the developers. The Muellers said they know most of what they know because of Corcoran, who has met directly with Moses.

Since the failed buyout last year, Corcoran said he’s notified his landlord twice that he plans to renew his lease and has gotten no response.

“I’m not moving,” Corcoran said. “I don’t care. Whatever it takes to fight them, I’ll do.”

Kathleen Cooper: 253-597-8546

kathleen.cooper@thenewstribune.com

blog.thenewstribune.com/business

@KCooperTNT