Historic high-rise in downtown Tacoma to get new life with ‘big investment’
A project to transform a historic high-rise is proceeding in downtown Tacoma.
Unico Properties of Seattle plans to start work next month converting the Washington Building’s offices into 156 upscale, market-rate apartments.
Interior demolition will begin in July followed by construction of the new apartments, set to take about 21 months to complete, according to Unico representatives.
The entire project is tentatively set to be completed early summer 2022.
The site’s redevelopment is part of a joint venture between Unico and Pinnacle Partners, which acquired the property in May.
Unico is developing the project on behalf of its and Pinnacle Partners’ fund investors, according to a statement released last week.
Ned Carner, Unico chief investment officer, said Unico was eager to get moving on the project, which is using Opportunity Zone funding.
“It’s a unique project and a really great public-private partnership,” Carner said. “It took a lot of programs and effort to get the deal to come together with the historic tower and bringing new life into downtown.”
With the project now an Opportunity Zone project, “it incentivizes you to own the property 10 or more years,” Carner said. “So we not only redevelop but then continue to own it.”
Opportunity Zone funds are set up to invest in properties and redevelopment in economically-distressed areas. Investors can defer and potentially lower their capital gains taxes in exchange for the investment.
The law doesn’t specify how the funds are to be used, both affordable and market-rate housing are covered for now, though a reform measure was introduced late last year in Congress that would tighten qualifications and generate more affordable housing.
Critics have contended these types of investments can benefit investors more than residents, and a recent study also has raised equity outcome questions..
Developers such as Unico contend some projects would be too costly to take on without the program and that it provides opportunity to save and adapt old buildings for a new use.
The investments have seen a slowdown elsewhere amid the pandemic and the greater level of uncertainty about the economy overall, making the Tacoma project one that’s going against the tide.
That “speaks to the quality of the project,” Carner told The News Tribune in a recent phone interview.
While concerns are rampant over lack of enough affordable housing in Tacoma, city leaders have insisted housing of all kinds is needed.
There’s also the historic aspect of the Washington Building project. Unico sought and received landmark status for the 1920s-era building from the National Parks and City of Tacoma.
“We worked with Unico to add the building to the Tacoma Register of Historic Places in 2017 and with them on their design proposals,” said Reuben McKnight, historic preservation officer with the city’s Planning and Development Services Department, in response to questions via email.
The design proposals “included extensive masonry repair and tuck pointing, cleaning, minor repair of other elements like windows, and some minor alterations to the configurations of the street level facades, such as entrances, ventilation louvers and so forth,” McKnight told The News Tribune.
“Unico came to Landmarks several times in 2017 and 2018, and they have submitted an application most recently for the City’s Special Tax Valuation incentive that encourages investment in historic buildings,” he noted.
Approval of the incentive is pending review by the Landmarks Commission.
Dedicated in 1925
The building at 1019 Pacific Ave. was envisioned as a branch of the Scandinavian American Bank. When the bank failed, construction halted, and its skeletal 16-story steel frame sat unfinished until the Washington-California Co. purchased it, made it 18 stories tall, and dedicated it in 1925.
After decades of operations as an office building, it eventually again fell on hard times, with the exterior showing neglect with broken terracotta masonry and vegetation growing from the masonry. Inside, office tenants struggled with a nonworking elevator.
Unico purchased the building at the end of 2016 for $9.8 million. After spending the past few years working on preservation of the exterior facade, the real estate investment and operating firm secured funding for the construction of the apartments.
$60 million in upgrades
Transforming it into market-rate apartments isn’t an easy or inexpensive flip. Construction costs are estimated at $60 million.
The stone lobby will be left largely intact, and a tenant lounge will be created in the building’s historic bank vault, according to plans. The rooftop and penthouse space will become a rooftop amenity deck.
But, floor by floor, new construction will turn the space into what Carner described as “Class A” apartment units, a description usually reserved for top-grade office space.
The project is reminiscent of another Unico redevelopment finished in 2007: the Cobb Building in Seattle. According to that project’s description on Unico’s website, that building was constructed about a decade before the Washington Building.
Unico also transformed it into high-end apartments with retail.
MultiFamily tax exemption
Unico’s Tacoma project also qualified for an 8-year multifamily property tax exemption.
Paperwork filed with the city in 2018 listed the vast majority of the apartments would be one-bedroom, one-bath units at 622 square feet with an expected monthly rental rate of $1,550, and six, two-bedroom, two-bath units, 1,071 square feet, with an expected monthly rental rate of $2,000.
The latest plans call for 122 one-bedrooms, 14 studios, and 20 2-bedroom/2-bath, along with 12,000 square feet of ground-level commercial space. Those plans could change, and no word yet on what the rents will ultimately be, other than market rate.
As for parking, Unico has negotiated a lease agreement for up to 168 parking permits for future Washington Building tenants.
“The Washington Building itself has no parking and identifying nearby options, in public parking structures, was important for the feasibility of converting the former office building into residential use,” according to Maria Lee, communications representative for the city.
The parking sites include the Tacoma Parking Garage at 110 S. 10th St. and Park Plaza North, 923 Commerce St.
For now, everyone involved is ready to get on with the next phase of bringing the structure back to life, much like last year’s completion of McMenamins Elks Temple and the ongoing revamp of Old City Hall.
“Unico has been good to work with; their design and historic preservation team has been thorough and responsive,” McKnight said via email.
“We’re excited to invest in Tacoma,” Carner said. “We’ve been bullish on it for decades and are excited to make a big investment.”
This story was originally published June 24, 2020 at 1:33 PM.
