A California real estate investment company now owns one of the prime development spots in Tacoma’s Stadium District.
Tourmaline Capital Management bought the property occupied by Stadium Thriftway, as well as the two parking lots across North First Street, a bundle of properties that has long inspired dreams of retail and more housing to fill out the dense, lively neighborhood.
“I love buying well-located real estate,” Jonathan Cheng, president of San Diego-based Tourmaline, said Thursday. “For whatever reason, the property hadn’t been utilized to its full potential.”
Development plans are in the early stages, Cheng said. “We’re looking at all uses. We haven’t decided anything. We’re looking at retail, obviously, but also multifamily, office and medical office,” he said.
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Stadium Thriftway isn’t going anywhere. Cheng said the grocery store is a “great anchor.” Owner Mike Hargreaves, who just completed a major expansion of his business, said he has a long-term lease that gives him security for at least 20 years.
“We made a really big investment in our business and in this neighborhood, and it’s exciting that someone will come in and make investments, too,” Hargreaves said.
The deal, which closed earlier this month, ends a years-long attempt by the previous owners to sell their collection of parcels comprised of two parking lots on North First Street and the triangle portion across the street that holds Stadium Thriftway, Morrell’s dry cleaners and the parking lot they share. The strip of retail businesses on the northeast side of that triangle, which includes Tully’s, Franco the Tailor and Gibson’s Frozen Yogurt, are owned by other people and are not involved in the deal.
The triangle portion of the site has longstanding environmental issues stemming from the dry-cleaning business — contamination that is very old and associated with obsolete practices unrelated to Morrell’s.
“That’s your problem right there,” said Scott Price, who with Joel Jones of Neil Walter Co. brokered the sale to Tourmaline. “The groundwater leached over to the parking lot. For buyers, that can be very challenging. But Jonathan got his hands around it.”
Here’s how: The sale of the property will happen in phases. The triangle portion of the site has been divided into three parcels, with Tourmaline purchasing the largest segment plus the parking lots for $5.8 million. Tourmaline now has options to purchase the remaining two segments — the dry-cleaner property and the parking lot – after the previous owners complete environmental cleanup. The previous owners, four people via three limited liability companies who have owned the property since the early 1980s, have been working with their insurance company on the issue.
Tourmaline is a relatively new firm. Cheng formed it in 2011 to buy and develop underutilized retail properties on the West Coast. It owns six properties now, four of which are in Washington. One of them is the shopping center on Division Street and Harrison Avenue in Olympia that contains a Grocery Outlet and Dollar Tree.
Cheng said he started looking at the Tacoma site earlier this year. He said Tourmaline has relationships with national retailers, though it’s too soon to talk specifics for Tacoma. Hargreaves said he has a “rock solid” noncompete clause in his contract, so another grocery store is unlikely. Price said in the past Bartell Drugs had looked at one of the parking lot sites.
One of the first changes under Tourmaline might involve the Titus-Will service center, which occupies the southwest tip of the triangle. Cheng said he intends to “do something on that floor.”
“It is underutilized. It’s at such a great intersection. And there’s already a nice retail anchor,” he said.
Trevor Will, the center’s general manager, said Cheng hasn’t said when he plans to redevelop the space. Titus-Will’s lease requires the landlord to give the business nine months to relocate, and Will said he hadn’t received any notice yet. But when he does, Will said, the service center operations will move to the dealer’s location on Sixth and Broadway, where it has had offices since 1938.
Financing won’t be an issue for whatever Tourmaline ends up building on the parking lots, Cheng said. Tourmaline can work with lenders on the project, or it can use cash, he said.