From offices to residential: Another historic Tacoma building switching to apartments
Owners of a historic office building in downtown Tacoma once home to a major employer are planning another reinvention of the site. This time, the change is fueled by decreasing demand for office space.
The former DaVita building, 1423 Pacific Ave., is the focus of a pre-application filed with the city this month to convert the historic site to residential units: 63 in the 11-story tower and 12 in the building’s two-story annex.
The site was put on the market for sale or lease in May and listed by Lee & Associates Commercial Real Estate Services representing the LLC affiliated with the owners.
Mike Bartlett, founder and CEO of Horizon Partners Northwest, told The News Tribune via email on Monday the developers were “pivoting to converting the 1423 Pacific Tower to a 75-unit luxury apartment project.”
He added the move came as the market for office spaces “continues to be uncertain near term.”
Horizon Partners Northwest purchased the site in 1999 and renovated it, including a seismic retrofit.
Bartlett has also led the development of Tacoma’s Brewery Blocks.
The latest office-to-apartments project is envisioned as creating “the finest boutique apartment building in Tacoma,” he wrote.
“The 63 units in the tower will have 11 foot ceilings, top of the line finishes and air conditioning. Two thirds of the tower units will have great views of the mountain, Thea Foss Waterway or Downtown,” he wrote.
He added, “The 12 loft style units in the two-story annex building are very large, 1,300-to-1,700 square feet with 13 foot ceilings.”
Plans also call for making the most of the rooftop.
“All apartments will have access to an all new 11th floor amenity space with both indoor and outdoor seating and dining areas, fire pits, kitchen and large private dining room for special events or meetings,” he wrote.
Switching from office space to residential luxury units should be speedy, Bartlett said.
“The conversion to residential will be a large tenant improvement project and be available for lease in the summer of 2023,” he wrote.
historic site
The site, also known as the Sandberg-Schoenfeld building, was completed in 1908 and at the time was the tallest concrete structure west of the Mississippi. It was home to Schoenfeld & Sons Furniture for decades. The building’s namesake, Peter Sandberg, commissioned the building’s design and construction, hiring master architect Frederick Heath, who had recently completed design of Tacoma’s Stadium High School.
The site was added to the National Register of Historic Places in 1999. The application described the building as follows: “Combined with the large window openings and metal frame industrial windows, the pioneering concrete structure presents a clear break from the 19th century masonry buildings that dominate the Tacoma streetscape.”
In more modern times, kidney dialysis services company DaVita occupied the entire 110,440-square-foot building’s Class A office space. The company announced plans in 2017 to leave Tacoma for a new Federal Way campus.
That move was completed in April 2021, taking approximately 500 employees with it.
Other office-to-apartment conversions
The project isn’t the only one converting a legendary downtown Tacoma building from office space to apartments.
The former Key Tower, 1119 Pacific Ave., is now owned by Spokane-based developers. They plan to convert 1117, 1119 and 1123 Pacific Ave. Buildings “for ground floor retail, 63 apartment units and office space,” according to an eight-year multifamily tax exemption filing for all-market-rate housing, not yet processed by the city.
The application for the project, called the Tacoma Tower, notes, “There is currently no existing housing units in any of the buildings. Residential space is being created by removing office space from the buildings.”
Puget Sound Business Journal recently reported that the new owner of the Bank of California building, 1011 Pacific Ave., has plans to convert some of that space.
Ramesh Rabadia, owner of Shreeji Investment LLC, who bought the building in March, told PSBJ that plans call for “about 20 apartments or condos” on the upstairs level, and to “use the ground floor for high-end restaurants.” In the near term it will serve as an events venue.
The project’s pre-application filed in September says the project will include “expanding the existing mezzanine, adding two new floors between the existing mezzanine and the existing second floor. The existing mezzanine and two new floors will be multifamily residential. The existing upper floor (second floor) will have multifamily residential, space for amenities for the residences and leasable office space.”
The site that took the lead in the recent conversion movement is the redeveloped 18-story Washington Building, 1019 Pacific Ave. It’s now The Astor apartments, home to 156 market-rate units.
Another project, not on Pacific Avenue but just as significant in its conversion, is the ongoing transformation of Tacoma’s Old City Hall, 625 Commerce St., which ultimately will include shops, a food hall, co-working space, public-event space and micro residential units.
Plenty of space, cheaper than Bellevue
The current state of office occupancy in Tacoma, according to Kidder Mathews’ third quarter report distributed Tuesday, showed the central business district (downtown) with a vacancy rate of 9.8 percent, down from 10.8 percent last quarter.
Average office-space rent in the Tacoma central business district is at $27.24 per square foot, “about half of the current Bellevue (central business district) rate,” the report noted.
The city’s office market still reflects the effects not only of pandemic-related reductions in office space but also of State Farm’s departure in 2018, when before that time office vacancy rates were in the low single digits downtown.
CBRE’S analysis of the local market in the third quarter noted, “The Tacoma office market was stable compared to other suburban markets, with little positive or negative absorption.”