A Few Details on a Possible New Tacoma “Town Center”

We wrote last week about a possible development on the vacant blocks owned by the City of Tacoma on Jefferson between South 21st and 23rd.

A few more details are emerging on the proposed project, which is still in the early stages. The Seattle Times reports that a preliminary agreement dating back to August could see the 6.4 acres of land sold to an investment group for $3.5 million for the construction of a mixed-use project to be constructed in two phases.

According to the Times, the deal, still in early stages, would sell the land to China-based Wuhan Boshengshiji Real Estate Development Co., with Bellevue-based North America Asset Management Group handling the development of the mixed-use project.

The mixed-use project, called Town Center, includes 360 residential units, 90,000 square feet of offices and 200,000 square feet of commercial space. It will also have some ground-floor retail and about 480 parking stalls.

The project is expected to be 30% EB-5 funded, and involves some of the same players from the Yareton Convention Center Hotel project.

The News Tribune reports that the investment group is now working on a feasibility study to be submitted to the City by mid-December. The project will require approval from the city coucil, but the TNT says we could see phase one done as early as 2018.

Early design images included in the Seattle Times story show a glass and brick building at the corner of 21st and Jefferson with a sign reading "Century Plaza," and an airy glass atrium, and public seating, downhill from what looks like it migth be the residential element of the project. An aerial rendering included with the TNT article shows a birds-eye view of the project covering both the Jefferson blocks and the larger blocks between Fawcett and Tacoma Avenue South. In this view, it appears that Fawcett has been closed to vehicle traffic, creating a turnaround for cars, and a plaza with a water feature.

Any designs at this point are, of course, just conceptual, and nowhere near final, but what would you hope to see included in a development on those blocks? It's a pretty big blank canvas...

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Include a first-run cinema facility.  The hillside location also represents an opportunity to excavate for significant underground parking that could serve a major anchor tenant in a taller-building with windows focused on Mount Rainier.  How ironic that the firm coordinating the project is based in Bellevue, a prosperous city.  The EB-5 , by contrast, is meant to promote development in distressed communities, like Tacoma.  It would seem proximity to the vibrant UW-Tacoma campus might attract a significant anchor tenant (i.e., like State Farm) seeking something different than downtown Seattle but in the an urban environment around Puget Sound.  Developers assessing Tacoma opportunities should recall that the city has hosted major business firms downtown in the past.  One hopes that the land buyer maximizes the physical development—and therefore job-creating—potential of that acreage.  It would seem high-tech firms might benefit from the nearby computer science program at the UW-T.

October 5, 2015 at 1:21 pm / Reply / Quote and reply

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“Developers assessing Tacoma opportunities should recall that the city has hosted major business firms downtown in the past. “

They have, they are, and what they discovered is there is a reason they left.  To paraphrase an old car commercial Tacoma, the Little Detroit of the West.  Tacoma has followed the Detroit model and all indications are that Tacoma will continue to do so into the future.  For God’s sake a city that is so ineptly managed that it cannot afford weekly garbage collection and whose pavement is in such piss poor shape, due to neglect, that maintenance is no longer able to keep pace with deterioration is a city whose public policies are demonstrably leading it in a downward trajectory.

October 7, 2015 at 8:46 am / Reply / Quote and reply

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At first news of this I was excited, but I asked a friend in commercial real estate about it and my expectations have been tempered.

Here’s why.

First, about two years ago, the city put out a Request For Proposals on that property.  The got an offer from a local developer for over $6M.  They turned it down because he was the only one to submit an offer.  Now, they announce a deal for $3.5M without doing another RFP.  Not only is losing $2.5M on the deal dumb, but apparently there is a good chance that this deal gets challenged in court by the developer.  The articles say that the city didn’t receive any offers from 2 years ago, the person I spoke do says they definitely did.  I guess that’s what the court will have to figure out.

Second, the Chinese investors aren’t there yet.  The total cost of the project is estimated at $125M.  The Chinese firm NAAMG (with offices in Bellevue, but managed and owned by Chinese) will put up $25M, with the other $100M still to be raised, primarily targeting rich Chinese with over $500k lying around who want to buy a visa into the USA.  (The Times article and the summary on Exit 133 says that 30% of the cost will be from the EB-5 program but doesn’t say where the other 70% will come from, the TNT says all of it will come from EB-5).
There are two potential problems here for this project:  First is that the Shanghai stock market has had a terrible year.  In early summer the market fell by 30% in three weeks, then fell another 8% a few weeks later.  Then fell again by over 15% in late August.  That is a huge loss to Chinese stockholders, and there are a lot fewer people with the requisite $500k to invest in this, than there were 6 months ago.
Second, there are rumblings in Congress about changing the EB-5 program. Even if that goes nowhere, the uncertainty about it could cause investors to hold onto the money they still have until they know what’s going to happen.  Then again, it might also encourage people to jump in before the window of opportunity closes.

Big hurdles still to go.  Don’t fall in love with pretty pictures with fountains in them yet.

October 7, 2015 at 8:22 am / Reply / Quote and reply

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