News

May 08, 2023

Big building remodels hit heart of downtown > Spokane Journal of Business

Renovations are planned for two iconic structures in Spokane’s downtown

Renovations are planned for two iconic structures in Spokane's downtown core—the Crescent Building and the Fidelity Building—according to pre-development applications submitted to the city of Spokane.

With the addition of these two new projects, there are now four iconic buildings within a four-block radius in the city's downtown core that are undergoing significant upgrades. Two of those projects involve converting office space into living units.

"Downtown is well served by having people live in its core," says Dave Black, CEO of NAI Black commercial real estate brokerage who was involved in converting the former James S. Black office building into the Marjorie Apartments, on the southeast corner of First Avenue and Howard Street in the core. "I want to see downtown succeed."

According to the Fall 2022 market survey compiled by the Spokane Valley office of Valbridge Property Advisors Inc., office vacancies in downtown Spokane have been on the rise.

Office vacancies in the central business district stood at 18.8% last fall, compared to 17.4% in the fall of 2021, and 15% in the fall of 2020. Countywide, the offices vacancy rate is at 12%, the report states.

At the Crescent Building, at 719 W. Main, predevelopment plans filed with the city call for an estimated $10 million renovation of the structure's interiors to transform five of the building's eight stories from office space to 90 apartment units.

The owner of the Crescent building is listed as Red Tail Multifamily Land Development LLC, an Irvine, California-based private real estate investment company. Representatives for Red Tail decline to comment on the project.

Spokane-based Uptic Studios Inc. produced preliminary plans for the project. A contractor isn't listed on the pre-development information.

Preliminary plans call for converting 80,000 square feet of office space into 42 total units on the third and fourth floors, with 21 units on each floor.

On floors five, six, and seven, plans call for converting the nearly 85,000 square feet of space to 48 apartment units, with 16 on each floor.

The first two floors, which have 35,000 square feet and 41,000 square feet of space, respectively, will remain mixed-use commercial space. The existing 8,000-square-foot building services area on the eighth floor eventually may be considered for apartment use in the future, the plans show. The project may also include converting the 46,000-square-foot basement into parking for the proposed residential units.

The building's exterior façade may have minor modifications, if necessary, but otherwise will be retained, "due to its historical significance," the application states.

Logan Camporeale, historic preservation specialist for the Spokane City-County Historic Preservation Office, says the organization is excited about recent and proposed office building renovations and conversions.

"The continued use of these buildings ensures that older buildings are kept in good (condition)," says Camporeale.

A block east of the Crescent Building is the Fidelity Building located at 522 W. Riverside, where pre-development plans recently filed with the city for the eight-story structure call for updating the office building's electrical, heating, ventilation, and air-conditioning systems. An estimated project value isn't listed on the pre-development information.

The Coeur d’Alene offices of Architects West is listed as the project's architect. No contractor is listed.

According to Washington state Department of Revenue records, the Fidelity Building was purchased in September 2019 by Jim Wants a Normal Company Name LLC, of Post Falls, for $3.3 million from 522 Riverside LLC, of Spokane.

Representatives for Jim Wants a Normal Company Name decline to comment about the project.

According to preliminary plans, future phases of renovation may include a two-story addition to the north side of the building, as well as demolition of the skywalk, which connects the Fidelity Building and the Parkade Plaza parking garage to the north.

The 70,000-square-foot general office space building was built in 1952 for Fidelity Savings & Loan Association.

The projects follow a string of other historic and older edifices with current or recent renovation projects, including the Peyton Building, at 10 N. Post, and the Bank of America Financial Center, at 601 W. Riverside.

The 133-old Peyton Building was purchased in February for $12 million by a group of investors led by developer Jordan Tampien, owner of 4 Degrees Real Estate, of Spokane.

Tampien plans to renovate the seven-story structure from long-time office space to 96 living units at an estimated additional cost of $18 million.

He says that transforming historic buildings from offices to apartments is ideal due to the structures’ focus on natural light. The Peyton Building, for example, has windows on three sides, while modern office buildings have darker interiors, he says.

"It's definitely a trend," says Tampien of recent historic building renovations. He notes that there are about three or four more buildings in the downtown core that could be good conversions—including the U.S. Bank Building, formerly known as the Old National Bank Building, located at 428 W. Riverside.

Tampien says that federal and local tax incentives are intended to encourage such projects.

For the Peyton Building, the Tampien-led group will receive a tax credit from the Federal Historic Preservation Tax Incentives Program, which encourages private sector investment in the rehabilitation and reuse of historic buildings. The group is also eligible for a multifamily tax exemption through the city of Spokane, says Tampien.

Tampien says he anticipates obtaining building permits by the end of summer and beginning construction in the fall.

Black says the recent trend of renovating older buildings and converting some to housing is a good one.

He also agrees that there are lots of incentives for developers, saying the numbers in terms of square footage and rental value are better in the downtown core.

As previously reported by the Journal, the Bank of America Financial Center at 601 W. Riverside has seven commercial building remodel projects valued over $1.75 million. The ongoing construction projects will improve multiple tenant spaces inside 20-story Class A office tower, which was built in 1980 and is Spokane's tallest building.