The South Sound’s economy and business climate are singularly unique, and that was never truer than in 2018.
Whether it is the development of an agricultural business park in Thurston County, a national online retailer expanding its operations in Grays Harbor County, or a pair of famous Pacific Northwest brothers turning an old Pierce County Elks Temple into a brew pub and hotel, witnessing and writing about our region’s local economy was never without its share of surprises and interesting developments.
In the following, we take a county-by-county look at some of this year’s notable business and economic news, as well as some forward-looking observations on projects and activities poised to make headlines in 2019.
Airlift Northwest, a Seattle-based company that offers helicopter flight transportation to patients in critical need of intense medical care, opened a location at Bremerton National Airport in December, offering improved service to Jefferson, Kitsap, and Mason counties.
After more than 75 years of operating in Port Orchard, Evergreen Lumber was sold in February 2017 to Sacramento-based Homewood Holdings, which operates five lumber and building materials operations in California and Washington. The acquisition helped to ensure Evergreen Lumber would remain a major county employer in 2018 and beyond.
Sound West Group spent $4.5 million in May to purchase a former parking lot on the Bremerton waterfront and move forward on a plan to develop Marina Square, which will include two six-story towers that will house a 120-room hotel, more than 130 apartment units, and a restaurant and bar. The project is expected to break ground next spring.
“Harrison Medical Center will transform the way patients and families receive care, ensuring access to a premier facility close to home.”
— David Schultz, market president, Peninsula Region, CHI Franciscan Health
GRAYS HARBOR COUNTY
In 2017, Overstock.com opened its Evergreen Customer Care Call Center at the Satsop Business Park in Elma, bringing 150 jobs to Grays Harbor County. Later that year, the company expanded its operation and doubled its employee headcount. This summer, the online retailer held job fairs to bolster its workforce. Other notable Satsop Business Park tenants include Xpress Natural Gas, Northwest Cannabis Solutions, and Rainy Day Espresso.
Individuals, such as those who have landed jobs at Satsop, are looking for more affordable housing and have given the residential real estate markets in Aberdeen and Montesano a lift, according to Tom Quigg, a veteran real estate agent and lifelong Grays Harbor resident. “We are currently experiencing the strongest market in the memory of any of the local real estate brokers,” said Quigg, who noted the number of homes sold so far this year (1,003 and counting through October) outnumbers last year’s total of 993. And yet affordability still exists: The median home price is $187,900, while the average home price is $200,288.
“Commercial real estate is also quite vibrant,” Quigg added. “Properties that have been on the market for an extended time have been sold, and more buildings are being renovated to take advantage of renewed interest.”
“This type of work (customer call centers) is relatively new to our community, and I think we could see continued growth and interest in it.”
— Alissa Shay, manager of business development, Satsop Business Park
Outdoor recreation and tourism, such as skydiving, motorsport racing, and the annual 75-mile Hood to Coast Relay, have increasingly buoyed the economy of this county of just over 63,000, especially as its most historically notable industry, timber, has experienced ups and downs. Another key player in the natural resources industry is Shelton-based Taylor Shellfish Farm, which has six restaurants and markets in Western Washington.
Sierra Pacific Industries, which acquired a former mill site in Shelton from Simpson Logging Company two years ago. In September, the company officially opened a state-of-the-art sawmill, employing nearly 300 people.
Shelton Hills, an 800-acre mixed-use, master-planned community, could bring 550,000 square feet of retail space, a 50-acre business park, and as many as 1,800 homes and apartments. The project has been in development for more than a decade, stymied by permitting issues and cleanup costs.
“We opened another oyster bar in Bellevue. We have had three in downtown Seattle, and we opened one in downtown Vancouver. It’s not our main business, but it’s a good way to get our name out in the public.”
— Taylor Shellfish Farms president Bill Taylor
The largest industrial park building to break ground in more than a decade, the Hogum Bay Logistics Center in Lacey offers 1.7 million square feet of warehouse space built on 97 acres. The facility spurred Uline — a leading distributor of shipping, industrial, and packaging materials — to relocate from Auburn and occupy 800,000 square feet of space.
In downtown Olympia, the former Capitol Center Building — a nine-story building that overlooked Capitol Lake and sat vacant for many years, earning it the nickname “Mistake on the Lake” — received renewed attention this summer when developer Ken Brogan invested more than $30 million to transform it into Views on 5th. When completed in spring 2019, this mixed-used project will include the renovation of the existing tower, as well as the construction of a pair of three-story buildings, creating 140 apartment units, and space for a ground-floor restaurants and retail shops.
Office parks are one thing, but what about business campuses focused on agriculture instead? Enter the Southwest Washington Regional Agricultural Business & Innovation Park. Scheduled to break ground in Tenino late next year, this unique venture aims to expand and develop local food and agriculture production, creating more than 150 jobs in this industry sector along the way. Bonus: The park will be located in Thurston County’s Bountiful Byway, a bucolic setting filled with farms, wineries, breweries, and distilleries, and a popular draw for agritourism.
Also on the radar: The development of a craft brewery and distillery district in and around the former Olympia Brewery in Tumwater.
“Thurston County has emerging, growing, and dynamic employment centers. Three regions — Northwest Lacey, Woodland Square District, and downtown Olympia — have continued to perform very well and have attracted entrepreneurs, manufacturing, and investment.”
— Michael Cade, executive director, Thurston Economic Development Council
In May 2017, Centralia College marked the grand opening of its $32 million TransAlta Commons, enhancing the educational services offered to local students. “It has more of a feeling of what it would be if you went away to school,” Steve Ward, Centralia College’s vice president of finance and administration, told South Sound Business earlier this year. “Students are engaging with each other and participating in student life.” One year later, the new facility is a county asset that offers a banquet hall for several hundred guests, campus bookstore, faculty offices, and classrooms. A signature, four-story atrium boosts the college’s campus feel.
Development activity at the Port of Centralia’s two industrial parks is poised to make business news in 2019.
On the Park I campus, construction is underway on a $100 million, 1.1-million-square-foot grocery distribution center. When completed next summer, the operation is expected to generate 350 jobs. The 77-acre property is being developed by Seattle-based O’Keefe Development, which owns a portfolio of commercial real estate that includes RiverPoint Corporate Center in Tukwila and Normandy Park Town Center in Normandy Park.
Meanwhile, the port finalized a deal with German-headquartered STIHL Incorporated to build a 100,000-square-foot facility on its Park II campus. The building will serve as the hub for STIHL Northwest, and relocate from Chehalis to Centralia its 30-person operation, which serves its forestry, garden power, and lawn equipment dealers in Alaska, Idaho, Oregon, and Washington.
Finally, will 2019 be the year developers move closer to realizing Centralia Station? The mixed-use project is slated to include Fred Meyer as its anchor tenant, with additional space for retailers and office workers, as well as restaurants, medical facilities, and sports fields. This year, the state Legislature directed $3.1 million toward the project, which port officials said would generate more than 500 jobs and contribute more than $40 million annually to the city’s economy.
“In addition to the hundreds of well-paying jobs (the grocery distribution center) will create, it will also make significant contributions to our schools, roads, and essential public services.”
— Julie Shaffley, president, Port of Centralia Commission
SOUTH KING COUNTY
The prospects of a boom in lodging construction was on the horizon, City of Federal Way officials told South Sound Business in January, with future plans for Holiday Inn and Extended Stay America in discussion. Unfortunately, a deal to build a hotel on the former Target site and near the city’s Performing Arts & Events Center fell through this summer. In the long-term, the city also looked forward to making progress on its agreement with the University of Washington Tacoma and Highline College to open a satellite facility in Federal Way.
Meanwhile, in Kent, the city’s now former economic and community development director Ben Wolters last year told South Sound Business, “We’ve issued more single-family home permits than we have in 17 years.” Wolters noted that between 2012 and 2017, more than 1,000 single-family homes were built, with more than one-fourth of those permitted to be built last year alone. The reason? Kent’s growing employment base meant workers wanted to cut their commute times and live closer to the office.
Commercial real estate is poised to be a big deal in Federal Way next year as Cogent Communications, DaVita, Diagnos-Techs, and London Aviation Underwriters become major employers over the next few years. One building that could help fill a need for office space is the former Weyerhaeuser headquarters — a 47-year-old, 355,000-square-foot building situated on more than 400 acres along Interstate 5. The property was acquired by Industrial Realty Group in 2016 for nearly $74 million after the timber company’s 700 employees relocated to new headquarters in Pioneer Square. Public works projects in Federal Way include a $450 million plan to expand and renovate eight public schools over the next several years, and the 7.8-mile Link light rail expansion, which is scheduled to open in 2024.
In Kent, developers broke ground in April on a project that will turn the site of a former golf course into Marquee on Meeker, a $120 million mixed-use project that includes nearly 500 apartments and 12,000 square feet of retail space. When the project is completed in early 2020, it will be the city’s first large-scale luxury apartment project.
Arguably, Kent’s most favorable occasion has been Jeff Bezos’ Blue Origin space technology company establishing its headquarters in the city. The company’s 1,500 employees are a boon to the city’s economy (Airways Brewing has created a beer named after Blue Origin), and Bezos owns several dozen acres of city property on which to build rockets that will put civilians into space. Long-term, Blue Origin is expected to double its workforce in Kent over the next several years.
“Federal Way is seeing such significant public sector investment over the next six years, it is hard to see a recession, let alone a downturn.”
— Tim Johnson, economic development director, City of Federal Way
The new year began with ominous news from a notable downtown Tacoma employer. State Farm’s call center, which employed 1,400 people, would be closed by the end of the year, with most of those jobs being divvied up between offices in DuPont; Bloomington, Indiana; and Phoenix. Four years ago, the company was a savior of sorts when it moved many of those employees into a high-rise office tower that was vacated when Russell Investments relocated to downtown Seattle. It was a pile-on of bad news, considering DaVita, a leader in kidney dialysis and diagnosis, announced it would relocate its downtown Tacoma headquarters, home to 500 employees, to Federal Way by 2021.
Three building renovations could help to re-energize downtown Tacoma’s economy. In October, the city completed a $30 million renovation of the Tacoma Dome, a move that aimed to maintain the 35-year-old entertainment venue as a resource that draws top touring performers, as well as tourist dollars.
Fifteen years after Brian and Mike McMenamin — brothers and owners of brewpubs, music venues, and hotels throughout Washington and Oregon — laid eyes on the historic (and very derelict) Elks Temple, the pair is set to open its latest gem of dining and hospitality: McMenamins Elks Temple.
Similarly, Surge Tacoma was selected to redevelop Old City Hall, a historic building located right across the street from McMenamins Elks Temple. Development plans include rooftop restaurants, offices and coworking spaces, and affordable apartments.
Also, look for the Northwest Seaport Alliance to remain competitive in the international shipping realm as the Port of Tacoma’s Husky Terminal, which continues to benefit from a $250 million renovation project, receives four additional super-post-Panamax cranes in 2019.
“History is wrapped into everything (with this building). Every floor will have a story. We’re just having fun with the restoration and seeing what it can become.”
— Brian McMenamin, co-owner of the McMenamins Elks Temple in downtown Tacoma