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Tue November 12, 2013
State's Past Real Estate Pick Proved Money-Loser
The state of Washington is expected to sign a 30-year lease Tuesday for Seattle’s iconic Pacific Tower, or the so-called PacMed building, on Beacon Hill. The idea is to turn the former headquarters of Amazon.com into a hub for health care innovation and training.
The plan is reminiscent of another big real estate decision the state made nearly 20 years ago—one that’s proven costly.
The Rhodes Center in downtown Tacoma is two office buildings connected by a sky bridge. When Washington bought the complex in 1996, the plan was to consolidate state agencies and save taxpayers money. But it hasn’t exactly worked out that way.
“We are actually, on paper, losing up to $400,000 or $500,000 a year,” said Nick Cockrell, who oversees the Rhodes Center for the state.
Cockrell says the complex currently has a 15-percent vacancy rate.
“It does represent lost revenue and lost opportunity,” he said.
The state tried unsuccessfully to sell the Rhodes Center. Now the plan is to pay off the mortgage, and hope the building then goes from the red to the black.
Like the Rhodes Center, Washington’s plan for the PacMed building in Seattle is born of a vision for what could be. Speaker of the House Frank Chopp, a Democrat, wants to fill Pacific Tower with a health college and nonprofits.
“The whole dynamic is totally different than the Rhodes Center,” said Chopp.
Chopp acknowledges he doesn’t know much about the details of the Rhodes purchase. But the speaker says he’s confident the state, acting as a master tenant, can fill the PacMed building.