Downtown Spokane is poised to come back after pandemic, but it won’t be the same

Downtown Spokane has long been the epicenter of the city’s 9-to-5 business activity.

But that suddenly changed when COVID-19 arrived, and the vast majority of office workers were sent to do their jobs via Slack and Zoom.

And though restrictions have been lifted and some of those workers have returned, the neighborhood is unlikely to ever be the same, according to those involved in the city’s development industries.

The shift won’t be sudden, they say, but the pandemic is likely to push downtown’s emphasis away from its traditional focus on large office space and toward more residential, commercial and mixed development.

A major driver, of course, is the growing prevalence of remote work, which has reduced demand for vast tracts of desk space. But other factors are also at play, including skyrocketing demand for housing, relatively loose downtown zoning rules, an influx of newcomers from larger cities who prefer urban living, and new public projects like the coming downtown stadium and the completion of Riverfront Park’s redevelopment.

Altered office demand

Alicia Barbieri, vice president of the local commercial real estate firm Goodale and Barbieri, expects demand for office space to shift in the post-pandemic world, though the effect is unlikely to be felt immediately.

“I don’t think we’re going to have some mass exodus of office space, mainly because there’s contracts in place,” Barbieri said.

And many of those contracts run three to five years, she said.

But as those leases expire, she expects companies to begin shifting their models and, as a result, their footprints.

“I would love to say that we’re going to still have whole floors taken, but I think the next three years are going to be trying for that,” she said.

Call centers and other companies where large pools of employees occupy vast tracts of office space are likely to shift to remote work, she said.

“Those companies are saying, ‘We’ve realized people can work from home,’ ” she said.

But those companies have also realized they have a “horrible time” training new staff remotely, Barbieri said.

That’s one factor that is likely to lead to “a lot more” offices where desks are shared and workers come in less regularly, she said.

Tim Kestell, a broker with commercial real estate firm Kiemle/Hagood, said he’s observed similar trends.

He said larger office buildings occupying 4,000 to 5,000 square feet are proving to be “a little tougher to lease” than they once were.

“That’s where a lot of the vacancy is predicted, at least in my opinion,” Kestell said.

But he said there’s increasing demand for smaller, more flexible spaces that include amenities like kitchens and open floor plans.

“They’re going from, ‘Hey, we need 14 offices’ to ‘We need four private offices and some open work space so employees can set their stuff up for a day or two and work while still most of the time being somewhat virtual,’” Kestell said.

This “new norm,” Kestell said, is also changing where people want to locate their offices.

He said he’s done quite a few transactions on the periphery of downtown, in part because parking is easier to come by and business owners want to “offer additional benefits for their tenants, whether it be open green space or trails and walking that can be a benefit for coming into the office.”

Another aspect of this shifting demand, he said, is a “strong likelihood” of more mixed-use buildings that include retail or shared workspace on the first floor with apartments or condominiums on the second and third levels.

Kestell said some of the demand for these new kinds of space is a result of “investment dollars” flooding into Spokane from larger cities along the West Coast.

“There’s been a huge uptick in the amount of activity we’ve seen in the past few years,” he said. “Demand is really high, and inventory is low.”

The result, Kestell said, is that multiple parties are interested in the kinds of spaces that meet these new needs, which can both increase rental rates and also allow landlords to be more aggressive about the length of leases.

‘More people living downtown’

But there’s something else in high demand in the Inland Northwest: housing.

And Kestell is among those who think the effect will be felt downtown.

“I do think the demand for residential downtown is going to be much higher,” he said.

Jordan Tampien agrees.

Tampien has been involved in a number of downtown development projects as co-founder of 4 Degrees Real Estate, including the Parkview West Apartments, which includes short- and long-term rentals in a new seven-story building on West First Avenue, and the two-story Lolo Lofts residential remodel, which is located a half-block away on Adams Street.

“One of our goals was to get more people living downtown,” Tampien said of those projects.

But for downtown to become a more thriving hub for 24/7 residential living, he said, it needs more than just housing.

To that end, Tampien and some partners opened Brick West Brewing Co. across the street from the Parkview West and Lolo Lofts in January 2020, on the cusp of the pandemic.

Those projects are part of Tampien’s broader effort to create a distinct downtown district that he calls the West End and that he hopes will help create a distinct identity for the area. This fall, for example, he’s planning a West End Oktoberfest that will involve not only Brick West but also other area breweries like Iron Goat and Whistle Punk.

But Tampien is also investing in residential projects elsewhere in downtown.

4 Degrees is currently remodeling the building at 120 N. Wall St. to include 23 apartments as well as commercial spaces and a speak-easy in the basement. That project should be complete late this year or early next, he said.

Other developers are pursuing downtown residential projects as well.

Construction is underway now on the six-story, 138-unit Riverside Apartments at the corner of Riverside Avemie and Browne Street, and a Portland developer recently flipped a shuttered Days Inn into an apartment complex.

Plans are also underway for major residential projects in the North Bank neighborhood, where developer Larry Stone has proposed building a 22-story luxury tower and where Selkirk Development is moving forward with building its $80 million, two-tower Papillon project.

Tampien said he expects more development to follow as work on the Podium indoor sport complex wraps up, and as it begins on a new downtown stadium for high school football and professional soccer.

He’s “bullish” about the prospects for more housing in the downtown core, including the North Bank.

“I think there’s a lot of opportunities to still be had there,” he said.

And he also thinks pressures will push his fellow developers to grasp those opportunities.

With the city’s Growth Management Act boundaries limiting sprawl and single-family zoning limiting infill in much of the city, Tampien said downtown is primed to help meet the massive demand for new housing.

He said that could help drive new projects along areas that have been largely overlooked for market-rate development, such as the corridor north of Interstate 90 and south of the railroad viaduct.

Ziad Elsahili, president of the Portland-based firm Fortify Holdings, is among those who have acted on that area’s potential.

His company recently flipped an abandoned Days Inn at the corner of West Third Avenue and Browne Street, creating an apartment called the Imperial that’s billed as offering “boutique-style living” on its website.

“COVID has been a huge driver of (growth in) secondary cities like Spokane,” Elsahili said. “We saw downtown as a place where you could create a real vibrant community.”

Asked whether he’s seeking out other existing downtown properties to convert into apartments, Elsahili said “absolutely.”

According to Tampien, downtown represents a rare place where such dense housing development can go within city limits.

“Where else are you going to go?” Tampien said. “There’s only so many locations to put density anymore.”

Zoning downtown doesn’t just allow but encourages dense, mixed-used development, he noted.

The city is also on the brink of adopting a new Downtown Master Plan that envisions a denser and more pedestrian-friendly neighborhood that features more residential and mixed-use development.

Tampien said he’s a fan of the plan but doesn’t put too much stock in something that is just ideas on paper, at least for now.

“As long as they stick to it,” he said, “I think it’s amazing.”

The kind of downtown the master plan envisions and that developers say is already taking shape is also the kind of downtown that newcomers from larger cities are seeking – the same kind of urban living they’re leaving behind.

Among those recent arrivals to downtown Spokane are Jon Green and Ethan Stowell, both restaurateurs from the West Side who opened outposts in the Lilac City during the pandemic.

Green opened Wooden City on Riverside Avenue with a business partner in August after operating a restaurant of the same name in Tacoma.

Stowell, CEO and founder of Ethan Stowell Restaurant Group, opened Tavolàta in May in the Old City Hall building across from Riverfront Park after operating 16 restaurants in Seattle.

Among the reasons they chose downtown Spokane, both said, are the amenities, including Riverfront Park, as well as the availability of historical spaces to house their restaurants.

And while both restaurants struggled to endure the fluctuating restrictions, they both are high enough on their experiences in Spokane that they are open to the possibility of adding more here.

These are the kinds of additions, Tampien said, that can contribute to a downtown Spokane that recovers from the pandemic by catering more to round-the-clock residents and less to office workers who come and go on weekdays.

But the change won’t happen overnight, Tampien said.

“It just takes time to get from historically what a downtown was to what it can be,” he said. “And I think a lot of people want it to happen overnight, and I don’t think that will be the case.”