Tacoma-based developer pulls plug on luxury apartment proposal near Stadium District
A proposal for 200 new luxury apartments in Tacoma near the Stadium District is over before even starting.
A representative for Tacoma-based Harbor Custom Development, in response to questions from The News Tribune, said its proposal for an undeveloped site on Broadway is not happening.
“Unfortunately, we are not moving forward with the luxury apartments on Broadway in Tacoma,” HCDI spokesperson Jennifer Lang said via email.
“I do not have more details as to why we are not moving forward with the project,” Lang responded when asked for the reasons behind the decision.
In November, the company announced signing a letter of intent to purchase .70 acres along Broadway for $5.75 million. The company at the time said it was planning to build “an urban multistory apartment project of approximately 200 units.”
The company did not specify where on Broadway the project was planned, but an accompanying photo with the announcement showed what appeared to be a site in the 200 block. The photo showed undeveloped parcels next to Sky Terrace Condo, with views of the Port of Tacoma and waterfront.
HCDI’s then-CEO Sterling Griffin said the company was excited to “expand our multifamily portfolio into the downtown Tacoma market.”
He added that the project was to be the company’s “first pedestal-style apartment in an urban setting.”
Pedestal or “podium” construction comes with a distinct horizontal division of a lower “podium” and an upper tower, which can create a design accommodating ground-level commercial development with apartments above.
Changes in market, leadership
The publicly traded company relocated its headquarters to Tacoma from Gig Harbor last year. It also turned its regional focus to multifamily apartment development in Western Washington, instead of single-family homes.
The company completed Pacific Ridge, 8445 Pacific Ave. in Tacoma last year. That project had been planned as condominiums, later switching to apartments.
Pacific Ridge is one of six area properties HCDI put on the market in April 2022 for a combined value of $278 million. In June it closed on its first sale among the six, a 36-unit townhome project in Bremerton, for $14.25 million to Kitsap Community Resources. Another site in Port Orchard also was anticipated to close this summer, according to a May update.
In its first quarter earnings report released in May, the company showed sales of $9.2 million compared with $28.6 million a year earlier, and a gross loss of $2 million compared to gross profit of $6.1 million from the same period a year ago. It noted some of the decrease was because of “large prior year sales in California and Washington that did not recur in the first quarter 2023.”
Griffin at that time also blamed the results on “ongoing challenges in the broader housing market, including higher mortgage interest rates and inflationary pressures.”
In recent months, the company has promoted a new leadership team from within its ranks.
Griffin, founder of the company, retired from the company this month. Harbor’s chief operating officer, general counsel and corporate secretary Jeff Habersetzer, is serving as interim CEO and interim president. The company’s chief financial officer’s plans for departure this month were announced in June. Harbor’s director of accounting, Yoshi Niino, is now chief accounting officer.
Other changes, announced this month, included Kyla Sawtell, formerly senior director of operations, promoted to vice president of operations, and Mark Long, formerly senior director of acquisitions and construction, promoted to vice president of development and construction.
Spokesperson Lang was also named vice president of marketing after serving as the company’s director of marketing.
Habersetzer, along with Griffin, spoke during the company’s annual shareholders meeting, held online July 12. Griffin said he was “confident in Interim CEO Jeff Habersetzer’s ability to manage this transition successfully.”
Habersetzer told shareholders that his “main objective is to ensure the long-term stability of the HCDI brand. I am confident we can achieve our objectives and increase shareholder value by pursuing our strong business model, maximizing our portfolio and continuing our ongoing efforts to improve efficiency.”
Company not alone in challenges
The news of the now-abandoned luxury apartment project is the latest high-profile multifamily project to not go according to plan:
– Tacoma Trax, 415 E. 25th St. next to the Tacoma Dome Station, was one of the city’s first anticipated transit-oriented projects. It appeared to still be headed for a foreclosure sale Friday (July 21) along with a Kent apartment site. GIS International Group and DMG Capital Group partnered in developing the Kent and Tacoma sites as Madison Plaza LLC.
GIS CEO Eugene Gershman did not respond to a request for comment on Thursday afternoon, and a law group handling the trustee’s sale also did not respond.
In April, Gershman told The News Tribune, “The two projects are tied to the same construction loan and same ground lease. So that’s why they’re both being affected.”
– Tacoma Town Center, bordered by South 21st to South 23rd streets from Jefferson to Tacoma avenues, remains mired in a court battle with the project architect, following an earlier settlement agreement, according to court filings.
So far, just one of the buildings from the original developer, North America Asset Management, is completed, finished in March 2021.
An amended development agreement with the city of Tacoma in June 2021 brought on Galena Equity Partners of Boise, Idaho. The agreement conveyed remaining undeveloped property to NAAM subsidiary Tacoma Town Center Parcels LLC, who would assign its interest to one or more LLCs formed and controlled by Galena Equity Partners.
The News Tribune archives contributed to this report.