Focus
2017-18
Construction + Real Estate in the Tri-Cities
A specialty publication of the Tri-Cities Area Journal of Business
Thriving Tri-Cities photo: paul t. Erickson
Homes and schools are being built to fill the demand of the growing population in the Tri-Cities. These homes and Kennewick elementary school No. 16 are being built in south Richland.
Experts say region poised for more growth BY MICHELLE DUPLER
E
verywhere you look in the Tri-Cities, there are new faces, new businesses and new homes being built. The area is in the midst of economic and population booms that keep ranking it on lists of desirable places to live, work and play. And local experts say the steady growth should continue at least for the next few years.
Population
A slight uptick in population from 2016-17 is part of a larger, long-term trend that shows a nearly 50 percent increase in the number of Tri-Citians since 2000. The Tri-City metropolitan area grew to 283,830 people from April 2016 to April 2017, or an increase of 1.7 percent, according to the Office of Financial Management’s annual count published June 30, 2017. Benton County grew from 190,500 residents to 193,500, or an increase of about 1.6 percent. Franklin County grew from 88,670 people to 90,330, or an increase of 1.9 percent.
Regional Labor Economist Ajsa More than half the population growth in Benton County is Suljic said the area is seeing steady accounted for by an influx of new job growth that she expects will residents, rather than births. In continue into 2020. The growth in Benton County, net migration acpart is due to a local economy that counted for 1,799 of the 3,000 new has diversified beyond dependency people in the past year. upon Hanford employment over The picture the past couple of was different in decades. Franklin County, Jobs added in 2016 Suljic noted that where migrain Benton County, 2,500 Benton County tion brought 411 the top five indusnew residents 530 - Franklin County tries — governout of the 1,660 ment, health care, total population professional and increase from technical services, administrative 2016-17. services and retail trade — make Of the four cities, Kennewick had the greatest population up more than half of overall emincrease, adding 1,160 people over ployment, compared to Franklin the course of the year. Pasco was County, where only two industries close behind with 1,120. Richland — agriculture and government — added 740 people and West Richmake up almost half of the jobs. land added 320 from 2016-17. “Benton County is a lot more However, the Tri-City area diversified,” Suljic said. added a whopping 92,008 people When looking at year-end from 2000-17, or an increase of numbers, Benton County added about 48 percent. 2,500 more jobs in 2016 than 2015, or a 3 percent increase. Franklin Employment County added 530 jobs, or about a One thing drawing people to 1.6 percent increase, Suljic said. the Tri-Cities is a strong economy with abundant jobs. GROWTH | Page 4 Focus | Construction + Real Estate in the Tri-Cities 3
Focus
Construction + Real Estate in the Tri-Cities
Table of Contents
Residential Real Estate City of Kennewick City of Richland City of Pasco City of West Richland Port of Kennewick Port of Pasco Port of Benton Higher Education K-12 Education Commercial Real Estate Population Growth
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Cover photo by Paul T. Erickson
photo: paul t. Erickson
Roofers add three-tab shingles to homes near Kennewick elementary school No. 16 off Steptoe Street.
GROWTH | From 3 She said there has been a strong trend in employment in the leisure and hospitality sector as new hotels have been built to address demand for rooms. The leisure and hospitality job sector grew by 12.3 percent year over year from 2015-16 and was the second-fastest growing employment category in Benton County. “Now, we might stabilize this and next year see how the area feels in terms of extra added rooms,” she said. Suljic said construction jobs tell another Tri-City success story. Construction dipped nationwide during the 2008 recession and afterward, but the Tri-Cities saw less of a struggle than other parts of the country, in part because jobs at Hanford drew people to the area during the recession. “During the rest of the recession period, our construction was really only down during 2008 for six to seven months. It started picking up in June 2009,” she said. Construction slowed in 2011 when Hanford layoffs caused some uncertainty, but Suljic said after a few months, contractors realized that people who had come to the Tri-Cities for jobs weren’t moving away and housing construction was still needed. “Now we’re seeing record high employment numbers in construction,” she said. “We reached our peak last year and recovered all of the jobs we lost in 2008. Now we’re just making new highs every time we look at construction. … It’s very
beneficial for us to see that. Construction is one of the backbones for any area.”
Business and industry
The Tri-City Development Council has been on the forefront of efforts to diversify the local economy for decades. TRIDEC President and CEO Carl Adrian said the process of decoupling the local economy from Hanford started in the 1990s and has become more dramatic in recent years as new industries have been attracted to the region. A few industries, Adrian noted, have become important to the region and include food processing, which marries its tradition as an agricultural center with technological innovations; health care, as Tri-City hospitals become regional destinations for specialized care; logistics and transportation, as the area’s central location on highways and rail lines makes it a sensible hub in the Northwest; and manufacturing, which is a growing local sector. “Manufacturing in general has been growing, probably at a faster rate than we’re seeing elsewhere in the country,” Adrian said. Adrian believes the Tri-Cities will remain a magnet for businesses in the foreseeable future. “I think we’ll continue to see good, positive growth in industry,” he said. “I don’t know if we can continue to sustain 1.5 to 2 percent per year, but we will continue to be attractive.” GROWTH | Page 15
Residential market hungry for homes BY MICHELLE DUPLER
T
he Tri-City area continues to be a hot market for real estate, offering continued affordability, low unemployment and an attractive local economy in comparison to many other metro areas in the United States. Local experts said single-family home construction continues to boom, as do sales of existing homes, while both the average and median sold price of residential real estate has been increasing at a steady clip. And most houses are staying on the market for less than two weeks — a sign that buyers are hungry for homes in the area. “It is a very attractive market still,” said Lola Franklin, CEO of the Tri-City Association of Realtors. The association tracks residential real estate sales in the Tri-Cities Metropolitan Statistical
photo: paul T. Erickson
Lola Franklin, CEO of the Tri-City Association of Realtors, said this year’s residential home sales look similar to last year’s. Through August 2017, the association reported a total of 2,813 homes sold, and an average sold price in August of $272,400. In 2016, a total of 4,423 homes sold, compared to 4,153 in 2015, an increase of 6.5 percent.
Area, which includes not only the core cities of Pasco, Richland, Kennewick and West Richland,
but also outlying towns, including Benton City and Prosser. HOMES | Page 6
Focus | Construction + Real Estate in the Tri-Cities 5
HOMES | From 5 Overall, the association reported a total of 4,423 home sales in 2016 compared to 4,153 in 2015, or an increase of 6.5 percent. The average sold price rose from $224,699 in 2015 to $244,035 in 2016, or an increase of nearly 9 percent. Franklin said 2017 looks very similar to 2016 so far in terms of the number of sales, and that number will likely grow as new developments are completed and more homes come on the market. “There are simply more buyers than houses for them,” Franklin said. Through August 2017, the association reported a total of 2,813 homes sold, at an average sold price of $272,400. Dennis Gisi, owner, broker and realtor with John L. Scott Real Estate, said there’s an unmet demand for homes in the $200,000 to $250,000 price
6 Tri-Cities Area Journal of Business
range. With few houses on the market in that range, buyers end up looking at homes priced at $300,000 or more — which in turn drives up the average local selling price. “If you’re looking at demand, anything between $250,000 to $275,000 is the sweet spot,” Gisi said.
“ ” There are simply more buyers than houses for them.
— Lola Franklin, CEO of the Tri-City Association of Realtors
Gisi said he had a listing for a home in that price range that went on the market on a Wednesday, and by Friday, his company had two offers for the property. Because an open house had already been scheduled for that weekend, they kept the list-
ing open until Monday before considering any offers. By the Monday deadline, they had six offers for the home. “And one of them was cash. It’s a fast market,” Gisi said. Dave Retter, owner of Retter & Company Sotheby’s International Realty, said that land values are increasing, which in turn raises the price of new home construction. “If you have land sales go higher, it’s harder to do a $250,000 house on that,” Retter said. “Land is typically 20 percent of the (home) purchase price.” However, rising land prices haven’t put a damper on new home construction in the TriCities. Jeff Losey, executive director of the Home Builders Association of Tri-Cities, said home construction remains robust in 2017 and shows growth over previous years. HOMES | Page 7
photo: paul T. Erickson
Jeff Losey, executive director of the Home Builders Association of Tri-Cities, said home construction remains robust in 2017 and shows growth from previous years.
HOMES | From 6 Statistics compiled by the Home Builders Association show a total of 874 single-family residential permits through July 2017 in the Tri-City metro area, compared to 815 by the same point in 2016, and 681 by the same point in 2015. That’s an increase of nearly 20 percent from 2015-16 and about 7 percent from 2016-17. Losey said areas that appear to be hotbeds of residential home construction include around Road 100 in Pasco, in the Clearwater Creek development near Steptoe Street and Leslie Road in south Richland, where a new connector will link the two corridors, and the Southridge area in Kennewick. Retter said he foresees Richland and Kennewick needing more room to expand in the future as they build out their current city limits and designated urban growth areas. “They both have reached the point where they have to expand,” Retter said. “Richland still has the Badger south area. Kennewick has the Southridge area. … Pasco still has a lot of farm ground that can be converted to homes. Richland and Kennewick have to expand. They’re kind of stuck with one area.” One factor that could inhibit
residential construction or drive up prices in coming months is the recent devastation wrought by hurricanes in Texas and Florida. Gisi noted that billions of dollars’ worth of reconstruction in those states tends to put a strain
on the supply of materials and labor for construction elsewhere in the country. That can lead to shortages that drive up prices, or put the brakes on construction. “They’re going to need so much of everything because it’s so devastated,” Gisi said.
Focus | Construction + Real Estate in the Tri-Cities 7
CITIES
PHOTO: PAUL T. ERICKSON
Kennewick’s Southridge area continues to fill with the addition of restaurants, businesses and homes.
Demand for development swells in Kennewick BY AUDRA DISTIFENO
K
ennewick continues to grow as the Southridge area flourishes and new residential and commercial construction projects take
EDUCATION
shape throughout the city. Projects under permit review that likely will start at the end of this year or the beginning of 2018 include a 10-screen movie theater on South Quillan Street, a 53,750-square-foot Gensco Inc.
building for heating, ventilation and air conditioning products, and improvements at the 86,000-square-foot Amistad Elementary School. KENNEWICK | Page 10
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CITIES but from 2000-17, it recorded 46.6 KENNEWICK | From 9 percent growth, adding 25,529 Other upcoming projects new residents. include a 113-acre mixed-use New commercial permits issued development at Vista Field; Center from January through July 2017 Park, a mixed-use commercial totaled 22, valued at $23.6 million, lower-level and upper- level apartdown from 44 valued at $35.4 milment building; a 13,850-squarelion, during the same period in foot International Brotherhood of 2016. Electrical Workers Union Hall on “I think by the Edison Street, just end of 2017, the south of commercial perClearwater ... People are very mits will be close Avenue; a interested in the to the 2016 num64,584-squarebers. Inquiries foot, four-story, Tri-Cities in general, regarding new 93-unit Comfort and there’s a lot of construction Suites on Plaza interest in Kennewick. projects have Way; and Kennewick — Terry Walsh, remained strong, so we anticipate Dental, a Kennewick’s executive the current rate of 10,700-squaredirector of employee and construction to foot office. community relations continue into “Economic 2018,” said Wes development in Romine, the city’s development Kennewick is going great. It’s very services manager. busy and going very well,” said Recently completed commercial Terry Walsh, executive director of development includes six projects employee and community relain the Southridge area: The tions for the city of Kennewick. Original Pancake House, Taco Kennewick, population 80,280, Bell, Chinook Middle School, Sage grew 1.5 percent in the past year,
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10 Tri-Cities Area Journal of Business
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Crest Elementary School, 27th and Williams Commercial Building and Hampton Inn. “We have added 100-plus residential lots to this area in 2017, and several new commercial projects,” Romine said. In other parts of the city, seven major projects – ranging from apartment buildings to schools and restaurants and medical buildings – recently were completed. “(City officials) attend the International Conference of Shopping Centers to recruit developers for projects. In economically-challenged years, it’s been very difficult, but now people are very interested in the Tri-Cities in general, and there’s a lot of interest in Kennewick,” Walsh said. The city’s largest commercial construction project this year was the $40 million, 110,400-squarefoot Chinook Middle School, on Southridge Boulevard, north of Hildebrand Boulevard, which opened in January on West 27th Avenue. KENNEWICK | Page 11
CITIES KENNEWICK | From 10 Other Kennewick School District projects include the Amistad construction; a $18.4 million, 66,000-square-foot dual language elementary school on West 10th Place, the former site of Desert Hills Middle School, scheduled to open in 2018; a $21.7 million, 76,600-square-foot elementary school, scheduled to open in 2018; and $18.4 million, 60,500-square-foot Westgate Elementary School, which opened in August. Projects under construction in the city include apartment complexes, commercial buildings and the Columbia Gardens Urban Wine and Artisan Village. The wine village, on the north side of Columbia Drive south of Clover Island, will include three buildings, totaling 11,400 square feet. It will house production wineries with tasting rooms. “I believe two projects in particular – the waterfront revitalization and culinary school for (Columbia Basin College) will make a huge difference in the revitalization of the downtown area,” Walsh said. The city has partnered with the Port of Kennewick and CBC to raise about $9 million over the next four years to turn the school into a reality. The three partners have invested about $1 million in the idea, which would culminate in a two-story, 20,000-square-foot facility, with a student-operated restaurant and bakery storefront, an event center and two or three kitchens. The culinary center would be built next to Duffy’s Pond, on the site of a former manufactured home park, and next to the wine village near the cable bridge. “We also have a partnership with the Historic Downtown Kennewick Partnership to get vibrancy downtown and connect to the port projects – the waterfront and wine village,” Walsh said. The city issued nearly 100 fewer single-family home construction permits from January through July 2017 compared to the same period last year, or 216 permits valued at $57.9 million through July 2016, to 117 permits valued at $31.7 mil-
PHOTO: PAUL T. ERICKSON
Land is still available for development in Kennewick’s growing Southridge area.
lion through July 2017. One reason the number is lower is because property subdivision to create new lots in previous years did not keep up with the number of new homes built, Romine said. “We had a shortage of lots to build on in 2017. New lot creation has increased in 2017 to address the demand for new home construction,” he said. Nine housing developments are currently under some phase of construction: The Ridge at Hansen Park (84 lots); nine single-family lots and 48 townhomes at the southwest corner of 10th Avenue
and Columbia Center Boulevard; Southcliffe (414 lots) on Thompson Hill in the Southridge area; The Village at Southridge (170 single-family lots, clubhouse, assisted living and rehabilitation facility); Canyon Ranch (131 lots), at Ridgeline Drive between Clodfelter Road and Clearwater Avenue; Apple Valley (formerly The Parks); 47 lots at Olympia Street and Highland Drive; Sunrise Ridge (44 lots) off South Newport Place; and Cherry Creek Estates (122 lots), off 45th Avenue and South Ely Street. KENNEWICK | Page 15
Focus | Construction + Real Estate in the Tri-Cities 11
CITIES
PHOTO: PAUL T. ERICKSON
Lamb Weston’s $200 million French fry processing facility is expected to bring 162 jobs to the area when fully operational. The Richland plant’s expansion off Saint Street is just shy of 280,000 square feet.
Richland eyes local, international developments BY AUDRA DISTIFENO
T
he city of Richland continues to experience residential, commercial and industrial growth, with additional homes and businesses to pop up in 2018. “Beginning in 2016 and continuing through this year, Lamb Weston’s expansion continues to be our biggest project. Lamb Weston is a great partner with the city, and its expansion increases our job market and manufacturing base,” said N. Zach Ratkai, the city’s economic development manager. The $200 million french fry processing line will bring 162 jobs to the area. The expansion is just shy of 280,000 square feet. Construction began in June 2016, and Ratkai said it should be completed and operational by December 2017. Lamb Weston is one of the largest employers in the Columbia Basin, with about 4,500 employees. In addition to Lamb Weston, the city’s other big commercial projects include Cost Less Carpet, which expanded its store along Highway 240 near the
Reach museum. The 62,000-square-foot expansion includes a $5.5 million distribution center and corporate office. The city of Richland broke ground in September on its new $18.5 million city hall, which will be “an exciting addition to the Swift Boulevard corridor downtown,” Ratkai said. The city plans to demolish the 59-year-old city hall on George Washington Way and sell the land for commercial development. The new three-story, 40,840-square-foot building will include a 3,345-square-foot basement to house records. It should be complete in 2019. Richland, population 54,150, grew by 1.3 percent from last year. The city welcomed 15,442 people between 2000-17, growing nearly 40 percent. Richland saw significant increases in commercial construction permits issued from 2016-17. New commercial construction building permits numbered 45, valued at $52.17 million, from January through July this year, up nine permits from the same period last year, though last year’s valuation totaled
$94.53 million. Existing commercial construction permits increased by more than a third for the first six months of 2017 when compared to 2016. The existing construction permits had a value of $14.83 million through the end of July, compared to $7.41 million in 2016. “Last year had permit charges for the Preferred Freezer facility levied, which were high priced due to the size; however, without such a large project thus far in 2017, permit values have normalized,” Ratkai said. Preferred Freezer Services opened a $115 million facility in July 2015 in the north part of Richland to provide refrigerated warehousing services. Ratkai said the increase in the number of permits issued for all sectors can be attributed to the strong economy nationwide that “allows new businesses to start, expand or relocate.” “The same could be said for home permits. More land has opened up for development and more people are moving into new homes in Richland,” he said. RICHLAND | Page 14
Focus | Construction + Real Estate in the Tri-Cities 13
CITIES RICHLAND | From 13 The city’s residential building permits have remained steady, with a slight increase during the first six months of the year, compared to the same time last year. The number of new single-family home permits jumped from 146 to 153 from January through July, though valuation dropped a bit, from $49.12 million to $46.28 million for the same period last year. The city’s residential outlook remains positive, Ratkai said. “As the inventory of homes for sale remains tight, new construction will always be robust,” he said. The city of Richland currently has 2,100 acres of land available for development in the Horn Rapids Industrial Park and the Horn Rapids Business Center in north Richland. “Horn Rapids is the premier location in Central Washington for industrial, manufacturing and trade. This vital area of Richland continues to develop at a steady pace, with land sales exceeding $1.5 million in 2017, most notably of which was 40 acres of land
14 Tri-Cities Area Journal of Business
PHOTO: PAUL T. ERICKSON
Layers of signs highlight building activity at the Vintner Square development off Queensgate Drive in Richland.
being sold to the Washington National Guard,” Ratkai said. The National Guard had hoped to speed the completion date to 2019 for a 40,000-square-foot center for an Army infantry Stryker company with 180 to 200 people, 16 Strykers, plus support vehicles, but the $300,000 needed for design work is in the stalled state capital budget. The finish date now appears to be headed back to 2020, according to Washington National
Guard officials. Although plans and bids are still not tackled, the National Guard expects the project to cost about $3.8 million in state capital funds, which are needed to receive another $11.4 million in federal money. Next year’s economic outlook is strong for Richland, Ratkai said. “For 2018, the city has eight prospects for land purchases in the works and is working to further market Horn Rapids for development in large-scale manufacturing, logistics, international trade hubs and support facilities,” he said. “Expect big things to happen in Horn Rapids in 2018.” Another area that experiences high traffic volume is the evergrowing Queensgate corridor, a growing retail hub for the MidColumbia. “Richland has seen a lot of success with new establishments such as Ross, Marshalls, MOD Pizza and Mattress Firm,” Ratkai said. The Tri-Cities’ first-ever Panera Bread soon will open in the Queensgate corridor. “We are lucky here to have so much opportunity and a well-balanced economy to provide jobs, homes and shopping to the region,” he said. “Richland is positioned to continue this growth in 2018 and beyond, with continued development interest not only rooted locally, but internationally as well.”
CITIES KENNEWICK | From 11 “We anticipate continued commercial development in the Southridge area for 2018, with the possibility of some mixed commercial/multi-family development,” Romine said. The city implemented an express permit program for tenant improvement projects in 2015. The process involves an application for the plan review/building permit process and typically a permit can be issued in two to three business days. To date, the city has issued more than 100 of these permits. Single-family and duplex permits also are included in the express program, with permits issued in one to two business days. To date, the city has issued more than 205 of these permits. The city plans to expand its express permitting program Oct. 9 to include “virtually all residential projects, including factory-built sheds, engineered pole buildings, stick-built shops and sheds, residential additions and residential remodel projects,” Romine said.
adding listings, the supply has yet to catch up to the demand — Real estate especially for homes priced under Population growth in the Tri$250,000. Cities has gone hand-in-hand “I think residents will see existwith a housing boom. Demand ing homes added to the inventory, for housing has driven new sinbut we will not get back to 1,200 gle-family and multi-family home (listings),” Retter construction said. “Buyers and a robust should have real estate marBuyers should have more options, ket with steadily which should be more options. increasing good. … We home values. — Dave Retter, don’t want to see Dave Retter, owner Retter & Company prices get out of owner of Retter Sotheby’s International hand like in & Company Realty some of the Sotheby’s metro areas.” International Retter said Realty, said that overall, the real estate outlook as of September 2017, there were looks good in the context of a 687 active residential real estate local economy with steady populistings in the Tri-Cities, and lation, construction and job numbers dipped as low as 490 at growth, and continued low interone point. est rates for homebuyers. “We have had 1,200 to 1,400 in “I don’t see anything negative a normal market,” Retter said. on the horizon,” he said. “Jobwise, “Right now, we have the highest everything is positive. We’re looknumber of residents and the lowing at a good couple, three more est number of listings per capita.” years of growth.” Even with new developments GROWTH | From page 4
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CITIES
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The new $3 million Northwest Farm Credit Services building is under construction near Road 100 in Pasco. It’s scheduled to open this fall.
Building permits surge with Pasco’s population BY AUDRA DISTIFENO
C
ommercial building permits issued in Pasco edged ahead of last year, while single-family home permits were well above those issued for the same period. And next year’s outlook also looks positive, said Rick White, community and economic development director for the city of Pasco. “Things look good. Food products and distribution activities continue to be very strong, as is technology associated with food processing,” he said. “The residential sector continues strong with a dozen or so preliminary plats on line.” The city issued 302 single-family home permits valued at $80 million for the first six months of 2017. Last year’s total for the same time period was 216 permits worth $53 million. White attributed the increase to having “a larger supply of available building lots” this year. The first six months of 2016 netted 222 commercial building permits, valued at $26.4 million, compared to 235 permits, valued at $21.8 million, for the same period this year. Columbia Basin College’s student housing building and the Russ Dean RV sales center on
Sandifur Parkway and Road 100 were among the city’s largest commercial construction projects. Pasco School District’s alternative high school, New Horizons, saw $2.5 million in remodeling work this year. The school at 2020 W. Argent Road spent nearly three decades housed in a series of por-
tables on the west end of the CBC campus. The newly remodeled school is 32,500 square feet, after construction repurposed the old CH2M Hill Technology building on the CBC campus for the high school. PASCO | Page 19
Focus | Construction + Real Estate in the Tri-Cities 17
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CITIES “Accessibility of the old police The 38,000-square-foot building PASCO | From 17 opened at 215 W. Sylvester St. in building was always an issue as Though plans aren’t solidiit was located on the second fied, commercial construction in February 2017. floor, making it less visible and “Our old police facility was 2018 is expected to see contindifficult to get to by the public,” about 14,000 square feet and ued growth. Roske said. “The new police “I would expect several larger was designed in the early ’90s community building has easy for a staff of 50. We now have a industrial projects in the 395 ground floor access with handistaff of 100 corridor and cap and public parking right out working out near the Pascofront. It is a well-lit building, of the new Kahlotus Pasco issued 302 making for a safe, inviting feel facility,” said Highway and single-family home when the public visits.” police Capt. Commercial The new facility’s attached Ken Roske, Avenue interpermits valued at community room is available for public inforsection,” White $80 million for the first meetings and “provides an mation offisaid. opportunity for us to hold joint cer. The The city’s six months of 2017. meetings that allow for police/ increase in economic Last year’s total for community interaction,” Roske personnel growth focuses the same period was said. parallels the on several The building, at the east end growth of the areas, including 216 permits worth of the city hall campus, boasts city – Pasco downtown; the $53 million. has more than state-of-the-art technology for Oregon police operations and investigadoubled in Avenuetions with secure forensic evipopulation in Highway 395 dence storage. Detectives also the past 16 years. corridor; Commercial Avenue; can access a modern computer Pasco, population 71,680, the Broadmoor area at Interstate grew 1.5 percent in the last year. laboratory that has become 182 and Broadmoor Boulevard; imperative with the increase in The city grew 123 percent from and commercial property at the computer crimes, Roske said. 2000-17, adding 39,614 people. southwest corner of Road 68 and I-182. “(We’re) continuing development of the area west of the airport and north of I-182, and the area recently sold by the Department of Natural Resources west of Road 68 and south of I-182,” White said. DNR auctioned 230 acres of prime real estate last year just south of I-182 between roads 68 and 84 and Argent Road, and north of Chiawana High School for more than $8.1 million. Economic growth efforts also focus on “much in-fill of smaller (25- to 30-acre) parcels throughout town,” White said. A recent commercial project standout is the $50 million Auto Zone warehouse at 3733 Capital Ave. near King City Truck Stop. The 443,819-square-foot distribution center supplies 235 stores, and brought about 200 new jobs to Pasco. The 93.4-acre site in Pasco was selected over four other cities in the Yakima Valley and Columbia Basin. Ground broke on the new $8 million Pasco Police Community 509.735.7072 • www.expresspros.com Services Building in June 2015. 101 N. Union Street, Suite 203 • Kennewick
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Focus | Construction + Real Estate in the Tri-Cities 19
CITIES
PHOTO: PAUL T. ERICKSON
A flurry of activity continues during construction at Double Canyon Winery in West Richland. The 47,000-square-foot winemaking facility opened in September. The $6 million facility has the capacity to make 50,000 cases of wine.
Residential growth on rise in West Richland BY AUDRA DISTIFENO
T
he city of West Richland continues to be a desirable place to live, made evident by the 84 single-family home building permits requested
20 Tri-Cities Area Journal of Business
during the first six months of 2017. That’s an impressive number when compared to the 89 singlefamily home construction permits issued in all of 2016. “This year has been big. We are trending better on single-family
permits this year than last,” said Aaron Lambert, the city’s community development director. “The hurdle now is there aren’t enough platted lots. The developers are scrambling to get that done.” WEST RICHLAND | Page 21
CITIES WEST RICHLAND | From 20 The city experienced similar booms in 2013 and 2014, but isn’t able to keep up with the demand at this time, Lambert said. “For a city of nearly 15,000 residents, around 150 homes (in a year) is quite a bit,” he said. The upswing in residents comes with an increased number of students at West Richland schools. The $35 million Leona Libby Middle School opened with the start of the 2017-18 school year. The Science, Technology, Engineering, Art and Math, or STEAM, school is adjacent to the new city municipal services building. Lambert said the city anticipates a new Richland School District elementary school to be built within the city limits next year, along with a remodel of Tapteal Elementary. The new 65,000-square-foot elementary school would house about 600 students and be built near the intersection of Belmont Boulevard and Bluewood Street. It’s scheduled to open in 2019. Richland School District voters approved a slate of construction projects and a $99 million bond in February 2017. The city’s population has hovered around the 14,000-mark for the past three years. The current population is 14,660, up 2.2 percent from the previous year. It boasts the highest percentage year-over-year growth rate of the Tri-Cities. The city added 6,275 people from 2000-17, or an increase of about 75 percent. Future road projects also will make access more efficient to West Richland, Lambert said. “We’re especially excited about the Red Mountain interchange between West Richland and Benton City. It will provide direct access to our community from Interstate 82. It’s been long needed,” he said. Construction of the $25.5 million interchange, which creates a new exit off I-82 and a new connection to Highway 224 east of Benton City, begins in spring 2019. It’ll provide the only direct link
PHOTO: PAUL T. ERICKSON
Workers build a new West Richland entryway off Van Giesen Street that will feature a new public bathroom, parking areas and signs.
from the interstate to West Richland. Commercial growth hasn’t been as substantial as residential growth in West Richland. So far, the city has granted 12 commercial building permits. The total for last year was 22. “We don’t get a lot of commercial building applications,” Lambert said. The city’s major economic development focus includes the redevelopment of the Van Giesen corridor and continuing expansion in the wine industry. “We recently gave occupancy to Double Canyon Winery. They’ll make fall crush this year,” Lambert said. The winery, owned by the California-based Crimson Wine Group, broke ground on a 47,000-square-foot winemaking facility last summer and opened its doors in September 2017. The $6 million facility boasts cutting edge, automated processes to improve precision and efficiency of its anticipated start of production of
50,000 cases of wine. “Double Canyon’s waste, along with another winery, is processed with pre-treatment by the (city’s industrial wastewater treatment) plant. It takes and processes the waste before it hits the city’s wastewater treatment facility, which adds capacity at the wastewater facility for other commercial and residential customers,” Lambert said. The city’s $3.2 million wastewater plant, known as the I-Plant, opened in 2016 to entice wineries to the area. The plant also can treat wastewater from breweries, distilleries and creameries. Another commercial enterprise coming to the city is SSC North America, the supercar manufacturer of the Ultimate Aero, named the world’s fastest production car in 2007. The city has issued a building permit for the facility, which will be across from the city’s new $6.3 million municipal services building. WEST RICHLAND | Page 22
Focus | Construction + Real Estate in the Tri-Cities 21
CITIES WEST RICHLAND | From 21 “We’re hoping to see them break ground this year,” Lambert said. In the meantime, the city of is readying to sell its former municipal services property — about three acres and 6,000 square feet of space — at 3801 W. Van Giesen. “We’re looking to sell our properties after we move the last department, finance, into the new building,” Lambert said. “We’re also marketing about 14 acres at the corners of Belmont Boulevard and Keene Road.” The acreage comprises three of the four corners at the intersection. “We’re still sourcing the financing to build space for the finance department here at the new building, though the 4,000-square-foot footprint is already here,” Lambert said. The new municipal building is 14,000 square feet, and will house all municipal services, except the police department. The nearly 13,000-square-foot shop is also on the property. “We’re all located under one
22 Tri-Cities Area Journal of Business
PHOTO: PAUL T. ERICKSON
Construction of the new $6.3 million West Richland municipal building and city shops was completed this year off Belmont Boulevard.
roof. It’s terribly convenient during the course of the day; we don’t have to travel across town for impromptu meetings,” Lambert said. As West Richland’s growth continues, the city is planning for more people and businesses during the next two decades. “We certainly acknowledge that West Richland is attractive to
people. We have an excellent school district, convenient access to commercial businesses with our proximity to Queensgate, and we want to make it as accessible as possible,” Lambert said. “With the recent adoption of our 20-year Comprehensive Plan, we’re planned for commercial, industrial and residential growth through 2037.”
PORTS
PHOTO: PORT OF KENNEWICK
The Port of Kennewick’s Columbia Gardens Urban Wine and Artisan Village is under construction on Columbia Drive with completion expected this fall. Seattle-based Bartholomew Wineries and Monarcha Winery, an imprint of Prosser-based Palencia Wine Co., will be the first tenants.
Redefining Kennewick’s downtown areas BY LAURA KOSTAD
A
return to small towns and reconnecting to the waterfront is the idea behind the Port of Kennewick and city of Kennewick’s joint project to develop vacant riverfront property. The goal is to cultivate “new energy, vitality, business and jobs and provide a gathering place for people,” said Kennewick Mayor Steve Young. “It’s a major movement nationwide — people want to go back to small towns,” he said. The Clover Island revitalization project and the Columbia Gardens Urban Wine and Artisan Village are part of a larger “bridge-to-bridge” initiative to reclaim the river’s shoreline. “We want to reconnect citizens to the waterfront,” said Skip Novakovich, Port of Kennewick commissioner. “Our focus is on attracting young professionals to the area. We want our youth to come back to the area with their families.”
Young said downtown Kennewick will gain renewed focus with the development of new cultural resources and businesses. Columbia Gardens, on the east end of Columbia Drive, will create a link between the riverfront and historic downtown area to stimulate urban renewal. “We aim to create a destination front that is family-friendly and economically viable for businesses to thrive,” Novakovich said. The city and port cite the success of Clover Island’s revitalization for setting the stage for larger-scale projects such as Columbia Gardens, and, in 2018, the groundbreaking of the Vista Field redevelopment. The vision for Clover Island is to create an “urban waterfront destination for the region,” Novakovich said. The 14-acre island was overhauled to provide more public recreation areas, accessible via pathways punctuated with sculptures, fine dining options and points of interest, such as the lighthouse and adjoining plaza. Further shoreline improve-
ments are being explored and additional lots zoned for commercial mixed-use remain open for development. Across from the newly reclaimed Duffy’s Pond, the initial phase of Columbia Gardens is set to be completed this fall, with Seattle-based Bartholomew Wineries and Monarcha Winery, an imprint of Prosser-based Palencia Wine Co., as two confirmed tenants. The two boutique wineries will tap into the city-owned and monitored effluent pretreatment facility to neutralize highly acidic winemaking waste before it travels to the city’s main waste treatment plant. Such a system, even just a small-scale one, can be cost-prohibitive for smaller winemakers. This is one reason wineries aren’t found in city limits, city officials said. Young said this is a key example of how cities and ports can work together. PORT OF KENNEWICK | Page 26
Focus | Construction + Real Estate in the Tri-Cities 23
PORTS PORT OF KENNEWICK | From 23 “It’s not the city’s place to play in economic development,” he said. “The city helps those interested in doing so, which is the port’s role.” Novakovich said the port brought its plans for the Columbia Drive properties to the table, and the city contributed its expertise in establishing infrastructure to support the vision. “Where cities and ports fail, is where they make the mistake of becoming competitive with one another and try to do what the other excels at,” Young said. Novakovich said jurisdictional PHOTO: PORT OF KENNEWICK and private sector partnerships are integral to the success of port proj- The wineries setting up shop in the Port of Kennewick’s new Columbia Gardens Urban Wine and Artisan Village on Columbia Drive will face ects. Duffy’s Pond and the walking trail. The second phase of Columbia Gardens, which includes a food truck plaza and infrastructure to ment, which officials say has bene- revenues from land sales and busisupport the preparation of land fited greatly from the experience nesses that open shop there would parcels to be made available to the the city and port gained from go directly into the development private sector, is already underway. designing Columbia Gardens and of the next phase and so on. The Willows site, just west of Clover Island. “And one thing experience has the new wineries, is soon to follow The master plan for Vista Field, taught us is, once buildings start and where Columbia Basin prepared by Duany Plater-Zyberk coming out of the ground, it can’t College’s future $10 million, and Co., a Miami-based consultbe stopped—people want to see 20,000-square-foot culinary instiing firm, will be presented to the tute will be located. more. It’s an exciting time,” Young Kennewick City Council and port In addition to three kitchens, said. the two-story complex will feature commission in coming months. The city continues to seek “At the pace a retail bakery, grants to move the project forwe’re going, I feel student-operated ward, such as local revitalization confident that it It’s our job to restaurant and funding through the state, which will be presented an event center. safeguard the by the end of the was used in the past to develop More than Kennewick’s Southridge area. ” half of the city’s community vision. year, “At full build-out, half-a-billion Novakovich said. $2.1 million in -Skip Novakovich, dollars in private sector investA mid-2018 Rural County Port of Kennewick groundbreaking ment will have been made; $400 Capital Funds, a commissioner on the first phase million will be added onto the tax sales tax-generatalso is foreseerolls for schools and city services; ed economic able, he said. and 3,200 jobs will be created,” development The 20-acre development resource, are being used to comNovakovich said. plete the second phase of the proj- would feature public spaces, ame“It’s going to be the gem of the nities, shops, a designated area for ect, and the remaining balance city — the new downtown,” Young a performing arts center and a will be applied toward The said. road. Shovel-ready lots will be Willows mixed-use development. Young said that at one of his made available for developers, if The port also owns the nearby monthly luncheons with other TriCable Greens, which is earmarked their projects align with the pubCity mayors, a guest asked where lic’s vision for Vista Field. for future improvement. the real downtown is among the “It’s our job to safeguard the Port officials say the full buildfour cities. community vision,” Novakovich out of Columbia Gardens could After a moment of deliberation, said. take 10 to 20 years. they responded, “We haven’t built Both entities remain committed it yet.” to their pay-as-you-go, phased Vista Field redevelopment “Vista Field will be the place development approach. This elimOn a similar project timeline is the 103-acre Vista Field redevelop- inates the need to raise taxes, since people go,” Young said.
“ ”
26 Tri-Cities Area Journal of Business
PORTS
PHOTO: PAUL T. ERICKSON
The $41.9 million airport terminal expansion project at the Tri-Cities Airport nearly doubled the size of the terminal and brought much-needed amenity and Transportation Security Administration checkpoint improvements.
Port plans more airport improvements BY LAURA KOSTAD
T
he new Tri-Cities Airport terminal opened in February 2017 and the Port of Pasco is planning more improvements in coming months. Also on the horizon are plans
to develop the port’s 60-acre marine terminal area just east of the cable bridge. The $41.9 million airport project nearly doubled the size of the terminal and brought muchneeded amenity and
Transportation Security Administration checkpoint improvements. “Before, it was standing room only,” said Buck Taft, director of airports. PORT OF PASCO | Page 28
Focus | Construction + Real Estate in the Tri-Cities 27
PORTS PORT OF PASCO | From 27 Randy Hayden, the port’s executive director, said he knew of several people who wouldn’t fly out of Pasco because of overcrowding issues and instead opted to drive to Spokane for an easier airport experience. Thanks to the terminal overhaul, many of those people have returned to their hometown airport, Hayden said. The redesigned airport has reduced bottlenecks, allowing the airport to take full advantage of all its gates and resources, as well as provide a more smooth and comfortable experience for travelers. Previously, aside from the coffee shop beyond TSA, the only dining option was outside the secure area. This was inconvenient for travelers who had already passed through security. In addition to the existing dining venue, travelers can choose from three different dining options beyond security, which include a grab-and-go counter, sit-down restaurant and bar, which has been
28 Tri-Cities Area Journal of Business
PHOTO: PORT OF PASCO
Travelers can choose from three dining options beyond the Tri-Cities Airport security checkpoint, which include a grab-and-go counter, sit-down restaurant and a bar that shares a common food court with expansive views of the tarmac.
very popular, Taft said. These centralized amenities share a common food court with expansive views of the tarmac and are equidistant from the terminal’s seven gates. Prior to the renovation, there were three gates, and not all could operate at once due to slow-downs at TSA’s one lane. The checkpoint now features two lanes, with the capacity to
expand to four lanes in the future. The building’s new spaciousness was intentional and enables the airport to continue to grow and accommodate the Tri-Cities’ increasing population and corresponding demand for flights. During the past five years, the annual number of passengers in Pasco has grown by nearly 100,000. PORT OF PASCO | Page 29
PORTS PORT OF PASCO | From 28 The new terminal can expand in every direction. The ticket counter walls and the ends of the building can easily be pushed out to add more gates and check-in space. Taft said the overarching goal of the large-scale redesign was to establish the foundation that would place future, smaller scale expansions and updates in the range of a few million dollars to implement. “The Tri-Cities is growing, but we want to maintain a sense of ease and the feel of a hometown airport,” Taft said. In the meantime, Taft said things are “operating efficiently,” and that “people seem to like it.” Taft reported that in 2018, a new TSA inline baggage system will be introduced that automates the bag screening process, allowing for processing of a larger number of bags per minute than the airport’s existing security scanners. Under the current system, TSA agents must lift bags onto and off the scanners, then transfer luggage to conveyor belts that go out to the planes. The new inline system places the security scanners on the same track as the belt that moves bags from ticket counter to plane, eliminating the time-consuming heavy lifting and transfer of bags from one belt to another. If the scanner detects questionable contents, it will alert TSA staff to examine the bag. In 2018, the port plans to add new landscaping and replace existing landscaping to the inner parking areas. Throughout the remainder of 2017 and into 2018, the port will continue work on its pavement replacement project on the east general aviation apron, which is the parking area for general aviation users. The existing pavement dates back to World War II. This phase covers the area near the Sullins Jet Center, one of two fixed-base operators where private jets and small craft are repaired and fueled. The first part of the project was completed in 2016, which repaved
the area in front of the Bergstrom fixed-base operation. Other updates will focus on bringing the airport into compliance with the Federal Aviation Administration’s current regulations. One of the taxiways will be realigned in 2018 to run parallel with the other taxiways and enhance safety. An extension of another runway is also on the horizon.
Airport Business Center
The port is actively marketing its new business center and hangars, on the west end of the airfield off the Highway 395-North Argent Road exit. The 86-acre site was developed for higher-end commercial businesses that would benefit from having their own private hangar and adjoining front office space. Gary Ballew, the port’s director of economic development and marketing, said the port would like to encourage more neighborhood retail businesses to move into the area as well.
Last month, the port commission approved a land lease with Musser Bros. Inc. auto auctioneers for one of the spaces. The port also has received a state grant and loan to build Battelle a new hangar at the business center. Battelle’s current hangar, near the airport industrial park, does not easily accommodate the plane the company uses for the Department of Energy’s Atmospheric Radiation Measurement program. Battelle also has expressed interest in acquiring a new plane for this program, which might outsize the current hangar, and further prompted the port’s move to build a new facility for them. “We want Battelle to stay at (the airport),” Ballew said.
Marine terminal development
Another site on the planning table is the redevelopment of a 60-acre, former tank farm/marine terminal and wharf just east of the cable bridge. PORT OF PASCO | Page 34
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PORTS
PHOTO: PORT OF BENTON
This year, the Port of Benton celebrates 10 years of its successful Crow Butte Park revitalization project with ongoing improvements, including expanded dock facilities and electrical upgrades.
Hundreds of acres available soon in Richland BY LAURA KOSTAD
W
ork to market 760 acres of federal land transferred to the Port of Benton will kick off in earnest in the coming year. In 2016, the Department of Energy transferred 760 acres of industrial land from the Hanford site to the Port of Benton and 581 acres to the city of Richland as part of the Mid-Columbia Energy Initiative. The port, in cooperation with the city, has announced the start of the master planning process for the property, and in 2018, will begin marketing it. A portion of the acreage nearest to Horn Rapids Road has been conceptually divided into four 150acre lots — “the largest parcels currently available in the Tri-Cities,” according to a report prepared by BST Associates in January. The sites strategically leverage existing utility, fiber and road infrastructure. The area boasts multi-modal transportation with Highway 240 and Interstate 82 close by, barge facilities on the Columbia River as well as two railroads, operated by
BNSF Railway and Union Pacific, along with a short-line rail operator. Biofuels, natural gas refueling stations and offices that support and foster new energy technologies are the prime industrial targets for the sites. However, the port’s market analysis identified warehousing, distribution, food processing and agriculture as the most likely businesses to capitalize on the available land, noting “rail transportation provides lower-cost transportation for long-distance shipments and for bulk goods.” Currently, almost all containerized cargo from the Tri-Cities bound for the Puget Sound for international trade are trucked. Empty containers are also trucked back. Most of this cargo consists of agricultural products grown and processed in the Tri-City area, according to the report. Though there is significant emphasis placed on research and technology jobs in the Tri-Cities, part of the port’s 2017 Comprehensive Plan is “to support existing agribusinesses that are also growing within the county.” The remaining 900 acres north
of the four sites is planned as a “clean energy manufacturing facility,” said Diahann Howard, the port’s director of economic development. “Targeted industries are solar, wind and small modular nuclear reactors.” The port wants to populate its smaller, 150-acre sites with renewable energy-supportive businesses, a part of its plan to help Benton County diversify the local economy with the gradual replacement of Hanford jobs with similar levels of research and technology jobs. The port received a $300,000 grant in September 2017 from the U.S. Department of Commerce to support the development of earlystage seed capital funds through the Regional Innovation Strategies program. The port is the administrator for the Tri-Cities Research District, a state of Washington Innovation Partnership Zone intended to accelerate the development of local startups. The U.S. chamber dollars will support the expansion of education curriculum and business support services to better prepare local companies for seed funding. PORT OF BENTON | Page 32
Focus | Construction + Real Estate in the Tri-Cities 31
PORTS
PHOTO: PAUL T. ERICKSON
The Port of Benton is in the process of completing an extensive pavement rehabilitation project at the Richland Airport.
PORT OF BENTON | From 31 This is the first grant of its kind to be awarded to the Tri-Cities. “This is outstanding validation that we are on the right track to grow the Tri-Cities entrepreneurial ecosystem,” Howard said in a news release.
Richland Airport
Following a $1.5 million
improvement project that opened new hangars requested by hobbyists and business flyers who use the Richland Airport, the Port of Benton is in the process of completing an extensive pavement rehabilitation project. Crack sealing, seal coating and new pavement marking work are a part of this project. About $3.3 million was secured
contemporary vision — enduring design www.archibald.design | 509.946.4189 660 Symons Street | Richland, Washington 32 Tri-Cities Area Journal of Business
this year in Federal Aviation Administration grants for the work, as well as for pavement maintenance of both runways. Renovation of the entryway to the Richland Airport off the bypass highway is next on the port’s agenda. Scott Keller, executive director at the Port of Benton, said the project will include widening of the road and the addition of new signage, including a new archway. A candidate for the archway’s focal point is the silhouette of the Day’s Pay, a B-17 bomber, whose name stems from the Hanford workers who sacrificed a day’s worth of pay on D-Day to fund the plane during World War II. A $500,000 helipad is also under consideration in response to high demand. The Prosser Airport, which the port owns, also will see improvements in the coming fiscal year, including taxi lane improvements and a new electronic gate.
Vintner’s Village, Chukar Cherries
The port expects to be able to award a contract for Prosser’s Vintner’s Village II development by the end of October 2017. The project got a boost from the Benton County commissioners in September with a $1.2 million infusion from its Rural County Capital Fund. The pot of money is fed by sales tax collected by the county and earmarked for economic development, job creation and tax revenue in the county. Construction would begin this winter, with the objective of opening in mid- to late summer 2018, before harvest. The county money will pay for architecture, design, surveying, engineering and construction costs. The $2 million project is intended to attract businesses and mirror the original Vintner’s Village in design and use. The 8,600-square-foot facility will be separated into three bays of about 2,500 square feet, plus additional office space that will be leased to private sector operators to promote the local wine industry. BENTON | Page 33
PORTS PORT OF BENTON | From 32 The pre-built bays in the village will serve as a springboard for small companies to expand their businesses and eventually transition into their own facilities on the remaining 22 acres of the site. But high demand for construction services has driven cost projections higher than anticipated, often causing delays in building and greater timidity among companies to expand, Keller said. The port continues to actively market the lots, which are shovelready with infrastructure already in place. “We do things a little more like a business does … we’re very opportunistic … we take action where we see a need and help the people and community,” Howard said. The port is also in the process of designing a separate 12,000-square-foot expansion for Prosser’s Chukar Cherries. “They are a great company for Prosser and for the port,” Keller said. A tenant since 1988, Chukar
PHOTO: PORT OF BENTON
The Port of Benton plans a 12,000-square-foot expansion for the popular Chukar Cherries store and manufacturing facility. Chukar Cherries has been a port tenant since 1988.
Cherries specializes in foods and gifts crafted from locally-grown cherries and berries. The company’s new building will bring its total square footage up to 30,000 square feet.
“It all depends on the bidding climate though,” Keller said. “If it’s too costly, we will have to re-evaluate.” PORT OF BENTON | Page 34
Focus | Construction + Real Estate in the Tri-Cities 33
PORTS PORT OF PASCO | From 29 As the environmental cleanup of hydrocarbons and other contaminants leftover from the site’s earlier use as a petroleum and agricultural chemical storage and distribution center wraps up, the port is working with the city of Pasco to create a mixed use “waterfront zone” for the area. This rezoning would be similar to riverside areas of Kennewick and Richland that contain a mixture of residential, commercial and light industrial properties. The project aims to unite the marine terminal, adjacent boat basin marina and nearby public areas, such as Schlagel Park, as well as the surrounding neighborhood. The port’s 110-acre Osprey Pointe, which houses its corporate offices, would adjoin the development at full buildout. The project is a high priority for both the port and city as the land is near Pasco’s urban core and main thoroughfares.
A study is scheduled late 2017 to evaluate the potential of the existing wooden industrial wharf to be converted to public use, with future overall site redevelopment plan in mind. Ballew said the port’s current vision for the wharf is that of a public market space akin to what has been created in Wenatchee, essentially a smaller scale version of Seattle’s Pike Place Market. Private businesses related to the culinary arts, small manufacturers and artisans, culture, microbreweries and wine tasting rooms would be the main targets, especially small, locally-owned businesses. The city of Pasco is also considering space for the public market in the downtown area. Both the port and city have agreed to build the market wherever it is determined to function best and have the most success.
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34 Tri-Cities Area Journal of Business
PORT OF BENTON | From 33
Recreation areas
This year marks 10 years of the port’s successful Crow Butte Park revitalization project with ongoing improvements to its existing amenities, including expanded dock facilities and electrical upgrades. The 275-acre park is on an island in the southwest corner of the county, outside Paterson. Another one of the port’s current objectives is to entice TriCity residents to spend more time in north Richland by adding more amenities and recreational opportunities there. As more housing goes up, the port’s vision for a vibrant, united north Richland community comes closer to realization. Keller said collaboration is the key. In 2011, the sail and conning tower of the Cold War-era USS Triton nuclear submarine found its new home adjacent to the Port of Benton building. It’s included as part of the National Park Service’s B Reactor tour, and the port is looking to expand the exhibit by building a $1 million visitor center to showcase other sail components currently in storage. “In the next year, we hope to initiate, start and develop the infrastructure and seek grant opportunities to help fund the project,” Howard said. Guests will have the opportunity to learn more about this often-overlooked part of military history and explore a facility that provides the feeling of being onboard a submerged submarine. “It’s an exciting time at the port,” Keller said. Managing 13 areas throughout Benton County, totaling 2,756 acres worth of $83 million in assets, keeps Port of Benton staff busy. “It’s never boring around here,” he said.
EDUCATION
PHOTO: PAUL T. ERICKSON
Students stroll past the new Student Union Building on the campus of Washington State University Tri-Cities in Richland. The $5.73 million building, completed this year, is used for student leisure, study, meetings and events.
Dorms, new buildings shape college campuses BY STACEY DENNY
C
olumbia Basin College’s new student housing opened in September, and Washington State University Tri-Cities officials expect to open the doors to their new housing complex next year. It’s a sign the Tri-City colleges are becoming destination campuses. Site and weather-related delays pushed back WSU Tri-Cities’ plans for its new 800-bed dormitories, but the complex remains high on the list of priorities because new students want housing close to campus, said Jeffrey Dennison, WSU Tri-Cities spokesman. WSU Tri-Cities officials are still working on the financial and construction details with the developer and anticipate opening sometime in 2018, Dennison said. “We have a far greater reach now in regards to new students. We are seeing students coming here from Hawaii, New York, Florida and many other states. This influx of students from out of the area creates a far greater need for housing,” he said. Each unit will have its own kitchen, and the complex will include a clubhouse, outdoor pool, basketball court and recreational facilities. “Typically, residence halls are staffed and managed by the university itself. In this case, we are
PHOTO: PAUL T. ERICKSON
The new WSU Tri-Cities Student Union Building features a large cougar design on the exterior of the glass and an outdoor gas fire pit.
leasing land to a management company that is building the buildings in phases, and staffing and managing them too,” Dennison said. The complex will be owned, operated and maintained by Corporate Pointe Developers. The first of seven phases includes 165 beds. Tentatively called The Vineyard on Campus, the project will cost between $8 and $9 million per each of the seven phases. Enrollment continues to grow at the Richland campus with 1,937 undergraduate students, or a 5.1 percent increase over last year. Overall enrollment increased by 3.7 percent and the growth this fall contributes to a 49 percent increase in enrollment since 2013 for the Richland campus. The college also celebrated the completion of its new Student
Union Building — called the SUB — in September. The $5.73 million building will be used for student leisure, study, meetings and events. WSU Tri-Cities students voted in 2014 to assess a fee upon themselves to pay for the facility. There are about 2,000 students enrolled at the branch campus. The 9,951-square-foot building features a 2,437-square-foot multipurpose event space, new furniture, a gathering space, coffee bar and interactive TV monitors. Pasco’s Columbia Basin College completed multiple construction projects this year, including its new student housing, Sunhawk Hall at 2901 N. 20th in Pasco, across the street from the CBC campus. HIGHER ED | Page 37
Focus | Construction + Real Estate in the Tri-Cities 35
EDUCATION
PHOTOS: PAUL T. ERICKSON
Columbia Basin College’s new Social Sciences World Languages building is open for classes. The new building features two stories with a daylight basement, 20 classrooms, a large lecture hall and forensic, computer, human development and language labs. Left: Columbia Basin College board of trustees and employees tour the nearly completed Sunhawk Hall. From left are Daniel Quock, Alissa Watkins, Duke Mitchell, Frank Murray and Ray Dunn.
HIGHER ED | From 35 The $7 million residence hall has a 126-bed capacity. The 26,800-square-foot facility has 44 furnished apartment units and 126 beds for single, double, triple and quadruple occupancy, each with private bathrooms, a kitchen and dining space. Sizes range from 240 square feet to 550 square feet. “We really want this residence hall to be a place for students to meet one another, but also make sure that a student can hit the ground running academically from the moment they set foot in their room,” said Daniel Quock, CBC’s director for resident life. The rent, which includes utilities, for a single occupancy unit is $950 per person. Double occupancy rooms cost $700 per person; triple occupancy rooms, $635 to $676 a person; and suites for four people, $535 a person. CBC’s new $17.7 million Rand Wortman Medical Science Center, at 940 Northgate Drive, across the street from the Richland Public Library near Kadlec Regional Medical Center, was finished in August 2017 and is used to train health care professionals. Kadlec donated $3 million toward the project.
The four-story, 72,600-squarefoot building will be used by students in the college’s nursing, paramedic, EMT, medical assistant and fire science
programs. There will also be a medical clinic that will treat patients, 32 exam rooms and an X-ray suite.
Focus | Construction + Real Estate in the Tri-Cities 37
EDUCATION
PHOTO: PAUL T. ERICKSON
Kennewick elementary school No. 16 will be 76,664 square feet, featuring 38 classrooms.
More students mean more schools BY STACEY DENNY
A
s the Tri-Cities’ population swells, so have its schools and classrooms. The start to the 2017-18 school year saw student enrollment increases at each of the Kennewick, Pasco and Richland school districts. Kennewick saw the biggest student enrollment increase with 455 more students, for a total of 18,016 students. Pasco School District added 288 students for a total of 18,033 students. Richland School District added 368 students for a total of 13,635 students. These September enrollment numbers are preliminary because districts don’t report final tallies to the state Office of Superintendent of Public Instruction until Oct. 1. With the continued surge of students comes new schools. Kennewick and Richland school districts completed major construction projects in the past year and more are looming on the horizon, especially if Pasco School District voters approve a $99.5 million bond in the November election. 38 Tri-Cities Area Journal of Business
Kennewick School District
Kennewick recently completed the construction of Westgate Elementary School, a new facilities services building and Chinook Middle School. The projects planned for completion in the 2017-18 school year include Tri-Tech Skills Center’s east building, Elementary School No. 16 and Dual Language Elementary School No. 17. The Tri-Tech building will be a detached building east of the current school. It will provide room for existing programs at Tri-Tech and for new programs related to manufacturing. The $3.8 million building will feature 10,200 square feet of space for classrooms, workshops and offices. It’s expected to be completed in August 2018. Elementary School No. 16 is under construction at 18 Rachel Road in the Clearwater Creek development. Estimated construction cost is $20 million. The 76,664-square-foot school will feature 38 classrooms, a gym, cafeteria, library, music room, flexible learning space, computer lab, two reading rooms and playground. The project was initially funded by a bond approved by
voters in February 2015. The Kennewick School Board approved the expansion of the school’s original 26-classroom design after receiving a K-3 class size reduction grant from the state aimed at reducing studentto-teacher ratios in kindergarten through third grade. It’s one of three projects the grant will pay for. The second is for Elementary School No. 17, a dual language school, which will be at 6011 W. 10th Place, the former site of Desert Hills Middle School. The $18.4 million, 66,338-square-foot school will have 30 classrooms and an enlarged gym. The design will be based on the design of the new Westgate and Elementary School No. 16. Both elementary schools are expected to be ready for students by fall 2018. The grant also will pay for a 20-classroom addition at Amistad Elementary that will open in fall 2019. Cost for this project is $12 million.
Pasco School District
Pasco School District’s enrollment has grown by more than 8,000 students since 2000, or an average each year of 600 students. K-12 | Page 39
EDUCATION K-12 | From 38 The district’s current enrollment for kindergarten through eighthgrade students is nearly 2,300 students over the district’s current capacity. The district has a laundry list of construction projects to start in the 2017-18 school year, but many of them hinge on voters approving a $99.5 million bond in the Nov. 7 election, said Shane Edinger, spokesman for the district. The proposed bond would pay for land for future schools, two new elementary schools, one north of Chiawana High School on Road 84 and the other on Burns Road between Road 90 and Broadmoor Boulevard. Both schools would be 72,000 square feet, accommodate 800 students each and cost about $28 million. The proposed bond also would: • Replace the aging Stevens Middle School and add additional space to serve 1,000 students. Cost is $39.7 million. • Pay for a new $46.5 million middle school, the district’s fourth, on Burns Road. The
Students attending Pasco School District’s alternative New Horizons High School arrived for classes in a newly remodeled $2.5 million building when school started in August. The growing district is seeking a $99.5 million bond in November for new schools, renovations, additions and improvements.
115,000-square-foot school would house about 1,100 students. • Pay for $1.7 million in school safety and security improvements at Angelou, Captain Gray STEM, Chess, Frost, Livingston, Longfellow, Markham, McGee,
Robinson, Twain and Whittier elementary schools; Ochoa and McLoughlin middle schools; and Chiawana High School; and roof replacements at Captain Gray and Markham. K-12 | Page 40
Focus | Construction + Real Estate in the Tri-Cities 39
EDUCATION for a $100,000 home. The 2017 bond would add an estimated 59 cents per $1,000 of assessed value. For a $200,000 home, it would be an estimated additional $118 per year, or $9.84 per month. The bond needs more than 60 percent approval to pass.
Richland School District
PHOTO: PAUL T. ERICKSON
Students walk through West Richland’s new Leona Libby Middle School during orientation day. The $35 million school is at 3259 Belmont Blvd.
K-12 | From 39 • Pay for $3 million improvements to the district’s transportation and maintenance facilities, including adding two pull-through bus mechanic bays, replacing transportation office and
drivers’ areas with a single, insulated, metal building and updating the current maintenance facility. The current tax rate for bond debt repayment is $2.25 per $1,000 of assessed value, or $225 per year FOR SALE: 24,000 sf professional office building in Richland. 100% occupied. $4,495,000
RUSTY MORSE 509-438-9865
rmorse@cbtabs.com www.rustymorse.com More than 30 years of commercial real estate experience
TOMLINSON ASSOCIATED BROKERS
40 Tri-Cities Area Journal of Business
8836 Gage Blvd., Suite 201-B Kennewick, Washington
The Richland School District broke ground on a new Jefferson Elementary School in April and expects to complete it by August 2018. Leona Libby, the district’s fourth middle school, opened this fall. Both projects were paid for with a voter-approved $98 million bond in 2013, along with $62 million in state matching money. The new Jefferson school will be 65,000 square feet and house 630 students. The Richland School Board opted to rebuild the school instead of just the 1952 wing after receiving the additional state funding. West Richland’s second middle school opened in August. The $35 million Leona Libby Middle School is at 3259 Belmont Blvd. The 108,000-square-foot school can house 800 students in grades six through nine on the 30-acre campus. The district also will see $141 million in construction projects in the coming years after voters approved a $99 million construction bond in February. The projects include $42 million in state matching money. Here’s what’s planned: • Replace Badger Mountain Elementary School in Richland and Tapteal Elementary School in West Richland. Cost for both schools is $51.2 million. The 1978 buildings are too small and inefficient, and electrical and mechanical systems are failing. The current 48,000-square-foot buildings will grow to 65,000 square feet. • Build two new elementary schools, a $48 million combined project: a new elementary school on Belmont Boulevard in West Richland and a new elementary school in south Richland, at a site to be determined. K-12 | Page 41
EDUCATION K-12 | From 40 • Make $8 million in auditorium improvements at Richland High School. Work includes replacing 1,500 seats, adding 800-square-feet of restrooms, adding a center aisle and replacing stage curtains, riggings, wood floor, sound and lighting systems. • Make $10 million in homeside improvements and install field turf at Fran Rish Stadium at Richland High School. The home side bleachers, locker rooms and restrooms don’t meet health and safety codes, the track needs resurfacing and the grass field can host about 10 varsity football games per year but no playoff games. • Make $6 million in athletic field improvements, including installing bleachers, restrooms and field turf at Hanford High. • Build a new $10 million district teaching/learning/ administrative center to replace a 70-year-old building that isn’t big enough to house the central administration departments.
photo: paul t. Erickson
The 108,000-square-foot Leona Libby Middle School can accommodate 800 students in grades six through nine on the 30-acre campus in West Richland. The new school opened in August.
• The Jefferson Elementary 1982 wing will be repurposed into a $1.4 million preschool center. • Classroom additions and land purchases totaling $7 million. The district also hopes to
receive $42 million in state assistance funds to complete these projects. “We have seen massive growth, and these construction projects are imperative,” said Steve Aagaard, district spokesman.
Focus | Construction + Real Estate in the Tri-Cities 41
photo: paul T. Erickson
Construction continues on the new Vintner Square strip mall that will be home to Panera Bread and Tri-City Kids Dentistry in Richland.
Commercial real estate market: It’s hot BY JESSICA HOEFER
R
usty Morse has been a part of the Tri-City commercial real estate scene for 25 years, and while he’s seen plenty of growth in the area, he said the last five to 10 years have been phenomenal. “It just continues to grow,” said Morse, managing broker at Coldwell Banker Commercial. “I look at my production, and it’s just growing and growing every year. It’s quite amazing.” Morse said the growth reflects a long career built over time, but also is an indication of the commercial real estate activity and deals happening in the Tri-Cities right now. In the last year, Morse sold three properties in the $4 million to $5.5 million range. One was a $4 million medical office building in Kennewick, another was a three-story building with a basement in Richland that
sold for almost $4.5 million. “More often than not, what I’m involved with are investors looking for property with leases in place with cash flow so they can buy that with investment opportunity,” Morse said. “And I work a lot with sellers. I tend to focus on listing properties.” Morse currently has about $20 million in listings, including 86 acres of land west of Steptoe Street in Kennewick that he plans to break into parcels that vary in sizes to meet the needs of individual businesses. He doesn’t expect his work to slow down. And while it’s impossible to predict the real estate market’s future, the Tri-Cities is inching toward the 300,000-population mark, which will lead to big changes. “For our metropolitan statistical area, once you get to 250,000, you’re literally and figuratively on the map,” Morse said. “So instead of a little black
dot on the map, you have a bigger dot. And it makes a difference, because a lot of large retailers and service providers, they have to have a demographic and population base before they even consider going to that metropolitan area. And we’re really close to that number. I’m sure we’ll hit it within the next five years or so.” Dirk Stricker, a designated broker, has helped facilitate commercial sales and leasing in the Tri-Cities since 1990 and also expects continued growth in the region. “I’ve seen a lot of younger people making the move to establish a franchise and growing it,” said Stricker, who added that people are moving to the area because of the job opportunities that come with commercial real estate growth. COMMERCIAL | Page 46
Focus | Construction + Real Estate in the Tri-Cities 43
photo: paul T. Erickson
Workers finish roofing on homes in south Richland. The Tri-City area’s population continues to increase, growing 1.7 percent over last year.
Tri-Cities’ population climbs 1.7 percent BY FOCUS STAFF
T
he Tri-City area’s population grew by 1.7 percent over last year to 283,830 people. That’s up from 279,170 last year, according to the state Office of Financial Management’s data released June 30, 2017. Since 2000, the population of the Tri-Cities metropolitan area — which includes all of Benton and Franklin counties —jumped about 48 percent, adding 92,008 people. The area’s five-year growth rate is 8.1 percent and the 10-year growth rate is 12 percent. West Richland showed the highest year-over-year growth with a 2.2 percent increase, bringing the population to 14,660. Pasco reported 1.6 percent growth with 71,680 people;
44 Tri-Cities Area Journal of Business
Kennewick, 1.5 percent growth with 80,280 people; and Richland 1.4 percent growth with 54,150 people. During the past 10 years, Pasco’s population added 39,614 more people, growing by 123 percent, the highest 10-year growth rate of any of the TriCities. The state’s year-over-year population grew by an estimated 126,600 people, a 1.76 percent increase over the past year — the largest percentage increase since 2006. As of April 1, 2017, there were more than 7.3 million Washington residents, according to the state’s annual estimates. Migration is once again the primary driver behind Washington’s population growth, according to OFM. From 2016-17, net migration (people moving in versus moving out) to Washington totaled
90,800, up 3,700 from last year. Net migration accounted for 72 percent of the state’s population growth this year, with natural increase (births minus deaths) responsible for the other 28 percent (35,800 persons). The top cities for population growth, in descending order, are Seattle, Vancouver, Spokane, Federal Way, Kent, Tacoma, Auburn, Redmond and Everett, OFM said. The state added 39,500 housing units in 2017, compared with 34,400 in 2016, an increase of 15 percent. The level of housing growth remains below the prior decade average of 43,500 units per year. Statewide, more than 52 percent of all new housing units were associated with multi-family structures. Information on population estimates for the state, counties, cities and towns is available at ofm.wa.gov/pop/april1/.
2010
2017
Change
Benton County
68,618
76,434
11%
Kennewick
28,507
30,927
8%
Richland
20,876
23,965
15%
West Richland
4,298
5,413
26%
24,423
27,864
14%
18,782
22,683
21%
2010
2017
Change
175,177
193,500
10%
Kennewick
73,917
80,280
9%
Richland
48,058
54,150
13%
West Richland
11,811
14,660
24%
Franklin County
78,163
90,330
16%
59,781
71,680
20%
Franklin County Pasco
Benton County
Pasco
Source: State OfďŹ ce of Financial Management
Population
Total Housing Units
Housing, population numbers steadily rise
Focus | Construction + Real Estate in the Tri-Cities 45
COMMERCIAL | From 43 Commercial real estate development supported 3.3 million U.S. jobs in 2016 and contributed $465 billion to Washington state’s gross domestic product, according to the National Association of Industrial Office Parks. But there are business sectors in the Tri-Cities that can’t grow as quickly because of limited inventory. The market that’s in the most demand with the fewest amount of buildings is industrial, Stricker said. “We’re not an industrial town. There are mid-level service companies that are looking for space, and we just don’t have it. For plumbers and HVAC and contractors, there’s nowhere for them to go and nothing to buy. You go out to King City in Pasco and you see all the development and warehouses out there getting leased up right away and getting sold,” Stricker said. “There’s plenty of retail. There might be room for an upscale grocery store in Richland or Kennewick west.”
photo: paul t. Erickson
A worker delivers metal during construction of the new Double Canyon Winery in West Richland.
SVN Retter & Company’s Scott Sautell would love to see the TriCities get a Trader Joe’s, a grocery store chain based in California and owned by a German private equity family trust. He agreed the Tri-Cities is lacking in industrial space and said good cash-flowing, income-producing properties are a little harder to get your
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46 Tri-Cities Area Journal of Business
hands on here. “A lot of investors are looking for a deal around here, and that’s where they lose the edge to folks looking from the west side. Everything we have is a deal compared to what they see over there,” said Sautell, who has been in the commercial real estate business for seven years. “So if you want it, you need to act quickly.” Sautell said many of his investors are leaning toward real estate because it’s a tangible asset, but multi-family homes, such as duplexes and apartments, are a hot commodity and typically don’t stay on the market for long. With the market as strong as it is right now, Sautell said many tenants are making the transition to landlords because banks are more willing to lend. “Banks are out there wanting to loan money right now,” Sautell said. “Typically, someone getting into business, just starting up, they don’t have the wherewithal to own. They lease until their business looks good enough on paper. That’s the key — business is great. Businesses are succeeding. Regular businesses, a contractor, an accountant, or whatever it may be, they’re doing well enough in their day-to-day operations that they’ve become real estate investors. It’s a pleasure to serve and facilitate for those who look to better their businesses in our community.”