EVERETT – On paper at least, downtown Everett is poised for explosive growth.
Nearly 800 new downtown condos and apartments are in various stages of planning.
That’s the equivalent of six new Nautica buildings – the six-story condo conversion that opened in 2003 and dominates a city block on Grand Avenue.
There’s a good chance some of the projects scattered across a dozen development sites will not get off the ground, officials acknowledge.
Still, long-term growth, a property tax subsidy and a strong local economy, buoyed by jet sales at the Boeing Co.’s Everett factory, work in the city’s favor.
“We’re going to look out across this city in a few years, and I will be surprised if we don’t see cranes,” Everett Mayor Ray Stephanson said.
Dilapidated houses will be demolished and replaced with sleek, modern buildings. Low-income residents will be displaced by young professionals and empty-nesters with disposable incomes to spend at restaurants and shops.
Buildings now in the planning pipeline include $1.1 million bay-view penthouses.
All of this does not include 660 upscale condos, shops and restaurants being constructed on the marina, or up to 1,500 condos planned for the Lowell neighborhood along the Snohomish River on a former mill and landfill.
The City Council has funded a study on the feasibility of tying the peninsula’s three districts together with a streetcar line.
The condo market in the Puget Sound area remains hot, in spite of a wave of foreclosures and slumping housing sales creating jitters and sliding prices elsewhere.
Developers in Everett talk about “pent-up demand” and say they aren’t deeply concerned their projects will create a glut of vacant condos for sale, as is the case in Las Vegas and parts of Florida.
“I think the local market is way stronger than people realize,” said Joe Zlab, who plans to break ground on Rockefeller Square, a 40-unit condo building on Rockefeller Avenue, north of Everett Avenue, this spring.
Reaching an open hand toward the windows of his 10th floor City Hall office overlooking the city and Possession Sound, Stephanson said several months ago that he expects as many as 10 new high-rises sprouting from downtown in the next 20 years.
In that time, the city’s population is expected to grow from 101,100 to 123,000 people. Conservative estimates predict another 1,000 people will move downtown in the next three to five years. About 3,000 people currently live downtown.
Change already here
Downtown Everett’s transformation from hollowed-out mill town to urban center is already well under way.
More than $1 billion in public and private money has been spent on downtown development in recent years.
The $71.5 million Everett Events Center, which can hold 8,300 people in its main arena, brings thousands of people downtown at night. And it is widely viewed as an economic engine for downtown development.
“I’ve always said Everett is the best kept secret in Washington, and people are finally starting to see that,” said Donna Corpus, owner of Studio Donna on Colby Avenue.
Several years ago, her hair salon was housed in a shop on the east side of Colby Avenue owned by Art Skotdal, downtown’s largest landlord and developer.
Corpus and her husband, Timothy, later bought the salon’s current building on the northwest corner of Colby Avenue and Wall Street and began quietly assembling other downtown properties.
Now, the couple is planning to open a mixed-use building of their own.
They hope to begin construction this year on Colby Tower, a nine-story building on Colby Avenue and 26th Street, with ground-floor retail shops, and a mix of parking, offices and condos upstairs.
The building would be capped by a rooftop garden with wrap-around views of the mountains and water.
With Sub-Zero refrigerators, Wolf gas ranges and other luxury accouterments, condos are expected to range from $950,000 to $1.1 million.
“We’re just hoping for something kind of special and elite for people who want that,” Donna Corpus said.
Many are bullish about downtown Everett’s future. The Corpuses are joined by a remodeling contractor; a structural engineer; and even C.J. Ebert, the chairman of the city’s Planning Commission, who are looking for a piece of the development pie.
Ebert has talked with city planners about the possibility of adding up to 80 condos atop a California Street parking garage he co-owns.
A new-look city
It’s only a matter of time before Everett begins to resemble more affluent Seattle suburbs, including Bellevue or Kirkland, said Anthony Aversano, a Mountlake Terrace remodeling contractor.
Aversano, whose work usually focuses on dividing large older homes into apartments, wants to build a 32-unit condo on Grand Avenue, south of Sequoia High School.
He said the widening of I-5 and a possible light-rail station somewhere down the road will make the area more attractive to commuters.
“Seattle is overpriced, Bellevue has access problems and is also too expensive,” Aversano said. “It’s not a place where people can go unless you’re working for Microsoft and have been there for a long time.”
Gus Boutsinis, a Mill Creek developer working on a 130-unit condo project on 41st Street and Colby Avenue, agrees.
“We think Everett is ready,” he said. “It’s where Seattle was 15 or 20 years ago.”
His condos will range in size from 550 to 1,700 square feet, and will be neither cheap nor outrageous, starting at less than $200,000 and climbing above $500,000, he said.
Zlab, a structural engineer by profession, also is looking to sell condos to what he calls the value-conscious, first-time home buyer.
Units at his Rockefeller Square are expected to sell for $200,000 to $400,000, he said.
To be competitive, Zlab said he will lavish condos with granite countertops and double wall construction to reduce noise.
Zlab has applied to the city for a property tax subsidy, which also could help move units.
The Everett City Council extended the downtown tax break to 2018 last week.
The program allows condo and apartment owners to skip 10 years of taxes on the value of eligible new residential buildings, paying taxes only on the land value. That can result in a 75 percent reduction of property tax bills.
If accepted, Zlab’s would be the third downtown multifamily building to qualify for the tax break since the program started in 1998.
Also under the program are developer Steve Cupic’s 121-unit Nautica Condominiums on Grand Avenue and Skotdal Real Estate’s 63-unit Peninsula Apartments on Colby Avenue.
Now, both developers plan to reinvest in downtown with another 374 condos and apartments.
The projects include an 18-story building on Hewitt Avenue, which would become the city’s tallest by 88 feet.
However, Skotdal Real Estate said last week that the high-rise is on hold while the company focuses on building a 200-unit condo and apartment building abutting Everett Public Library.
The company, which places the value of the building at $30 million, said it wouldn’t build it without the tax subsidy.
“The purpose of the tax exemption is to help level the playing field between urban and suburban projects,” said Craig Skotdal, president of Skotdal Real Estate.
Obstacles to builders
Urban developments are more expensive than suburban projects because land costs more, code requirements are more stringent, and other features are needed such as structured parking and elevators.
A suburban developer, on the other hand, can often acquire a large parcel of land from a single owner, create an asphalt parking lot and develop a simple garden-style apartment building with stairs, Skotdal said.
When extending the tax break last week, city officials brushed aside arguments that it unfairly shifts the burden of paying for police, fire, schools and other public services to taxpayers elsewhere in the city.
City officials cited an economic study of 1,000 homes constructed under a similar program in Tacoma, which said the program landed more dollars in the city’s treasury than it took away.
They also said it is one of the few redevelopment tools available to promote difficult infill projects.
Allan Giffen, director of Everett’s planning department, said he has never seen so many market-rate projects at one time in his 21 years with the city.
But plans for new buildings won’t necessarily mean new buildings.
To get the city’s approval for projects, developers are not required to prove financing or show a resume of completed projects.
Inexperienced developers without sufficient capital could have trouble securing financing.
Also, other factors can affect feasibility, such as a change in interest rates, increases in building material costs, the number of other projects under construction and shaky global markets.
Aversano, the remodeling-contractor-turned-developer, said he’s trying to stay positive, but he thinks Everett’s downtown building boom could fizzle if the cooling housing market nationwide turns into a dot-com-style bust.
“It’s going to come down to economics,” Aversano said.
Reporter David Chircop: 425-339-3429 or dchircop@heraldnet.com.
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