Chris Saettel could throw a rock from the balcony of his new downtown Spokane loft and hit a Burlington Northern train as it lumbers past. He could also hit a hobo. (Not that he would.)
Last weekend, the 28-year-old Air Force pilot moved into the first completed residential unit at the Jefferson Street Auto Lofts, the 100-year-old brick building that used to house Pella Windows. Wedged between the train trestle and seedy Second Avenue, in an area frequented by transients and troublemakers, it's not exactly what most Spokanites would call "home."
Saettel couldn't be happier.
"I wanted to be downtown. I wanted to be close by the bars, the movies, the restaurants, the galleries." Sure, there are guys pushing shopping carts around, he says, but that just adds "a little flavor."
It's this kind of flavor that helped development firm RenCorp land reservations for the building's eight units within about two hours of opening them to the public in November 2004. That, and the high ceilings. And the exposed beams. And the stained concrete floors. And the fact that, for a little extra money, you could help design the place.
The massive bookshelves in the kitchen were Saettel's idea, as were the raised platforms for the loft and bedroom areas. The small inner atrium (maybe the coolest thing besides a heart-shaped bed that this writer has ever seen inside an apartment) was RenCorp's. A huge industrial fire door slides across his laundry room. Red brick is everywhere.
What is this, the Pearl District? Bell Town? SoHo?
Get used to this: It's Spokane.
The Jefferson Street Lofts aren't the first luxury condos to appear in Spokane's urban core. But they're part of a mushrooming trend of upscale downtown pads that has been growing for a year or more and is now reaching overwhelming proportions.
"Every developer worth his salt is working on something with condos right now," Mick McDowell told the Journal of Business last fall. McDowell himself was so encouraged by the sudden and dramatic interest in downtown condominiums that he's dusted off years-old plans for a 17-story, 52-unit tower that would rise 100 feet above Riverside Avenue like the tower of Sauron (much to the chagrin of some Peaceful Valley residents below).
And it's not just high-end condos cropping up in Spokane. RenCorp's Jefferson Street lofts sold for only around $200 per square foot, for totals between $160,000 and $350,000. (Tell that to anyone in Seattle and they'll either pass out or start packing.) The company has plans for similarly priced projects in two buildings just east of there, on the same block as the Montvale Hotel and CenterStage.
No Leap of Faith
But let's do the math here. Let's add up all the units in all the proposed projects on our map on page 16. Even if we assume (absurdly) that each unit will house only one person, that means developers across the city are banking on the notion that there are some 2,900 people who want to move to downtown Spokane -- and that many of them are willing to pay huge amounts to do so. Can that be?
Last year, Ron Wells told The Inlander that it was a leap of faith -- not a heavy price tag -- that made local developers reluctant to put money on the endangered Rookery Block. "You have to believe that there's a market for condos [more expensive] than anything anybody has yet sold downtown," he said. Just under a year later, developers are building homes for 2,900 people without breaking a sweat.
"It's no leap of faith anymore," Wells laughs.
John Pilcher, the city's economic development director, agrees that it's not as crazy as it sounds. "There is definitely a national trend that's been going on for the last five to 15 years of people moving back to the downtown cores," he says, pointing to Tampa, San Diego, Seattle, Portland and Anaheim.
Developer George Doran, who's working on a number of higher-end projects in Peaceful Valley, adds, "The craze has kind of taken over the entire population of the U.S. Condos increased in value 57 percent nationwide [in the last several years]."
According to msn.com's Money Central, almost a million condo units were built across the United States between 2000 and 2004; in 2005-06 alone, the National Association of Home Builders is expecting some 525,000 more.
Pilcher feels that Spokanites have been eager to jump on the national bandwagon, but "three or four years ago, you couldn't get a loan for a downtown housing project, because the market wasn't proven." This created a "pent-up demand," he says. "But now the dam is sort of open. Now banks are willing to finance them."
"In terms of finding investors, it's a whole different ballgame," says Wells. "The awareness of downtown as a vibrant place has clearly attracted [them]. There's a lot more faith in Spokane than there ever has been." He points to median house prices in Spokane County, which he says rose by 24 percent in 2004. Wells says they're likely to repeat that performance when the 2005 numbers come in. That narrowing of the breach between market value and the cost of building downtown, he says, has made development more viable. "More projects have been constructed and sold. Ones that are underway are clearly selling out. The demand is proven."
Who Are These People?
Developers insist the opening of the floodgates has yielded a tidal wave. As mentioned above, the Jefferson lofts sold out in two hours; RenCorp's Chris Batten says his list of buyers for each unit was two or three people deep. Barbieri says half of his chi-chi riverfront condos have already been sold. Wells says the same of his Carnegie Square townhouses, the property for which was only cleared last month. Even Dave Black, whose Ridpath development plans were announced just this week, says that reservations have already been made (in the form of a $1,000 refundable deposit) on half of his proposed 50 units.
Developers like to quote Field of Dreams. But if it's true that "If you build it, they will come," who are they, and how much money are they bringing to the table?
Black says that of the reservations he's made so far, some have come from people who are buying just as an investment, some are buying for a younger family member (say, a 25-year-old daughter who works downtown), "and there are some people who are reaching retirement, who want to move downtown and sell their home."
For them, keeping the cost down below $200,000 is key, says Black: "We think that's a market that hasn't been hit and there's a demand for it."
RenCorp's Batten agrees. He says he's heartened by the quick sales of the Jefferson Street lofts, and by the fact that units in the nearby Blue Chip Lofts, which sold for $200 per square foot three years ago, are starting to get resold for something closer to $250. "That market's pretty deep," he says, suggesting those are the kinds of prices that could draw Saettel (and a pair of retired school teachers, and a twenty-something symphony employee) to the Jefferson lofts. But beyond that price range, he's doubtful. "You can't bring 200 units in at $300 a foot," he says.
Speaking about his somewhat pricier Carnegie Square townhouses, however, Ron Wells says, "The predominant buyer is someone [local] who simply wants to live downtown and lose the responsibility of mowing the grass and taking care of a house."
Speaking to The Inlander last year, Tomlinson Black's Earl Engel speculated about the clientele for its apartments and condos at Kendall Yards. "I think there's two sets of people that'll buy 'em," he said. "One, you have the people that are ready to retire, empty-nesters. They want to spend some winters in California, summer at the lake." He adds, "There's [also] gonna be a significant number of younger professionals who don't have children. They don't want to deal with a house. They wanna go out and have fun. I don't think you're going to see a lot of out-of-town people buying them. The majority are going to be local."
In other words, no Californians?
Not quite. Downtown Spokane Partnership President Marty Dickinson points to a 2003 housing potential study conducted by Zimmerman/Volk Associates, which indicated there was a pool of about 4,100 people eager to move to downtown Spokane. Of these, about 51 percent, the study predicted, would come from the city or county of Spokane. Almost 7 percent would come from adjacent counties and 8 percent from the Seattle/Tacoma area. Southern California would produce only 2 percent of the immigrants, while 30 percent would come from the rest of the nation.
The study also found that of that pool of 4,100, 41 percent are retirees or empty-nesters, while 53 percent are younger single couples or single-family households. It indicated that downtown Spokane should be able to support nearly 300 units per year, or up to 1,500 units over the next five years.
"The waiting list is just growing and growing," says Dickinson.
This kind of optimism may sound strange in a city that seems to pride itself more in its proximity to other cities than in its own virtues, but Spokanites sound genuinely excited. Urban-density advocates are giddy about the idea of a vibrant, lived-in downtown. Local officials are already wondering how they'll spend the savings that come with infill development. Marshall Chesrown's saying he doesn't think Spokane can build condos fast enough. Never mind some market analysts' worries that the condo craze is a bubble waiting to burst.
Even Chris Saettel, who should still just be high on the fact that he's got a damn open-air atrium in the middle of his home, sounds evangelical. "It was a lot of fun for me to design the house ... and I think it will be a great investment," he says, but the first reason he lists for buying the condo is that he wanted to support downtown and help build it up. "I see the whole area improving drastically over the next couple of years," he says.
Batten concurs, saying RenCorp and other developers are "dedicated to changing the dynamic of the neighborhood. First Avenue won't look like it does in 12 months' time."
For his part Saettel, who's served at Fairchild for three and a half years, is just worried he'll be restationed and forced to sell his posh new home before he can even get comfortable.
If you want to buy it from him, we recommend you start camping outside his window now.