Developers here predict an uptick in residential and commercial development around the first three interchanges of what eventually will become Spokane's north-south freeway, but say progress will be slow and flavored by the mix of land uses already in place.

"Anywhere you build a freeway and an interchange, things will happen," says Spokane developer Dick Edwards, a principal at Hawkins Edwards Inc. who once designed freeways in California.

Edwards and others say they see the land generally surrounding the North Spokane Corridor's coming interchanges near U.S. 2 and Farwell Road and at U.S. 395, in the Wandermere area, as having big potential for residential and commercial development. Meanwhile, they say, the industrial area around the intersection of Freya Street and Francis Avenue, the southern point of the portion of the new freeway that's open so far, likely will remain relatively unchanged, at least until the freeway is extended south to connect with Interstate 90 long in the future.

"The biggest impact I would see would be at Farwell, because U.S. 395 will develop anyway," says longtime Spokane developer Dave Black, of NAI Black. "I see that intersection developing much more rapidly than it would have naturally."

Some activity near the route of the long-planned freeway already is occurring. Vandervert Developments LLC is adding to its Wandermere Village commercial project just south of where the freeway will connect with U.S. 395, and Kaiser Aluminum Corp. has been seeking a rezone for development of 424 acres of property it owns at the U.S. 2 interchange for development. A couple of miles to the north of the U.S. 395 interchange with the North Spokane Corridor, permits have been granted for a big multifamily residential development near Hatch Road, a type of project developers say is crucial for attracting future commercial development.

"The first thing retail does is count rooftops," says Dick Vandervert, of Vandervert Development. He says the success of his Wandermere Village project is a good example of how the addition of housing over time makes an area commercially vibrant. For years, significant housing development has occurred west and north of the U.S. 395 interchange, which is under construction now, with the new freeway.

"Where people shop is the last stop going home, so if there are no houses around, there's no reason for people to stop," Vandervert says.

Still, whatever opportunities the new freeway is bringing are being dampened by the recession, which has made selling property difficult, says Marshall Clark, president of Clark Pacific Real Estate Co. here.

"Very few people will spend money right now for raw ground," Clark says.

The area just south of the corridor's coming interchange with U.S. 395 has seen significant commercial development over the years, creating what has become the Wandermere commercial district. To the north of there, beyond Wandermere Golf Course, are the Gleneden and Blackhawk residential developments and the planned Midway Plaza commercial and residential development, which received the recent permits for a residential project.

"The Wandermere area is real hot because of the housing north of us," Vandervert says, adding that wasn't the case when he first started commercial development there 20 years ago.

Says Edwards, "You're going to see people look at housing. You'll see more residential development out there, and if you get more residential you'll get more commercial development."

U.S. 2 interchange

Meanwhile, a lot of vacant property surrounds the new freeway's connection with U.S. 2 near Farwell Road. The vacant land is mostly to the south and includes the land owned by Kaiser.

Kaiser has sought for years to rezone land near the corridor's interchange with U.S. 2 that it once used as a buffer for its now shuttered Mead Works aluminum smelter. Contract land-use planners for Kaiser say the company sees opportunity for development of about 420 acres there for retail, light industrial, office uses, as well as possible retirement housing, in part because of the property's proximity to the freeway.

Another parcel, located on the west side of U.S. 2 there, is owned by a company managed by Spokane developers Lanzce G. Douglass Investments LLC and Harley C. Douglass Inc.

Developers here say they envision a commercial retail mix around the interchange, parts of which are still under construction, but add that development will depend on additional housing projects springing up in that area, too.

"Retail and office will end up going up at Farwell and U.S. 2," Clark predicts.

The conceptual land-use plan that Kaiser submitted with its rezone application calls for a mixed-used development on the company's 424-acre parcel at the southeast corner of that intersection.

"I think the frontage in the corner (of the Kaiser property) you'll see commercial and retail, you'll see some office buffer, and some residential," says Black.

Vandervert says if the residential component on that land is developed as retirement housing only, as the application suggests, it could have a dampening effect on commercial opportunities.

"Senior housing doesn't drive the retail as well as families, because you spend lots of money on the kids," Vandervert says.

Paul Jensen, a senior planner with Spokane County, says limiting the residential piece of the project on the Kaiser property, which could account for about 115 acres of the site, to retirement housing, would reduce the impact of the increased population on the Mead School District.

He adds there was little public comment in favor of or against the proposal at a recent hearing on the proposed zoning changes. Kaiser has worked for some time to mitigate transportation and sewer requirements, Jensen says.

"It's a big project, but it's pretty well insulated (from surrounding neighborhoods) by the Newport highway (U.S. 2)," Jensen says. Kaiser representatives declined to comment on the zone-change request.

Francis-Freya interchange

The vicinity around the Francis and Freya freeway interchange includes a collection of distribution and light industrial companies, including Food Services of America Inc., located on the southwest corner of the intersection of Francis and Freya, and Ana Laboratories Inc.'s large engine-fluid testing facility, located just northeast of that intersection. The big URM Stores Inc. warehouse is just to the north of the freeway interchange, only portions of which are open now.

Developers say they expect the business mix around that interchange to remain largely unchanged, and that retail development will be a challenge there because the surrounding neighborhoods are seen as lower income.

"Hillyard is not a highly desirable area for most retail businesses," Clark says. "Without a middle class component, you can't get the retail in there."

He predicts the main businesses that will gravitate to that area will continue to be industrial in nature.

"Industrial businesses will succeed," he says.

Vandervert says that unlike the Wandermere area, which has a strong mix of commercial and residential development, the area around the Francis and Freya interchange is more of an enigma because so far it lacks that "rooftop factor" that's evident near Wandermere.

"I've been scratching my head about that area" around Freya and Francis, he says. "Even just industrial doesn't drive enough commercial development."

He says that without additional housing, the retail that would work best there would include restaurants and convenience stores.

Edwards says he sees other opportunities for that area, particularly once the North Spokane Corridor extends all the way south to I-90. "You'll probably see more distribution companies locating up there if they can get to the freeway," he says.

Says Black, "Right now, you have industrial on the south side of Francis, and the north side likely will have good development of the same character." He says further transportation connections in the future, though, could change that mix.

"If they change Bigelow Gulch or get a connection to I-90, it will open up the Francis area to more housing," Black says. "Once more housing comes, it would promote more retail and office."

Bigelow Gulch extends east from Francis and leads to routes that connect with Spokane Valley.

The rest of the North Spokane Corridor's 5.5-mile path between Francis and U.S. 395 is expected to be completed in 2011. The Washington state Department of Transportation says that even if it had all the money right now to complete the corridor to its planned ultimate end point at I-90 near the Thor-Freya interchange, it would take 10 years to do that. At this point, however, it says it's not clear how long it will take to get the money to complete the project.

"I think over time, over 5 or 10 years it will fill in. Just like the traffic (on the new freeway) has been slow" so far, development will be slow, Clark says.

Currently, only two lanes of the freeway are open, between Francis and Farwell. Reconstruction of the Freya Street Bridge, to the south, has curbed traffic flow to the Francis interchange, DOT says.

Edwards likens developing around a new route to building a pipe: "You have to have the water to run through it," to drive development along the route.

Black also says that development won't happen overnight, and all of the real estate sources contacted for this story say they believe that connecting the corridor to I-90 will be a key piece for long-term growth.

"Frankly, it won't be significant until they hook it to I-90," Black says.

Still, Edwards says, ultimately the project will stimulate growth and ease traffic on city streets. "There's no question everybody will benefit," he says.