Spokane Journal of Business

Who would have imagined downtown’s woes, wins

Amid sizable losses, RPS, Davenport and good planning were catalysts for today’s vital core

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Publisher’s Note: This is one of a collection of stories authored by business and civic leaders in Spokane in commemoration of the Journal’s 30th Anniversary in February 2016. Please click here or on the “Anniversary Issue” tag at the bottom of this story to read the others.

In 1986, the Spokane economy was in the doldrums. The last two high-rise office buildings to be built downtown had just come on line five years earlier. The opening of the Seafirst (now Bank of America) and Farm Credit Banks (now Wells Fargo) buildings had created a large amount of new office-space supply in the market. As a result, the office market downtown was going through a period of high vacancy. 

Still, retail real estate was holding its own. Department stores and shops on the skywalk level were the centerpiece of the downtown experience. You could shop your way from the original River Park Square all the way to Sherwood Mall. Little did we know that a major upheaval was on the horizon. 

Before we could rise out of the doldrums, we had to experience the loss of The Crescent and J.C. Penney department stores, and the near loss of Nordstrom. 

Through hard-fought battles, the Downtown Business Improvement District was formed and the River Park Square renaissance was completed. These two successes were the catalyst for so much more investment in the downtown core, creating the foundation for the active and vital urban experience we enjoy today. 

The community created a new Downtown Development Plan, which guided us through a long period of growth and change. That plan changed the skywalk paradigm. We learned that a successful downtown had to have an active street-level experience.  That part of the plan worked, but it created new challenges with former skywalk retail space. That challenge continues to this day. 

The advent of new employment centers in the region, coupled with the loss of some of our local banks and their headquarters status, are key factors leading to a downtown office market that is not growing at the same rate as other sectors of the economy. 

The competition for office tenants is increasing. As a result, rents for downtown office space today are, in many cases, not much higher than they were in 1986, when adjusted for inflation. 

The limited rise in rents is the reason we have not seen much in the way of new multitenant office building construction, the exception being the former American West (now Banner) Bank building at Riverside and Browne. While there have been other building renovations and repurposing, a new downtown high rise is a long way off and will be dependent on rental and occupancy growth in the core.  

And yet we have achieved so much. Who could have imagined that as we looked forward from 1986 that you would see a new City Hall and a renovated Old City Hall, a new Arena, an expanded Convention Center (three times), a new Regional Business Center for economic development organizations, the changes in ownership of so many banks, the addition of new banks and credit unions, the renovation of multiple historic buildings, and the loss of others. 

We would never have guessed that we would see a renovated Davenport Hotel, let alone the construction of two new Davenport hotels. The list goes on. 

As our community changed, so did our institutions. The City Council battles of the 1990s ultimately led to the formation of our strong mayor form of government. Momentum ’87 was formed to focus our efforts and move the Spokane economy forward after way too many years of resting on our Expo 74 laurels. 

The former Spokane Central Business Association morphed twice then came together with Spokane Unlimited to become the Downtown Spokane Partnership and Business Improvement District. The Chamber of Commerce and the Economic Development Council merged to form Greater Spokane Incorporated. 

New groups were formed to support the growth of entrepreneurial startups. Strong political leadership led to the formation of the University District, which set the stage for our new medical schools. Major hospital and medical systems changed hands or alliances. 

The need for a new Arena led to the formation of the first Public Facilities District in Washington state. And when the voters spoke, the PFD took on the Convention Center and Opera House (now INB), leading to a new era of growth. Bloomsday exploded on the national stage. Next up was Hoopfest, growing its way into a world record-setting event. Today, “downtown” is no longer a bad word. It is the proud center of our region. 

Through it all, a positive community spirit has driven us to achieve so much more than we maybe believed we could in 1986. As plans came to fruition and investors gained the confidence to invest, our community self-esteem began to grow.  We’ve come a long way in the last 30 years. While we can now walk with a bit of a swagger, we also realize that the work is never done.  

Keeping Spokane great takes hard work and focus. While there are many perspectives on what success looks like and how we get there, at the core is the fact that we all want to see our community succeed. We can never take that for granted. 

Larry Soehren is president and CEO of Kiemle & Hagood Co., and has been involved with downtown real estate and economic development initiatives since 1983.

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