By Meghan Hall
Unico is continuing to invest extensively into Tacoma’s Washington Building. According to public documents, Unico spent $13.5 million at the beginning of June to bring a new equity partner—affiliated with a qualified opportunity zone fund—on board. The documents indicate that the equity partner is Washington Building QOZ LLC, also known as Pinnacle Partners.
“Unico have had an ownership presence in Tacoma for 22 years—and we’re proud to partner with Pinnacle Partners to undertake this once-in-a-generation opportunity to rehabilitate a beloved landmark and deliver to the market its only vintage urban residential high-rise experience,” said Ned Carner, Unico Chief Investment Officer. “We are excited to soon embark the revitalization of Tacoma’s historic downtown building, bringing residents and activity back to the heart of city, and spurring new life and vitality after hours.”
Unico paid $9.8 million for the Washington Building, located at 1019-1020 Pacific Ave., at the end of 2016. At the time, the seller was Seattle real estate investment firm Stratford Co. The historic 18-story building was constructed in 1925 and is the second tallest in the area.
Soon after, Unico announced its plans to turn the 120,000 square foot office tower in apartments. According to Unico’s website, the firm is investing in “significant capital upgrades” to convert the building. Upon completion of the building, the tower will have 150 residential units.
The project, according to Unico, is larger than its conversion of The Cobb: a 91-unit historic building in downtown Seattle constructed in 1909. The project is expected to run $60 million and include 12,000 square feet of ground floor commercial space, one-of-a-kind rooftop deck and a tenant lounge located in the building’s former vault.
Unico completed the preservation of the building’s facade last year. Demolition work on the interior is expected to begin in July of this year, with construction lasting 21 months.
Much of Tacoma is eligible for opportunity zone financing. Opportunity zones, which were established in 2017 by the Tax Cuts and Jobs Act to provide tax breaks to investors who choose to invest in low-income areas. Investors who reinvest capital gains into qualified opportunity zone funds can defer federal payments on realized gains until December of 2026. Those who hold their investment for ten years will not be required to pay federal capital gains tax on any realized gains from the investment. Unico will be developing the property on behalf of Pinnacle and the companies’ QOZF investors.
“This project is a testament to the value the Opportunity Zone program can unlock especially in underinvested, historic neighborhoods,” said Jeff Feinstein, a managing partner and principal at Pinnacle Partners in a statement. “Unico’s deep relationship with lenders, their expertise in rehabilitating and adapting historic properties, and their commitment to our downtown communities was a great match for Pinnacle Partners.”