A little more than a year ago, developer Walker John set his sights on one of the biggest eyesores in downtown Olympia, the corner building at Fourth Avenue and Adams Street, which had become a daily reminder about some of the uphill challenges the city still faced, including groups of street youths and homeless people gathering nearby.
Within months, though, that corner became a revelation as the building was redeveloped into a mixed-use destination, attracting a corner street-level retail business and renters who quickly filled the building’s dozen market-rate apartments upstairs.
John, who says he sees huge potential in downtown Olympia, is at it again. He’s set to close on a downtown office building at 600 Franklin St. that was once home to Sears and the state Department of Personnel. The building is known for its mirrored windows and blue-and-white color scheme.
But once the sale closes — John thinks it will happen this month or early next month — work will begin in earnest in transforming it into another mixed-use destination, with room for two retail tenants on the main floor and 19 loft-style apartments on the second floor.
John said he has two signed leases, but only one tenant was ready to disclose their plans: Nate and Sara Reilly, owners of Darby’s Cafe in downtown, plan to open Three Magnets Brewing Co., a brew pub and bar that would include a family-friendly dining area, and indoor and outdoor seating.
The Reillys expect to open their new venture next summer, they said.
Their business will occupy 5,000 square feet on the main floor, while the other tenant will take 6,500 square feet.
John said he was attracted to the building because of its size — it measures 26,000 square feet — and its 80 parking spots. The property line runs from Franklin to Jefferson streets, and from Jefferson Street to Seventh Avenue, potentially providing room for another building on the site. John is exploring that option, he said.
The building was constructed in 1951 and was once occupied by Sears. Sara Reilly said her grandfather once worked there as a warehouse manager.
The state purchased it in 1983, then renovated it in 1998. It was later put up for sale, with a list price of $2.6 million, after the state Department of Personnel was consolidated with the state Department of Enterprise Services, Enterprise Services spokeswoman Jennifer Reynolds said.
Personnel largely used the building for training, she said.
The former personnel building was in much better shape than the Cunningham Building at Fourth Avenue and Adams Street, John said, adding that the office building has a good roof and a good HVAC system.
“The state has done a good job in maintaining it,” he said.
But the renovation will completely gut the interior, John said.
Downtown observers of the project can expect to see more windows added. Inside it will have a contemporary industrial feel, with exposed characteristics such as wooden beams.
The Reillys said their business will have an open feel throughout, with an open floor plan, open kitchen and open brew space.
The microbrew operations will have a 15-barrel system, and the Reillys plan to hire a brewmaster and then collaborate on creating the beers.
The Reillys are confident the market will support another brew pub.
Features of the loft-style apartments will include large windows and vaulted ceilings. Once the apartments are complete, John expects them to lease up in three to four months, the same amount of time it took to lease up the market-rate apartments in the formerly troubled Cunningham Building.
Pat Rants, president and chief executive of commercial real estate company The Rants Group, said he’s not surprised his units leased up relatively quickly because there always has been demand for market-rate housing downtown.
The company has managed downtown apartments for 30 years and has four properties, which are almost always full, Rants said. He estimated the vacancy rate at about 3 percent.
They stay in demand because they appeal to young people who like the urban experience, or to those who want the convenience of living close to work and not needing a car, Rants said.
Rants said his business is in discussions with John to manage the rentals in his new building.
Former Olympia Mayor Bob Jacobs called it a new day for downtown if the project is successful.
Jacobs learned about John’s plans after sitting in on a site plan review committee meeting about the building.
“He’s doing some interesting things that no one has figured out how to do for a long time,” he said, adding that the recent lack of redevelopment activity might be tied to the slower economy.
But Jacobs also pointed out that John’s efforts could be one solution for the glut of vacant office space in the area. If landlords are unable to find office tenants, they might have success converting the space into housing, he said.
“It won’t disappear overnight,” he said about the elevated office space vacancy levels. “So you have to ask yourself: Do I hang on or try and do something with the building?”
“I hope it’s successful,” Jacobs said about John’s newest project. “It will get even more housing downtown, and that will certainly help downtown in a lot of ways.”
Rolf Boone: 360-754-5403