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August 19, 2017

Landing DaVita is a plus but Federal Way is still no hot bed for growth

The News Tribune

Bill Virgin

OK, Tacoma, we've been through his drill before.

In fact, we've been through this drill with DaVita before, back when it moved 350 workers to Federal Way in 2012 to accommodate growth, prompting considerable civic consternation about whether the rest of the company might follow.

Five years later, it did, prompting the predictable range of emotions from resignation ("What, us, again?") to sour grapes ("Eh, they were just a branch office anyways") to dogged optimism ("We'll fill that space in a jiffy.")

So for the moment let's focus not on what this means for Tacoma, but on what it means for the other city involved in the transaction - Federal Way, which has its own history of economic-development disappointments.

Federal Way's population is nudging 97,000. In some states, that would qualify you as the largest city. In Washington, it just gets you ninth place, and status as barely an afterthought.

It's not so much Federal Way's comparative youth that's an issue (it wasn't formally a city until 1990), although that might be a contributor. It's the lack of a specific identity.

Federal Way isn't a tech hub or corporate-headquarters center like Seattle or Bellevue. It doesn't have the port or the industrial base Tacoma does. It lacks the manufacturing and warehouse-distribution sector of Renton and Kent, two other towns on the Top 10 list.

Then there's the physical structure of the city - a suburban commercial center in proximity to two larger urban cores.

There was a time when that was considered an attractive model for combining working/playing/shopping/living - that's how Federal Way grew to be so large in the first place - but it's not the style they're wearing this season in urban-planning circles.

Federal Way had other attributes, including proximity to the airport. Don't scoff, for some companies that matters, and if yours is one, access to Sea-Tac Airport from Federal Way is about as fast and painless as from any other large community in the region.

Most of all, what Federal Way had for years was Weyerhaeuser.

Physically, the company's presence had a huge influence, not just with the headquarters campus and the amenities, including the bonsai collection and the rhododendron gardens, but in all the office space Weyerhaeuser developed and occupied for its far-flung business ventures.

Plus, there were the intangible benefits of seeing Federal Way mentioned in every story about the company, and being home to a highly visible and very cool headquarters building.

But Weyerhaeuser has been downsizing and selling off pieces of itself for years, moves that dumped more office space on the market in an era in which suburban office space wasn't in fashion.

Now the company itself has moved on, leaving a building that, while still very cool, isn't compatible with modern tastes and no one is quite sure what to do with (lots of ideas, but no money behind them).

That's hardly a new story for Federal Way, which has seen a series of proposals for high-rise, large-scale developments that never turned dirt for various reasons.

Meanwhile, the city continues to face issues over what to do with retail properties as that sector contracts, taking jobs but leaving vacant space.

Now comes the DaVita news, with the prospect of 500 jobs by 2021 and some absorption of surplus office square footage. Is this the inflection point at which companies wake up and say, "Maybe that suburban commercial center model wasn't such a bad idea after all?"

As logical as such a shift would seem (less expensive office space, shorter commutes for workers) it hasn't happened yet, so let's not construct a trend out of one news item - yet.

Here's a recent analysis from commercial real estate services firm Kidder Mathews:

"Leasing activity in South King County continues to consist of mostly small tenants moving around without much expansion. Boeing continues to give back space and no major company has been found to replace their demand for office space in this submarket. No major changes from the recent trends are expected in the South King County market.

"Traditionally this market is the last to recover, providing lower rental rates as the more active Eastside and Seattle markets price out some tenants."

For Federal Way, that means economic development and job growth are going to be slow slogs.

The city will be able to point to some highlights - the new Performing Arts & Event Center, for one - but history suggests setbacks are always possible. "It's never easy for this town," this column once said of Tacoma's economic-development experience.

Even as it enjoys one win (at Tacoma's expense), Federal Way can commiserate with its southern neighbor from plenty of painful experience of its own.

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