Tacoma's first large-scale condominium auction Saturday yielded substantial bargains for the buyers of 17 units at downtown Tacoma's Marcato condominiums.

For instance, a two-bedroom, two-bath, 1,210-square-foot unit with two inside parking places sold at auction for $180,000, just 46.3 percent of its original offering price of $388,900. That's a $208,900 discount.

A third-floor unit with two bedrooms and two baths brought $195,000 in the auction, a drop of $210,900 from the asking price of $405,900.

The units, which ranged from a single bedroom, 620-square-foot unit to a 1,228-square-foot unit with two bedrooms and an den, sold for an average of 55.2 percent of the units' original offering price.

The 70-minute auction at downtown's Hotel Murano, yielded $3,365,000 in sales for Marcato developer Vision One LLC. The original asking prices for those units was a total of $6,096,862.

"We had almost 700 groups through in the month leading up to the auction," said Koket Fowler, project manager for TeamBuilder Auction Group. "We knew all the units would sell because of the large amount of interest, the quality of the community and the great values," she said.

Sixty-eight pre-registered and pre-qualified buyers attended the auction.

In general, one-bedroom units sold for a higher percentage of their original asking price then did the larger, two-bedroom units.

The smallest unit in the auction, 620-square-foot unit with one bedroom and one bath on the building's second floor sold for $160,000. That's 69.6 percent of the $229,900 offering price before the auction.

Developer Robert Hebert said he was pleased that buyers realized some bargains. Though the prices were substantially less than the original asking prices, he said, the auction brought a quick finish to what had been the glacial pace of sales since the recession struck.

While each building is different, the Marcato auction may give other developers who are holding onto large unsold inventories of condo units in Tacoma an idea of what the market will bear in the future.

Several major buildings are seeing condo sales moving so slowly that they'll be years filling. A large waterfront building on the Thea Foss Waterway, the Esplanade has nearly 150 vacant units.

The bank that foreclosed on that property has yet to disclose how it intends to sell the remaining units.

It looks like the Tacoma office for the state attorneys general isn't moving to the Brewery District after all.

General Administration spokesman Jim Erskine said that on Friday afternoon, Kirkland-based developer MJR withdrew from negotiations for the Attorney General lease space in the Jet Building on 21st Street and Jefferson Avenue.

The building is owned by renowned glass artist Dale Chihuly and it sits just outside the state-approved footprint for the University of Washington. As I reported last week, Chihuly's spokeswoman said he had received an unsolicited offer on the building and that the offer is being considered.

It appears that the answer to MJR was no.

Erskine said that MJR principal Mark Lahaie sent the GA a letter Friday afternoon, which stated that that "initial discussions made it clear that an agreement was unlikely."

The state's Department of General Administration said last week that MJR was the successful bidder for 36,000 square feet of new offices for 100 employees.

University of Washington Tacoma spokesman Mike Wark said last week that the university was surprised to learn that a building so close to the campus might be turned into office space. The school's master plan calls for finding opportunities outside the footprint for student services, such as residence halls, so that the state money can be used to build academic buildings as the student body grows.

If the university had known that Chihuly's property was available, Wark said, "we would have been interesting in talking about it."

"We emphasize purchasing properties when people are ready to sell," he said.

I've confirmed that among the original proposers, Tacoma-based developers Simon Johnson LLC pitched space in the downtown post office.

I'm awaiting word from the state GA department on what happens next.

UPDATE: Erskine said Monday afternoon that the state's team wll meet tomorrow morning to decide whether to choose another successful proposer from the original bidders, re-advertise, or end the search altogether.

The other proposers were:

• Prium Cos. LLC, whose lease portfolio includes 820 A St. and 1933 Dock St. The 820 A St. building is the Bank of America Plaza that sits on the intersection with Ninth Street, just before the entrance to I-705. The 1933 Dock St. site has no building yet.

• American Life, a Seattle-based property investment and management firm whose lease portfolio includes 2413 Pacific Ave.

• Simon Johnson LLC, the ­Tacoma-based development team of Herb Simon and Ted Johnson.

• Pacific Plaza LLC, at 1301 Pacific Ave., the former crumbling parking garage that has been renovated - by PCS Structural Solutions, BLRB Architects and the City of Tacoma - and now has office and retail space.

• Linmar Management Co., the San Diego-based firm that renovated the 1903-vintage Provident Building at 917 Pacific Ave.

JPMorgan Chase, the successor to failed Washington Mutual, has sold another former WAMU property, but this time the sale won't create a loss for Tacoma.

Chase was the bank that recently sold the former WAMU Seattle headquarters to Russell Investments parent Northwestern Mutual at a bargain basement price triggering Russell's planned move from downtown Tacoma to Seattle. Russell is downtown Tacoma's largest employer.

The new sale, announced today, is for WAMU's Cedarbrook Conference Center near Sea-Tac Airport.

Chase sold the conference center with its rushing streams and lush landscaping to Cedarbrook Lodge LLC. Managing partner in Cedarbrook LLC is Wright Hotels Inc., a company founded by Stuart Rolfe and Jerome Arches.

Rolfe is son-in-law of Howard S. Wright, the Seattle construction magnate. Wright Hotels is involved in several other West Coast properties including the Seattle Sheraton, the Portland Red Lion and the Monterey Marriott.

The 110-room conference center will be operated by Coastal Hotel Group, former operator of the Salish Lodge.

Julia Ellen, the upscale boutique that's called Proctor home for 15 years, is closing its doors.

"I've done this for 32 years total, 20 years of owning my own, and you hit the point where you are done," owner Julie Schmidtke said today. "We decided this was the best time of year to have a big closing sale."

It started Thursday, and the store will close when everything's gone, she said.

Schmidtke said that she started about 18 months ago to try to find a buyer for the store but that all of them fell through.

To get into business "you have to have more faith than fear," she said, and in this economic climate fear is a hot commodity despite the fact that Julia Ellen's annual revenues are between $500,000 and $1 million.

Julia Ellen, which is Schmidtke's first and middle names, opened 20 years ago in Old Town, then moved to the Proctor District five years later. Schmidtke briefly opened a store in Tacoma mall six years ago, but it closed after three years.

Schmidtke, who put her age at "almost 50," said she didn't have any specific plans after Julia Ellen closes, but that she has been approached by other people who want her advice on opening their own business.

"We really wanted to close with the same integrity and special-ness that we opened with," Schmidtke said. "I didn't want to be one of those stores that people thought, 'she should have closed a few years earlier.' "

The Tacoma office of the attorney general's office is moving from downtown to the Brewery District.

The state's General Administration department announced Friday that MJR Development, a Kirkland-based firm, was the successful bidder on 36,000 square feet of office space sought by the Tacoma office.

Currently they occupy six floors in the Washington Building at 1019 Pacific Ave, where their lease is up in June. They'll move to the Jet building at 2101 Jefferson Ave. on Dec. 10, 2010, said Cheral Jones of the General Administration department.

David Morton, property manager for the Washington Building, couldn't be reached for comment Friday.

According to the Pierce County Assessor-Treasurer's Web site, the property at 2101 Jefferson Ave. was built in 1919 and is a storage warehouse owned by glass artist Dale Chihuly. It's on the corner of Jefferson Avenue and 21st Street, which leads to an entrance to Interstate 705 just a few blocks down.

It's unclear if MJR Development has bought the building from Chihuly. Mark Lahaie, the contact for MJR listed on its bid to the state, could not be reached for comment Friday.

According to MJR's bid, the building will be renovated inside to Class A office space with LEED environmental certification while maintaining its distinctive brick structure outside.

=> Read more!

By KATHLEEN COOPER

The demolition of the Luzon is on track for 7 a.m. tomorrow after representatives of a local developer failed to convince city officials that they could quickly remove the risk of its collapse.

Stuart Young of the architecture firm BCRA presented information from a Seattle-based engineer that the building was not in imminent danger of collapse and could be shored up within 4-6 weeks, then rehabilitated at some point.

After a 50-minute meeting at the Municipal Building, city manager Eric Anderson was unconvinced that that would mitigate the danger.

"That's if everything works out all right, but if it doesn't work out all right, someone could get killed," he told the group. "Charlie (Solverson, city building manager,) has indicated his opinion has not changed. We have to go forward. I don't see an alternative. I'm not prepared to risk public safety. It's regrettable."

Present at the meeting were Anderson, Solverson, Young, and historic preservation consultant Michael Sullivan.

During the discussion, Anderson expressed frustration about the history of the building.

"I wish there were representatives of two to three other people here," he said."One would be those who have owned it for years and didn't do a ... thing."

Young said he had a letter from the Gintz Group, agreeing to deed the building to the Washington Trust for Historic Preservation. He also said he had a letter from Terry Lundeen, a principal at Coughlin Porter Lundeen in Seattle.

=> Read more!

Colliers released its third quarter office and industrial real estate updates today.

Pierce County's industrial vacancy rate was down slightly to 8.7 percent from 9 percent a year -- with the county remaining the only market in the area to post a positive net absorption rate.

The latter means that more people have moved into industrial space than moved out, according to an analyst from Colliers.

Industrial real estate high points for the third quarter included the opening of a new Whirlpool distribution center in Frederickson, and Green Mountain Coffee's expansion in Sumner.

The Colliers report states that industrial construction has ground to a halt and the need for spec construction (projects built without any tenants)has diminished.

For example, two "mega warehouses" in the Port of Tacoma area are need of tenants with nearly 1,000,000 square feet of space on the market.

Pierce County's office real estate vacancy rate increased to 12.1 percent from 11 percent a year ago and bumped up slightly from the previous quarter.

The area still posted a positive absorption of space over the quarter and year, "showing that despite the national recession, office users are still in the market," the report states.

The biggest news for this market is this month's announcement that Russell Investments plans to leave Tacoma by 2010. That move will open up 224,000 square feet of Class A (the highest quality) office space in downtown.

A Tacoma contractor who worked desperately for the last three weeks to save downtown Tacoma's historic Luzon Building from the wrecking ball today gave up his fight.

Serpanok Construction Co. owner Igor Kunitsa notified the City of Tacoma at noon today that he was withdrawing his proposal to save the building from demolition.

Robert Haley, Kunitsa's partner in the rescue effort, said the complications involved in the rescue plan were just too great to overcome in a short time.

Demolition contractor Wm. Dickson Co. is scheduled to begin staging at the building at South 13th Street and Pacific Avenue Wednesday. Dickson's crew will begin tearing down the six-story brick building Saturday.

Dickson was hired by the city to raze the structure after earlier rescue schemes proved undoable.

The building is in danger of collapsing without any human assist. The structure's north wall is leaning five inches toward South 13th Street and its west wall is bulging out toward Commerce Street.

The city three weeks ago ordered 13th Street blocked off and one lane of Pacific Avenue near the building barricaded. Last week, the city also roped off a portion of Commerce Street to protect passersby.

Haley said the city had worked diligently with him and Kunitsa to find a solution that would allow them to rehabilitate the structure, but in the end the risks were too great.

"Time has just run out," said Haley. "The city really stepped up to the plate, but there were just too much to be accomplished in a short time."

“I am not at all happy about this building coming down,” Tacoma City Manager Eric Anderson told the City Council at a noon study session. “It’s a shame that its come to this, but it didn’t come to this in the last three or four weeks. It came to this over the last 15 to 20 years.”

Kunitsa would have had to buy the building from its present owners, the Gintz Group, buy an adjacent strip of land from a California developer, sign loan and development agreements with the city and mobilize its own crews to begin shoring up the building.

Haley said he and Kunitsa feared that Dickson would charge the city for mobilization costs and for breaking the demolition contract and that those costs eventually would come back to haunt Kunitsa.

The city says it will charge the estimated $600,000 demolition costs to the building owner. The city, however, will likely lose money on the demolition because the property is valued on the tax rolls at $300,000 and several liens have already been placed on the structure.

The 119-year-old building is one of two remaining West Coast buildings designed by famed Chicago architect Daniel Burnham and John Root considered by many to be among the fathers of the modern-day skyscraper.

The city of Tacoma gave the owners of the historic and dilapidated Luzon a deadline of today to come up with a plan to shore it up.

"They sent a certified letter, first class, on Sept. 4, that was Friday, advising us of noncompliance and to please advise by today, over a three day weekend," Gintz said Tuesday. "We're still dealing with the prospective buyers, hoping to get something there. The ball's in their court."

Gintz said he hasn't talked to the city today, and he would not comment on the status of negotiations between his broker and representatives for Igor Kunitsa and his partner, Robert Haley.

"It's all very delicate right now and we hope to have something put together by Friday," Gintz said.

When asked whether The Gintz Group planned to take any action as required by the city, he said: "The city's going to do what it's going to do, the prospective buyer's going to do what they have to do, and we're just twisting in the wind."

I've made calls to the city and to Mr. Haley to get their comments. As soon as I hear back, I'll post an update.

UPDATE: As of 4:30 p.m., neither Mr. Haley nor officials from the city's building division could be reached for comment.

The City of Tacoma's Building and Land Use chief Charlie Solverson Wednesday night shared with the city's Landmarks Preservation Commission several photos of the exterior and interior of the Luzon Building to illustrate why the city is concerned.

Here are the pictures that give an idea how two or three decades of neglect to even a well-built structure such as the historic Luzon can become a dangerous building.

Note the collapsing roof and floors, the missing support colums, fractured beams and the separation between the floors and the leaning brick north wall.