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PHOTO BY JOHN LARSON

GROWING PAINS. DaVita has outgrown its main office building on Pacific Avenue, and has employees working out of four other buildings downtown.

DaVita pondering options foroffice space

By John Larson

DaVita, a national leader in kidney dialysis and a major employer in Tacoma, has announced that it needs more office space to meet its needs.

The company has leased space in the former Schoenfelds furniture building on Pacific Avenue since the late 1990s. Tacoma was at one point the headquarters for the company. El Segundo, Calif., is now the headquarters, but much of its business operations remain here.

It employs more than 850 workers, who are spread out over five downtown office buildings.

“We have been growing pretty steadily,” said Jim Hilger, the company’s vice president and controller. Two years ago it acquired another company, which resulted in its local workforce nearly doubling in size.

The Fortune 500 company operates 1,400 dialysis centers around the country. Its annual revenues are $5.5 billion.

Currently DaVita leases all of the office space it uses in Tacoma. Hilger said right now the company is in the early phases of identifying its space requirements and assessing what possible solutions exist in Tacoma and other areas in Pierce County and south King County.

Another major Tacoma employer, Russell Investment Group, is in a similar situation, with its headquarters maxed out and employees scattered around other buildings in downtown.

City officials and local business leaders have proposed an office building campus for Russell downtown. One possible site is land owned by German billionaire Erivan Haub along Pacific Avenue. Asked whether DaVita would consider co-locating with Russell in such a project, Hilger said the company is in discussions with developers who could provide the amount of space that would meet its needs.

“Nothing is on or off the table at this point,” he said.

The company has not decided yet whether it would want to lease space or own a building.

Hilger said public transportation is one advantage to remaining downtown. Many employees ride busses to work. Others park in the garage at Tacoma Dome Station and ride the Tacoma Link light rail into work.

A lack of parking is one disadvantage of being downtown, Hilger said. There is some structured parking in its main building at South 15th Street and Pacific Avenue.

Hilger said company officials have met with representatives of the city of Tacoma and the Economic Development Board (EDB) of Tacoma/Pierce County regarding its situation.

Hilger stressed that there are many discussions that will take place before a final decision on DaVita’s future is made, which he said will occur by the end of this year.

There are some incentives the city could offer to the company, which he noted were prompted by efforts to keep Russell in town.

“We will look to participate in anything the city can offer,” Hilger said. Lease rates are the most important consideration, but he noted incentives could sway the decision.

“We are looking at all alternatives. We will make the best decision for our employees and shareholders,” he remarked.

Bob Levin, manager of the Private Capital Division in the city’s Community and Economic Development Department, explained that the EDB operates a business retention program under an agreement with the city. He said the EDB meets with about 100 companies each year to assess their growth and any needs related to it. Representatives of the EDB and DaVita met recently, and the company briefly discussed its situation and said it would be hiring a broker.

Levin said last week he and a broker selected from C.B. Richard Ellis met with representatives of the EDB and DaVita to discuss the situation. DaVita seeks at least 200,000 square feet of office space, with the potential to add an additional 100,000 square feet. It currently uses close to 200,000 square feet.

“We are in the process of listening to the customer,” Levin said.

Levin discussed the potential to create a Revenue Development Area, which would be eligible for state assistance for infrastructure financing. This is part of an effort to keep Russell in town, although it could be relevant to other companies. Levin said a public meeting will be held June 10 on the topic. Tacoma could receive up to $1 million a year in state funding for 25 years.

“It would benefit everybody, not just Russell or DaVita, but our entire downtown,” Levin remarked.

Is Tacoma inadequate for companies as large as Russell or DaVita to conduct business? Levin does not think so. There are still fairly large parcels of undeveloped land in or near downtown, he pointed out, ones that could contain up to one million square feet of office space.

In addition to Haub’s parcels, the city owns vacant land around South 21st and Jefferson streets. Originally purchased in the 1990s to house a police headquarters, the land has sat vacant because the city selected another site for the police facility.

Levin said there have been no recent conversations with developers about that property.

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